Post-Pandemic Hotel Digital Marketing Trends Transforming the Guest Experience

Willing to adapt to today’s ever-changing environment and make your hotel highly stand out among your competitive set? Wondering how you can boost your property’s Occupancy and Revenue Per Available Room (RevPAR) post-pandemic times?

Then, you must watch my video to learn about the most recent marketing trends witnessed by one of the most renowned and accomplished hotel experts in Florida.

It was such an honor to have Mohan Koka, General Manager at Kimpton Surfcomber Hotel in Miami Beach, participate in my Interview. I was truly delighted to gain his valuable insights about the new marketing opportunities and shifts pandemic times have brought to the hotel industry. Indeed, these unprecedented times have definitely been a catalyst for innovation and changes in a world that has become undeniably digital. Hoteliers have had to think outside the box and had to be creative more than ever to appeal to their target audiences.

Watch my video to learn more about marketing initiatives driving booking conversions and increasing hotel’s profitability in this new era: 

 

Why Market Share and Market Penetration Matter for Hoteliers?

Are you a hotel professional willing to assess the performance of your property in the market? Are you willing to know if you stand out compared to the competition? If you want to learn about your market position, then you must master those metrics described in this article. This will allow you to start thinking about ways to gain a competitive advantage. Indeed, market share and market penetration are important tools to determine your hotel’s success. Before computing these metrics, it is important to identify your competitive set and have access to industry’s data. Smith Travel Research (Links to an external site.) is a popular organization that provides reports of the main hotel’s key performance indicators (Occupancy, Average Daily Rate and Revenue per Available Room) of your competitive set for benchmarking purposes. If you are wondering how you can calculate the market share and market penetration and interpret its meanings for your hotel, then consider using STR data and apply the formulas mentioned below.

What does Market Share Stand For?

According to the Corporate Finance Institute (Links to an external site.), market share can be defined by the portion of the market a company has captured measured in percentage. It can help you determine the overall business of your hotel compared to the competition. It can be referred as your sales (revenue market share) or room supplies (unit market share) performance against your immediate competitors. The higher is the market share, the most your hotel has an impact in the market.

Examples:

  • Let’s suppose that your hotel has 300 rooms and the total rooms of the competitive set in your area that includes your hotel is 1200 rooms. The unit market share for your hotel in this case can be found by dividing your property’s number of rooms by the total number of rooms of your market set. Here is the calculation below using the formula:

300/1200= 25% market share

It means that in the competitive market set, your rooms percentage represent 25%.

  • Now, you are willing to find the revenue market share of your hotel or Hotel A in the table below. Below are the revenues of your hotel and the ones of your competitors known as Hotel B, C, D and E.
Competitive Set Hotel’s Revenues
Hotel A $170,000
Hotel B $90,000
Hotel C $87,000
Hotel D $122,000
Hotel E $38,000

First, you have to aggregate the competitive set’s revenue which is equal to $507,000.

Based on the revenue market share formula, your market share can be computed by dividing $170,000 (your property’s revenue) over $507,000 (the total competitive set revenue) which is equal to 33.5%.

Below is a table created by the learning platform Study.com (Links to an external site.):

Table a:

Image taken from: https://study.com/academy/lesson/how-to-calculate-hotel-market-share.html 

If you want to look for the market share in terms of rooms sold for Coconut Resort, here will be the formula:

Coconut Resort Market Share= Coconut Resort Room Nights Sold/ Competitive Set Room Nights Sold

Or 280/806= 34.7% market share.

Now that you are familiar with market share, consider learning about market penetration that can help you further understand how you compete in the market.

What does Market Penetration Stand For?

According to the Management Company Xotels (Links to an external site.), “market penetration measures your hotel´s occupancy compared to the average market occupancy levels”. It is computed as a ratio determined by dividing the rooms occupied in your hotel over the total rooms occupied in your competitive set. If the index found is higher than 1, that means that your hotel is outperforming the competition. If it is lower than 1, that means that your hotel has to work on better distinguishing in the market in which the competition is performing better. When it is equal to 1, that means that there is a fair market share and that hotels in the competitive set are achieving equal performance.

4 Hoteliers (Links to an external site.) that is an organization specialized in Hospitality and Travel News mentions an example of market penetration applied to the hotel industry (Links to an external site.).  By using the market penetration formula, the index found was 93% which is lower than 100%  meaning that the subject hotel must do efforts to achieve better performance than the competition.

