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14 Most Effective Hotel Pricing Strategies You Need to Focus on to Grow Your Business

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If your hotel business is to succeed, you need to provide guests with value for money, boost your bottom line while avoiding being undercut by competitors. So, it doesn’t come as a surprise that hotel pricing strategies are the most discussed topic by hoteliers across the world.
This blog will help you understand what you need to know about hotel pricing as we list out some of the most effective hotel pricing strategies to help you maximise revenues and build a profitable hotel business. 

Factors to Consider While Choosing a Pricing Strategy

  • Type of rooms
  • Guest segments
  • Value of services
  • Occupancy
  • Competition pricing
  • Demand and supply in the local market
  • Seasons
  • Days of the week

Different Types of Hotel Pricing Strategies

  1. Occupancy based dynamic pricing
    Occupancy based dynamic pricing strategy is an excellent way to boost your hotel revenue. Depending on the demand and supply, you need to change the pricing. When the demand exceeds supply, increase your room prices. For example, if 27 rooms out of 30 are occupied, you can charge more for the remaining 3 rooms. And when the demand is low, your occupancy is low, and you charge less to attract more bookings. Your hotel revenue management system can be optimised for dynamic pricing. It can cleverly set the best rates for unsold rooms so you can make a profit, regardless of the season.
  2. Competitor based pricing
    Do what your competitors are doing to compete in the market. Monitor your competitor’s room rates. Define or list your competitors based on factors like; property type, room rates, star category, offers or discounts, or promotion channels. Understand what pricing strategy they are employing to attract customers and compare it with yours. This will give you a clear idea of what guests are paying and what they’re willing to pay for a hotel room. Based on this data, you can create a hotel pricing strategy that can help you compete with them.
  3. Market demand and supply based pricing
    This strategy considers the known periods of high demand and establishes the room prices accordingly to maximise sales over a given period. Market demand and supply based pricing strategy works best when there is a supply and demand effect and a certain resistance to competition.
  4. Length of stay based pricing
    In this pricing strategy, the room rates are adjusted based on the length of the stay of your guests. The benefit of this pricing strategy is that one rate is offered for the entire stay, making it an excellent pricing strategy during festivals and vacations.
  5. Guest segment based pricing
    In this pricing strategy, you sell the same room at a different price for different guests. The guests staying at your hotel are different based on their age, the purpose of visit, lifestyle, occupation, preferences in the room or occupation. Analyse the different types of guests and then set the pricing strategy to target the guest segment that brings you the most of the business.
  6. Forecast based pricing
    This pricing strategy is about revising the hotel room rates according to the forecasted number of rooms that would be unoccupied for future dates. To implement this strategy, you need to clearly understand your hotel’s occupancy data for the last couple of months and for the same period during the previous year. This will help you forecast accurately and adjust the room rates, based on demand and expected occupancy.
  7. Cancellation based pricing
    Your cancellation policy can also be a part of your pricing strategy. One way to factor in cancellation policy in your pricing strategy is by charging lower room rates, in exchange for no refunds. So, even if a cancellation happens, you can benefit from selling the room twice. If you want to give greater flexibility with cancellations, you can charge higher room rates.
  8. Upselling based pricing
    Upselling encourages guests to spend more on their existing booking. It would mean encouraging them to book better room or a room with a view for a higher price. Upselling in hotels is most successful when done during the booking process.
  9. Cross selling based pricing
    Cross selling is similar to upselling, but the difference is in encouraging the guests to make additional purchases rather than make them spend more on a single purchase. Cross selling is most successful through promotional emails or when sending the reservation confirmation email to your guests.
  10. Retargeting loyal customer based pricing
    If done correctly, this hotel pricing strategy is effective in getting your existing guests to visit your hotel again. Send discount codes through SMS or emails to your repeat guests and encourage them to book with you again. Consider including hotel loyalty programs for direct booking and to welcome repeat guests.
  11. Season based pricing
    When planning your season-based pricing strategy, list all possible dates over the next 12-18 months where your hotel or your destination is likely to see higher than normal demand. Use this data to adjust your room prices according to make optimum revenue.
  12. Rate parity based pricing strategy
    A rate parity strategy is about maintaining the same rate for the same product across all channels of distribution. The key benefit of this pricing strategy is that it provides transparency and hence improves customer satisfaction.
  13. Premium pricing strategy
    Premium pricing strategy involves setting room prices higher than your immediate competition. This strategy positions your hotel among the most expensive, and this cultivates a sense in the market that your quality of rooms and service is better than the rest. However, your consumers should understand the reasons behind why they should be paying more to stay at your hotel.
  14. Price skimming strategy
    In this type of pricing strategy, you set higher initial price levels and then gradually lower the price over time to attract more price-sensitive customers. This strategy gets the highest profit from early adopters.

