How do you set your hotel rates?

Price optimisation / yield management for hotels

How to set hotel rates

Hotel room rates often vary according to the day, the season and availability. This technique is known as Revenue Management or Yield Management. This is real-time pricing based on availability.

To succeed in optimising yield management of your hotel, you need to understand its principles and how it works. Yield Management refers to the strategies put in place to anticipate, understand and influence visitor behaviour.

Le yield management in the hotel industry, also known as flexible revenue management or price optimisationis a strategy for optimising the revenue generated by the sale of hotel rooms. This approach is based on a dynamic analysis of demand and supply, adjusting prices in real time according to a number of factors, such as the time of year, forecast demand, room occupancy rates and local events, among others.

The fundamental principle of yield management is to sell

1. The right product
2. To the right customer,
3. At the right time,
4. And at the right price.

This involves an in-depth understanding of the market, customer preferences, and accurate analysis of historical and forecast data. Hoteliers use a variety of tools and software to analyse this data and make informed decisions about their pricing strategies.

Visit adjusting prices based on anticipated demand, hoteliers can maximise their revenues during periods of high demand, while filling their rooms during slower periods thanks to more attractive rates. This approach requires constant monitoring of the market and flexibility in managing rates and room availability.

Yield management has become an essential practice in the hotel industry, enabling establishments of all sizes to optimise their profitability and remain competitive in an increasingly dynamic market.

Who can use Yield Management?

Yield management is aimed primarily at professionals in the hotel industry, but also at private individuals. The more rooms available, the more effective it is. Yield management is used by hotelsbut also seasonal rentals, gîtes & chambres d'hotes, campsites …

How to optimise your hotel rates

Revenue / yield management strategies for hotels

By taking the above factors into account, hotels can establish strategies that will enable them to offer the right accommodation to the right guest, at the right time and at a price that will increase their revenue.

Several strategies can be applied to optimise yield management:

1. Understanding market demand
   The first step towards optimal pricing is to understand demand in your market. This involves analysing historical trends, monitoring local events that may affect demand, and adjusting rates based on demand forecasts. Data analysis and yield management tools can provide valuable insights into anticipating market fluctuations.
2. Customer Segmentation
   Customer segmentation makes it possible to target different segments with appropriate pricing strategies. Whether based on age, reason for travel (business, leisure), or price sensitivity, understanding the different customer segments enables offers and fares to be personalised, maximising the value perceived by each segment.
3. Dynamic pricing
   Yield management is the process of adjusting prices in real time according to demand and availability. This strategy makes it possible to increase prices during periods of high demand and reduce them to stimulate bookings during periods of low demand. Modern technologies offer sophisticated systems for automating these price adjustments, based on predictive algorithms and data analysis.
4. Distribution Channel Management
   An effective multi-channel distribution strategy is essential to reach different market segments and maximise exposure. Fare management across different channels, such as online travel agencies (OTAs), direct booking platforms and travel agents, needs to be harmonised to avoid cannibalisation of revenues and ensure a consistent brand image.
5. Value-Based Tariffs
   Beyond simply competing on price, offering pricing based on perceived value can improve profitability. This involves creating packages and special offers that add value to the customer experience, such as additional services, unique experiences or exclusive benefits. These offers can justify higher prices and strengthen customer loyalty.
6. Using Technology
   The adoption of advanced technologies is essential to analyse large amounts of data, monitor the competition in real time, and implement dynamic pricing strategies. Revenue management solutions and artificial intelligence platforms can help hoteliers make informed decisions and automate the pricing process.
7. Ongoing Assessment and Adjustment
   Pricing in the hotel industry is never static. Ongoing evaluation and adjustment of pricing strategies is required to respond to changes in the market and consumer behaviour. This includes regular analysis of performance, benchmarking against competitors, and adjusting strategies accordingly.