Now that you are familiar with market share and penetration, consider monitoring these two metrics as it can give you a better idea about how your property is positioned with regards to the competitors in your segment. Those are useful tools that can let you reflect as a hotel professional on how effective your marketing strategies and business development are. As you will be able to get useful insights from computing these two metrics, you will most likely scale up your company’s profitability.

 

 

 

 

 

 

 

Best Email Marketing Practices for your Hotel

Are you a hotel professional willing to make your property distinguish in this highly competitive industry while driving better business performance? Then, consider running email marketing campaigns as it can allow you to enhance the promotion of your hotel, attract prospect guests and improve your customer lifetime value. Besides, it is a cost-effective strategy as the ROI is estimated to be $44 per every dollar invested according to the marketing organization Campaign Monitor. (Links to an external site.) Through learning the best email marketing techniques, you can significantly increase your revenue and ensure long-term profitability. While working on your email marketing, consider following this guide to make your promotional efforts powerful through this digital channel.

4 Tips for a Successful Email Strategy

Building a Strong Contact List

The basis for a successful email marketing campaign is to collect emails from people who are part of your target audience. If you still have not done it yet, consider creating a sign-up form for your website that asks as little information as the name and email to maximize the chance of having your visitors filling it out.  According to the E-marketing organization Website Optimizer (Links to an external site.), a subscription rate can be boosted by 317% through placing pop-up sign-up forms. If you are looking to create a pop-up sign up form for your site, the marketing organization HubSpot (Links to an external site.) offers the option to create a customized one. You can also place your sign up form on your footer or contact page. As a reward for sharing their email address, you can offer your subscribers incentives such as special discounts, early check-in, room upgrades, special deals and promotions, etc. Below is a sign-up form from a hotel offering special vouchers to entice people in entering their email addresses:

Image taken from: https://www.hotelopro.com/blog/en/how-to-kickstart-your-hotels-email-newsletter-your-first-3-steps/ (Links to an external site.)

Besides, your property might already have a property management system that includes a customer database that can be imported to your list. Before doing so, make sure you have their consent for emailing them. If you want to learn more about the legal aspects of email marketing, the marketing company Mailerlite (Links to an external site.) offers a guide about the General Data Protection Regulation (GDPR) as far as concern emailing permission.

Segmenting your Subscribers

There are huge opportunities for segmenting your contact list as you can send personalized emails through doing so and obtain the best results from your marketing campaign. Based on common characteristics shared, you can divide your subscribers into different groups. The company Constant Contact specialized in email marketing (Links to an external site.) suggests tips for email list segmentation. For example, it is highly suggested to segment your list based on the room preferences and type of travelers (either business or leisure). Through an efficient segmentation, you can create more valuable messages specifically tailored to a particular audience. Then, people receiving your email will more likely take action.

Sending Pre-Arrival emails

Hotels are sending pre-arrival emails to personalize their guest’s experience. This can show genuine care for your customers who will already feel the warmth of your hotel operators before stepping out at your property. It can also allow them to be more knowledgeable about the services available on-site. Those pre-arrival emails should be sent as soon as a booking was completed by a future guests as well as a few days prior to their arrivals. You should make sure to mention a warm welcome in your subject line to start building affinity with your guests. An effective pre-arrival email contains the booking confirmation, contact and location details, hotel services and amenities information, social media links, weather forecasts as well as tourist attractions guide. Here is an example of an informative and welcoming pre-arrival email from a hotel: 

Image taken from: https://id.pinterest.com/pin/564427765770993444/

Improving your Customer Loyalty

Email marketing can help you attract customers into staying at your property again. Thus, it is crucial to send follow-up emails after your guests checked-out at your hotel. It is important in those post check-out emails to express nice farewell and gratitude for choosing your hotel. Your message should contain wording enticing people to visit again. It should also include links to register to your loyalty programs as well as special offers for their next stays. To remain top-of-mind to those guests, you should send them emails on a regular basis with special promotions. You can schedule an email automation so emails are sent in specific time periods. The email marketing agency Uplers (Links to an external site.) offers a full guide on email automation. Here is an example of a warm hotel follow-up email:

Image taken from: https://www.resortdata.com/guest-survey-and-communication/ (Links to an external site.)

