Hotel Revenue Management – How Hotels Price Rooms

01st Jan 2020

This video posted by Kriya RevGEN

Establishing and sticking to your room rates is an important aspect of running a hotel business. Rates are simply what you charge to rent out a room. Pricing your rooms is something that comes with experience, because the way you price rooms would depend on circumstantial factors which are unique to every property.

The rates that you set for your rooms are determined by what your hotel can reasonably charge. That amount needs to enable you to cover your costs while keeping your rooms relatively full and leaving something left over for you. Your rates are the income of your business and your rooms are the inventory, so setting rates has an immediate impact on your revenue and, thus, your pay.

Deriving an appropriate hotel pricing strategy is important to your profitability and your long-term success. Price your rooms too high, and you won’t have the occupancy level that you need to succeed. Set them too low, and you may be leaving money on the table.

The calculation of your rates depends on many factors, including what your competition is charging, your location, your amenities, the condition and size of your rooms, supply and demand, and, finally, your best guess.

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