Friday, 20 March 2015

Importance of Managing Rates


Working within hospitality you come across industry related terms and phrases all of the time. From

Nic Owen - Distribution Co-ordinator at Guestline 
APR to ARR, OTA to ADGR it’s a big world of abbreviations! Guestline have put together a glossary to help you out– take a look here

Rate Optimisation / Management is another phrase used frequently in the hospitality industry, but what exactly does it mean and why is it so important?

What is Rate Optimisation?
Rate optimisation is successfully using all tools available to increase revenue through a variety of methods both on-line and direct, ultimately maximizing the yield of a hotel and driving higher average spends. Hoteliers need to take full advantage of every business opportunity, ensuring that they are capturing the maximum revenue at all times.

A hotel needs to understand their place in the market and their target market to put an effective rate structure in place. Guestline offer Rate Management and On-line Optimisation courses to show hotels the best way to do this. Courses can be booked here

Why is it important to manage rates?
There are many reasons a hotel should be managing their rates - firstly and most importantly, to ensure they are not losing revenue! If there is no rate management in place, you could be pricing yourself too low (losing easily earned revenue) or charging too much – effectively pricing yourself out of the market without even realising.

Things to consider when setting your rates
The first place to start when setting your rates is research and analytics. Analyse how you are performing year on year – check for any patterns over the year, look for busy and quiet periods and adjust the rates accordingly. During times of higher demand (if there is an event on in the local area for example) the hotel can afford to charge a higher rate. Why not lower your rate (and publicise this) during quieter spells to raise occupancy.

Take into account the time of year. Most hotels are busier during Valentine’s Day, the lead up to Christmas, school holidays and other such seasonal dates for example – use this to increase your rates as the demand increases. Make sure you’re aware of everything that’s going on in the local area so you can plan for any potential peaks in bookings.

Another key area to focus on with rate management is corporate versus leisure business. If your hotel is popular with corporate guests, set rates for business travellers between Monday and Friday to drive more revenue during these times or perhaps you are more of a leisure destination where you might increase your rates during the weekends when occupancy is higher.

Keep checking what your competitors are charging though to keep ahead of the game with competitor analysis.

How to drive and determine rates
The biggest question we often hear is how do we determine what rate we should be selling at? Firstly establish what you have to offer, where you’re unique selling points lie and the differences in rooms you have available. Keep photography up to date and clear descriptions available on-line. Make sure the differences between room types are clearly defined so you can charge higher rates accordingly. Do some competitor research to establish what others are doing in the area – Guestline can also offer this service if you need it.

Work on driving the average spend higher. Do you include breakfast? Do you offer up sells and promotions such as flowers, chocolate, discounted second nights?

Once everything has been considered and a comprehensive rate plan has been produced, hoteliers will benefit from an increased average spend, increased revenue and higher occupancy.

Hoteliers must also remember to close out availability to other channels to ensure they're not offering inventory when they're going to sell out anyway- cut OTA commission costs and get the business direct. Guestline WebSuite is a great way of driving more direct bookings!  

Nic Owen, Distribution Co-ordinator who runs the Guestline courses added “Our systems can achieve automatic strategies that increase/decrease rates for the hotels depending on occupancy – which is really good for clients that don’t have a revenue manger or the time to consistently check and monitor rates. Lots of independent sites really find this beneficial”

Contact Guestline today to arrange a rate management consultation.

6 comments:

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