You can also show care for your guests in your follow-up emails through asking them to share their reviews of their stay in your website as well-as third party website. This can allow you to increase your brand visibility and improve your hotel operations. You can use Net Promoter Score survey type to obtain stay’s ratings as it can gives an accurate understanding of your guest’s satisfaction. Here is an example of a hotel NPS survey:

Image taken from: https://www.resortdata.com/guest-survey-and-communication/ (Links to an external site.)

Know that you learned about efficient email marketing techniques, consider implementing this marketing strategy as email is one of the most powerful digital channels for promotion nowadays. You will be surprised how successful you will be at increasing your hotel occupancy through running email marketing campaigns using the best practices. Thanks to email marketing efforts, you will certainly attract new customers, increase your guest’s retention as well as increasing their spending. When working on your emails, always make sure to always have appealing and engaging content in your emails to drive conversions. Expect major results from this digital marketing strategy!

Here is a link to the previous article if you would like to learn more about marketing especially in the digital world:

What you Need to Know about Influencer Marketing Strategy for your Hotel

 

Rescuing the Hotel Industry by Revamping the Recruitment Marketing Strategies

The hotel industry has been suffering the most from the devastating effects of the COVID-19 among all sectors. Indeed, hotels across the globe have been severely hit and are still facing the adversity of the disastrous consequences of the pandemic. From the latest March 2020, lives of millions of Americans have been affected as a tremendous number of hospitality workers have been forced to be out of work as hotels were running out of business.

Recently, the hotel industry in South Florida has started to recover experiencing a drastic rebound in occupancy which gives hope for a promising future. An article called “Hotels in Miami and South Florida are open — and busy” from TravelWeekly mentions the words of hotel experts about the recent trends regarding the current situation of the industry. Indeed, a strong demand has been reported for hotels in the greater Miami Market especially for the beach-front properties being around 80 to 90 percent occupied according to the President of the Greater Miami and the Beaches Hotel Association, Wendy Kallergis. The Director of Sales and Marketing from Acqualina Resort and Spa in Sunny Isles Beach, Mauro Pinho, also claimed that the demand was so strong for the property at some point that they could not accommodate all requests.

The industry is facing a real scarcity of workers that has proved to be a real challenge for hospitality operators. According to an article published by the Hospitality Event Consulting Organization, Northstar Meetings Group, there is one million job openings in the hospitality industry that companies struggle to fill.

According to a research conducted by Peter Ricci, Director of the Hospitality and Tourism Management Program at Florida Atlantic University, the industry is experiencing a severe labor shortage. 4000 respondents participated in his investigation. Being uncertain about their future within the industry, one-third of them mentioned they would be looking for jobs outside the industry in the year ahead. This is a serious concern according to the graduate hospitality educator.

Feeling insecure about the new industry’s environment post-pandemic, a lot of people would rather take advantage of the unemployment benefits according to several industry experts which is currently estimated to be $575 per week at this time. In an article from New York Times explaining why companies are struggling to recruit while unemployment is still high, Tom Taylor who is the owner of the pub Sammy Malone, in New York City states “The government is making it easy for people to stay home and get paid. You can’t really blame them much. But it means we have hours to fill and no one who wants to work.”

Hospitality and Marketing leaders were interviewed to share about what they think of the current industry situation. This article will share insights from industry experts about efficient marketing strategies especially in the world of digital for reaching the best applicants and enticing them in joining hotel organizations during these unprecedented times.

Marlies Linares who is the Director of Sales and Marketing at InterContinental Miami states: “hotels could be doing so much better but because it is so difficult to find people to work, we have to cap our occupancy”.

The Director of Human Resources at Mandarin Oriental Miami, Isabel Porzecanski mentions that the situation is alarming and also unexpected as the company is having a hard time finding people willing to work from South Florida. The hotel currently has 45 job openings and a very few applicants to which very high hourly rates are offered even for the lowest job positions. They have no choice but trying to hire candidates from other countries and investing for work VISAs. She claims that they are so short in staff that all the hotel leaders including the General Manager have to clean the rooms and do the tasks of the entry-level workers to ensure the functioning of the property. According to her, at this time, it very hard for the hotel to run the operations and almost impossible to keep the standards.

