Revenue Management "Optimizing Pricing Strategies"

3.1.2. Establish new room rates
Why?
- Variety in room rates will help to choose right rate for each type of customer at the right time, which will make impact on revenue.
Establishing new rates and varying with them should be very careful. Discounts should not be left open when high demand will fill rooms at rack rates. At the same time offering only rack rates may not be desirable when demand is low.
Hotel has its rack rate which becomes discounted in low demand periods. If hotel will develop its rate structure, there will be a higher control about all rates they have. Of course there will be the rack rate as it is in all hotels (145 € in high demand and 95 € in low demand).
They should also create a special group rate, for example 115 € in high demand and 80 € in low demand. Hotel did a mistake when they accept reservation for low demand price when actually there will be high demand days at this time.
The same should be done by repeat business rates. Hotel should have one rate for high demand and one for low. In this case for example it would be 125 € for high demand period and 85 € for valley months. As we already know that the week of Doctor Convention will be high demand period, should be sold at 125 € even normally January is valley month. There is still discounted rate for repeat business travelers which should keep this business for future as well.
Hotel could also offer package plan rate. Many people attract one price for more products. As this hotel has restaurant, they should use it by offering special package by including Food & Beverage outlets. There could be one special price 185 € in high demand period and 135 € for low demand period. For the hotel it will be very preferable, because there is guarantee that guest will use hotel`s Food and Beverage outlets.
3.1.3. Tighten guarantee and cancellation policies
Why?
- All non-guaranteed reservations will be cancelled in advance and therefore more available rooms could be sold at higher price.
- It will avoid no-shows.
After all is done so far it is necessary to eliminate 6 p.m. holds.
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