Different Hotels and Their Pricing Strategies

  1. JW Marriot
    JW Marriott targets high-end customers that demand the best possible services and they are willing to pay for the privilege.
    Pricing Strategies Used:
    • Premium Pricing Strategy
    • Market Demand and Supply Based Pricing
    • Competitor Based Pricing
  2. The Oberoi Hotels Group
    The Oberoi Hotel offers a rich and luxurious experience and is placed in the premium section. Its customers are ready to pay for the quality of services they need. Premium costs are added to any value-added services taken, such as restaurant, spa, etc.
    Pricing Strategies Used:
    • Premium Pricing Strategy
    • Guest Segment Based Pricing
    • Cross Selling
  3. Hilton Hotels and Resorts
    Hilton only offers five star and four-star rooms that sells a set of intangible benefits – luxury and high status. The exclusivity of the brand is maintained by its exclusive customer segment that can pay premium tariffs.
    Pricing Strategies Used:
    • Premium Pricing Strategy
    • Upselling
  4. The Taj Group of Hotels
    Taj Hotels target people with refined and luxurious tastes in their travel and business. The brand is best known for excellence, leisure, luxury, and quality.
    Pricing Strategies Used:
    • Guest Segment Based Pricing
    • Premium Pricing Strategy
  5. Hyatt Hotel
    Hyatt Hotels cater to both high-profile business class and upper class section of society. Its customers are more interested in the service quotient than in the prices.
    Pricing Strategies Used:
    • Length of Stay Based Pricing
    • Premium Pricing Strategy
    • Cross Selling
  6. Accor Hotels
    Accor Hotels caters to different sections of society - Luxury and Upscale, Midscale and economy. It has to face stiff competitions not only from luxury international hotels, but also from mid-premium and economy local hotels.
    Pricing Strategies Used:
    • Premium Pricing Strategy
    • Season Based Pricing
    • Market Demand And Supply Based Pricing
    • Competitor Based Pricing
    • Occupancy
  7. Anantara Hotels & Resorts
    Anantara Hotels, Resorts & Spas is a Thai-based hospitality company with 23 hotels and resorts across Asia, the Indian Ocean, and the Middle East. It offers effortless luxury to customers visiting to experience the heritage, rich cultural traditions, and the natural beauty of its destination.
    Pricing Strategies Used:
    • Market Demand and Supply Based Pricing
    • Dynamic Pricing
    • Forecast Based Pricing
  8. Thee Group of Hotels (Chain Hotels)
    Thee Group offers 3-star stay with premium quality of amenities and services. It has 4 hotels based in Thailand.
    Pricing Strategies Used:
    • Dynamic Pricing
  9. Lotus Group of Hotels (Independent Hotels)
    Lotus Group of hotels, Dubai provides best-in-class affordable luxury hotels for its guests.
    Pricing Strategies Used:
    • Dynamic Pricing
    • Competitor Based Pricing
  10. TenTen Wilshire(Homestay)
    TenTen, Wilshire are suites and apartments located in Los Angeles, USA. It offers comfortable living with service amenities, such as conference rooms, making it ideal for business meetings and networking.
    Pricing Strategies Used:
    • Occupancy Based Pricing
    • Dynamic Pricing
    • Season Based Pricing
We’ve discussed some of the most effective hotel room pricing strategies that are used by big and small hotels all over the world. Implementing these pricing strategies successfully needs you to adopt a hotel revenue management software that can seamlessly integrate with your existing hotel systems and offer data-based intelligent solutions to strategise your pricing decisions. Let Aiosell help!

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