In order to rebound from the ravaging impacts the pandemic had on the hotel industry, leaders have to focus their efforts on attracting passionate and dedicated hospitality workers who are qualified to generate business. It is essential for hospitality leaders to rethink about effective strategies to attract talents skilled in exceeding guest’s expectations and leaving customers with long-lasting memories from delivering unique experience. As the industry is on the right track for recovery, it is important to recruit competent workers who are able to increase customer’s retention and ensure long-term profitability. One of the main keys to success for any hotel corporation is to be able to regain trust from the most qualified individuals who have the skills to bounce back the business.

Here is what experts say:

 

Glenn Sampert, General Manager at InterContinental Miami

Highlights the importance of reaching a wider audience as well as creating ads targeting prospective hires through social media and traditional media while promoting holistic work experience:

“Recruitment has always been a critical strategy for our organization; however, the pandemic has created new challenges for the hospitality industry and InterContinental Miami. Reaching a large audience for both hourly colleagues and management positions helps us increase our chances of successfully recruiting top talent. Posting open positions on a hotel web landing page and other online sources such as Indeed, Hcareers, etc, is a basic need; however, getting the attention of a wider audience who are not necessarily looking actively for positions is also required.  We are using ads on Social Media platforms such as Instagram and Facebook to target people while they are using their phone or tablet. Gaming apps also have advertising opportunities that we are exploring. Even in the digital age, we can use traditional media such as local radio stations to target listeners who listen to programming in their native language of Spanish and Creole. Lastly, the message is equally important. We need to communicate what the holistic work experience will be at our hotel in addition to the basics of pay and benefits. People want to work with organizations that share their values as much as provide for their financial needs”.

Gina Genna- Director of Marketing at InterContinental Miami

Suggests to use social media platforms that have many active fans who could be great potential hires:

Your hotel social media channels house your biggest fans. They are engaged in all aspect on your brand and property along with happenings. I like to create and share a branded message about how our fans could potentially become part of our One Great Team!

Flavia Antonescu – Digital Marketing Manager at DotcomWeavers

Notes the importance of implementing digital marketing strategies through the most use of social media platforms and rethink the targeting techniques to reach potential applicants while promoting enhanced benefits the industry has put into place for its workers:

“The devastating effects of the pandemic are still happening as we speak. Restaurants and hotels that managed to keep their doors open are now facing another challenge – personnel shortage. It is now the time to care less about one’s past experience and focus more resources on training out of the industry employees. Restaurant and hotel businesses should also change their targeting strategy. Posting a hiring sign on the front door is not effective anymore. Maybe employers should start using digital advertising to reach workers from other industries and enhance their onboarding benefits to influence consideration. Social media ads targeting younger groups from other industries while highlighting the benefits of working in the hospitality area might be a great start. We are using social media to get ahead of competitors, and even if we like it or not, we are now competing for attracting competent workers, therefore, a new approach may be necessary.”

Lin Humphrey, Cruise Industry Expert and Graduate Marketing Professor at Florida International University

Supports the creation of targeted marketing campaigns through LinkedIn platform and the promotion of digital job boards:

“Hospitality has a unique challenge in recovering from the COVID-related shutdowns. As some past hospitality worker may have exited the market since jobs weren’t available, intelligent targeting using tools like LinkedIn and the digital job boards will be critical. Beyond that, paying a fair wage will be more important than ever to lure professionals back to the industry.”

Stephanie Hernandez, Digital Project Manager at Florida Power and Light Company

Suggests advertising the rewarding benefits and skills employees could gain from being part of the hospitality industry as well as creating Google Ads and implementing effective SEO techniques:

“The digital marketing strategy I believe would be most effective in hiring outstanding recruits would be to showcase the value of working in the hospitality industry. Sharing a message to these recruits about how they will be able to exercise and refine their skills is an enticing benefit to working in the hospitality industry and the corners opportunities to grow in their career. Advertising the benefits, a reddit could receive by working in this field, I believe, should be the main focus in the digital marketing strategy. Not only share how the industry needs help but how the industry can help them. I recommend advertising to the potential recruits with Google Ads and focus on SEO to make sure talents who are looking for a rewarding career see the ads. Hospitality Marketing leaders should look up the best keywords using online keyword tools. Indeed, they should focus on keywords that align with the need of the company and what recruits are searching for to have the best chance of positive results with the ad”.

Anthony Miyazaki, Executive Director of Marketing and Analytics and Graduate Educator at Florida International University

Recommends strengthening hospitality companies’ reputation through social media to generate positive word of mouth:

“Because the stories of pandemic shutdowns in the travel and tourism industry were so prevalent, it will take a significant focused effort by industry organizations and the largest corporate players to combat concerns that careers in this area may be uncertain. Mere ads and public relations announcements, however, will be unlikely to sway the nervous opinions of potential employees, particularly at a time when the industry is still struggling to return to pre-pandemic levels. Fortunately, in today’s digital world, information communicated seemingly via word-of-mouth on social media platforms often is perceived as more credible than communications originating directly from organizations. Thus, the answer for the industry is to show its strength via social media communications from its employees, guests, suppliers, and other constituents so that prospective employees will regain their confidence in the future of industry opportunities.”

The industry’s experts testify of the current reality of the industry experiencing the challenges of a labor shortage. They all call attention on the importance of use of digital marketing strategies to attract hospitality workers during these times. Inspired from the expert’s opinions through this article, here are some recommendations about marketing strategies the hotel industry should implement during this particular time:

Strengthening the Social Media Platforms:

Image retrieved from: https://www.irishtimes.com/business/technology/what-does-it-take-to-get-banned-from-social-media-more-than-you-d-think-1.3959187

When used effectively, social media platforms can be powerful tools to reach a large audience. In order for hospitality companies to recruit the right people who can contribute to the business’ success, it is crucial to work on creating targeted campaigns. LinkedIn is one of the most influential platforms to attract potential candidates nowadays. LinkedIn offers several campaign options when it comes to job ads that help increase companies brand awareness among the best candidates. Targeted job ads in this platform can be very successful as it allows to advertise the job openings to individuals with the desired qualifications.

As many past hospitality employees are not convinced of joining the industry again, hotels must also take advantage of this time to reinforce the brand’s reputation through social media by promoting an attractive work environment and company’s culture. Indeed, a lot of prospect talents are anxious about working for the hotel industry, and a way to release the nervousness of these potential recruits is showcasing holistic work experience. To draw potential recruits’ attention, organizations should consider showing the image of a workplace that value its employees. Publications must be focused on showing pride for its workers and the unique employee’s journey provided to them.

At this particular time, it is also crucial to be active on social media and keep people engaged in these platforms. Ensuring thoughtful interactions through social media posts is also important to create a positive impression and strong connections with potential employees. Albert Andrew Valera, former Director of Sales at Faena Hotel and currently social media content expert states on a LinkedIn publication “Don’t underestimate the power of social media and the power of relationships” as he concluded a $5,000 booking from Instagram within an hour of receiving 2 requests. Prospect hires can also be motivated to take action if exposed to engaging social media pages.

Promoting Signing Bonus:

Image retrieved from: https://www.payrollpartners.com/different-kinds-of-bonuses-and-their-effect-on-overtime/

Furthermore, as many potential recruits are concerned about their financial needs and are satisfied with the unemployment benefits at this time, hotels should appeal these people by showing them they could get higher financial rewards by joining their team. A lot of hotel companies have been promoting signing bonus similar than unemployment compensation in addition to enhanced onboarding benefits. For instance, the Director of Operations at the Setai Hotel in Miami Beach, Li-Chyun Yang is motivating people to join the property with the promotion of the offer from the hotel of a stimulus check through a post promoting the job listings in LinkedIn.

Partnering with Hospitality Schools:

Image Retrieved from: https://calendar.fiu.edu/event/hospitality_virtual_career_fair#.YLj0QC2z10s

Cooperating with hospitality schools around the US can be effective to reach a significant number of potential candidates. Indeed, those universities have a large network of students willing to join the industry. For instance, FIU Chaplin School of Hospitality and Tourism Management in Miami regularly sends emails to its wide student’s database about job opportunities and is often promoting those on its social media platforms. Any hospitality company should consider sending updates of the job listings to these schools as it could help attract new recruits. In addition, hospitality schools have organized several virtual career fairs in which employers could connect with employees. Hotel leaders should definitely be on top of those career events as it can be helpful to hire skilled and educated employees in their organization.

Using Search Engine Optimization (SEO) Techniques:

Image retrieved from: https://netlz.com/search-engine-optimization-seo/

An essential digital marketing strategy nowadays is to use Search Engine Optimization to increase your company’s visibility online. In fact, the key to reaching the best possible applicants is to identify what are those prospects hires searching online. Thanks to SEO best practices, you can determine people’s interests through the phrases and keywords they are searching when looking for jobs in the industry. This process allows to make your page and ads easily found in the online search results by showing on top of the page to top applicants. This enables to increase site traffic in which job opportunities and benefits are promoted. Here is an overview of this marketing strategy and tips to ensure its best techniques.

Creating Google Pay-Per-Click (PPC) Ads:

Image retrieved from: http://cre8tivenerd.com/2018/08/landing-pages-pay-per-click-google-ads/

Moreover, hotels should make sure to have up-to-date digital job boards and should consider creating Google Ads promoting it. Here is a guide about how to advertise online job boards through Google AdWords to increase the landing page traffic and conversions according to the organization SmartJobBoard specialized in the creation of digital job boards. Google pay-per-click ad campaigns can be very powerful as it can precisely target the most relevant users. These ads appear on the search results page (SERPs) based on an auction determined by the amount of money you are willing to bid for each click compared to your competitors in addition to advertising quality and keywords relevance. At this particular time in which marketing budgets are very limited, hospitality companies should definitely consider PPC campaigns as it is one of the most cost-effective strategies as you are only paying if potential recruits click on your ad. SEMRUSH Academy offers courses guiding on the creation of effective PPC campaigns helping drive significant revenues.

Exploring Mobile Gaming Apps Advertising Opportunities:

Image retrieved from: https://gameanalytics.com/blog/popular-mobile-game-ad-formats/

Glenn Sampert suggests exploring the option of advertising through Mobile Gaming apps which could be very effective to reach a large audience potentially interested in joining the industry. Indeed, it is a billion-dollar industry that is booming. Statistics from App Annie that is a platform specialized in mobile market data analytics show that there are huge opportunities from these apps. According to this organization, 80 billion game app downloads on mobile were recorded with players spending 4.2 hours per day playing games in 2020. Mobile ad spends through these apps reached $240 billion dollars in the same year. These statistics clearly show that advertising through mobile gaming apps should be further investigated by hospitality companies that may not have yet considered these promotional tools.

Ensuring High Quality Website Content:

Image retrieved from: https://blog.marketmuse.com/what-is-high-quality-content-and-why-is-it-so-important-for-your-business/

Before considering SEO and PPC strategies, it is critical to make sure to have high quality content in your website in which your prospective applicants will be directed. It is important to make sure your website include appealing details about the company, its values, culture as well as compelling information about job opportunities enticing people to join the organization.

Revisiting the Targeting Strategy:

Image retrieved from: https://keymediasolutions.com/news/what-is-audience-targeting/

Besides, there is a huge potential in reaching a wider audience not necessarily having experience in the hotel industry but also from other sectors. According to industry experts, hospitality corporations should consider targeting people from a younger generation and other industries that may find a passion for serving. Considering this, hotel organizations should promote the unique skills especially in customer service these people could acquire by working in the industry that are essential for professional success in any sector nowadays.

Many recruiting marketing opportunities exist for the hospitality industry during these though times in which hotels are struggling to find qualified individuals. The foundation of successful digital marketing strategies is to make the most of social media platforms as they are highly influential tools for promoting job opportunities and companies’ culture. Online advertising targeting potential hires is critical to increase candidate’s reach and conversion.

Nevertheless, according to Peter Ricci in his article mentioned previously, “The industry needs more than just a PR campaign. It needs a full overhaul in its staffing levels, pay rates and employee treatment.” Potential recruits are hoping that the industry changed for the better as the hotel leaders had the time to rethink of the employee’s work conditions during the pandemic. Hotel leaders around the world definitely had the chance to return to their roots which inspired them to improve the work environment for its labor force and emerge from these challenges stronger than ever. Indeed, the industry is lucky to have accomplished individuals who have been real heros trying to ensure business operations experiencing unusual situations and designing recovery plans during these uncertain times. It is now time for all these talents to realize that they are able to rescue the industry to which they should regain trust as the pandemic was very positive in terms of work benefit’s enhancement. The industry has bright leaders striving with passion and ready to demonstrate their dedication in improving lives of their workers with the lessons learned from these unprecedented times!

 

 

 

 

 

 

 

 

 

 

 

 

A Guide for Hoteliers on Pricing Strategies

Are you a hotelier and not sure which pricing strategy you should apply to maximize your revenues ?

In order to ensure success for your hotel company, it is important to implement the right pricing strategies so you can attract customers.

Hotels have several options in terms of effective pricing strategies. Any hotel professional should know about the different pricing strategies and then decide which one is best for them.

What hotel pricing strategy stands for and why is it so important ?

First of all, pricing strategy in hotels is all about deciding which rate to charge for the rooms that you have in your property. Applying the right rate will allow you to boost the room sales. It is important to be careful to not apply the wrong pricing strategy as it can push away customers to book in your hotel. In the hotel sector, pricing is so crucial as if it is done right, it leads to increase your occupancy and revenues. As a hotelier, you should not price too high to not let potential guests be attracted by competitors. You should not price too low to be able to pay for your operating costs.

There are several factors that should be considered before choosing the right pricing strategy which are the following according to an article written by experts from Hotelogix, Hotel management system company  (Links to an external site.): seasons, demand and supply, week day, target market, room types, occupancy, service value, etc.

The hotel industry has similar pricing strategies than other industries in addition to its own particular pricing strategies. You want to sell more of your rooms to maximize your revenues, then consider using these pricing strategies according to the article from Hotelogix :

Dynamic Pricing Strategy : It is also called occupancy-based dynamic pricing strategy in the hotel sector. Here, prices are based on market supply and demand. When demand is higher than supply, this is when you should consider raising your room rates. Then, in the low season when the demand is low, the room rates should be reduced in order to attract more customers to book in your hotel.

Competitor Based Pricing Strategy : Here, your room rate would depend on the market rate.You would need to benchmark and look at the pricing of your competitive set which are the different hotels that can be considered as direct competitors to you. Then, the rate you want to sell the rooms to your guest should be based on your competitor’s prices. As the hotel industry is a highly competitive market, a small difference in price compared to competitors could sometimes influence customers to decide which hotel to book. As a result, this could be an effective strategy to implement.

Forecasting-Based Pricing Strategy : When implementing this strategy, your need to determine the rates based on historical data. What hoteliers usually do is to look for the KPIs from the precedent year which include Average Daily Rate, Occupancy, and Revenue Per Available Rooms. Then, they make their decision on pricing based on past performances. Based on expected demand and occupancy, you can determine which rate you would like to apply for the different types of rooms.

Guest Segment Based Pricing : This pricing strategy is very common in hotels as many hotels have different types of rooms and as a result attract different types of customers. For example, a suite with ocean view might have a different clientele than a standard room with the same view. As a result, hotels are applying different prices for the different segments targeted for these rooms.

Length of Stay Pricing : Hotels can decide to apply prices based on the duration of a stay. Hoteliers usually implement this pricing strategy to maximize their property’s occupancyIndeed, they would apply one rate based on a minimum or maximum length of stay.

Other pricing strategies that can be used in hotels are :

Psychological Pricing Strategy: It is a pricing strategy that is based on using human psychology to increase your room sales. For instance, you can decide on having a room rate of 99 dollars instead of 100 dollars as customers might psychologically believe that it is not expensive because the rate is not reaching the 100. Another way to boost sales through using the psychological pricing strategy could be to motivate guests to book a room as there would be a 50% discount on the second room.

Bundle-Pricing Strategy : This pricing strategy is a good way to add value to your service and is one of the most successful pricing strategies that you can use as a hotelier. It is very common that hotels would create packages with a room in addition to other offerings such as breakfast or activities included. Here, you can determine a reasonable rate for your room based on your bundle offers. Implementing this strategy is efficient as it can highly motivate guests to book in your hotel as it makes them believe they are having more for less.

Premium Pricing Strategy : This strategy is usually applied by luxury hotels that have high rates as a way of providing prestige and value to their guests. If you are a luxury property, guests usually decide to stay in your property for the image and status your brand gives to them. As a result, your hotel could apply premium prices for prestige purposes.

As you now know different pricing strategies that you can implement in your hotel, it is important to carefully review each one of them. Then, you should determine which one(s) would bring the best financial results to your property. There is no right or wrong method for pricing as it depends on circumstances and business environment. Each hotel is different, so there might be pricing strategies that work better than others depending on the property type.