Is your hotel like most hotels where you constantly sell out of your base room category but there are some of the higher room types that you struggle to move? Maybe it’s a room with a better view or a room with slightly larger square footage. Maybe it’s a room with extra amenities or different bed options. For whatever reason, it is important to evaluate which room types are underperforming and identify any trends to ensure that you are pricing the different rooms in a way that speaks to customers. Also, it is important to ensure that you are properly communicating these differences to potential customers.
One example we have seen is a client who had an underperforming room category. The price difference was approximately $50 more for the corner king room as opposed to the regular king room. But when shopping online for the two different room times, the size of the rooms were equivalent on the OTAs and no additional amenities were listed. As a consumer, why would you be compelled to spend an extra $50 for the same room? The answer was in the data. You wouldn’t be. After an overhaul of the room type descriptions and amenities listed across all channels, the room began to perform better than the regular king room.
A second example we have seen of an underperforming room category was one where a room type with additional amenities was not selling for the higher price. The additional amenities included things like slippers, bathrobes and a desk or working area. In this case it was determined that despite all of the channels displaying the specific amenities, the room was underperforming. It was decided that the hotel would remove the amenities that incurred additional variable cost for the hotel and simply group the few rooms with the lower priced categories.
The third example I want to share is a hotel with rooms with a fireplace. This is a huge draw in the winter months, but in the summer months, not so much. The price differential of $10 is a bargain in the winter and the room is always at capacity. In the summer, no one will pay the extra $10 and so the base room is oversold and the hotel manages free upgrades.
So how do you fix your underutilized rooms? First, determine whether or not the amenities are being clearly marketed online or where customers are booking your hotel. Next, if the amenities are marketed but the room still isn’t selling, it’s time for a tough reflection on whether or not your amenities actually bring value. Third, maybe the amenities bring value sometimes and not others. If that’s the case, creating room type differentials that vary by season would be a good way to maximize revenue in the periods where the amenities are in high demand and reduce the workload in other seasons. For example, in the case of the third hotel, charging $20 for the fireplace rooms in the winter months would more than cover a $0 differential in the summer and the hotel would reduce the manual workload.
Monitoring room type utilization and adjusting the marketing and pricing accordingly is a strategic role for revenue managers. With perishable inventory, every additional dollar earned makes a difference. Rate Yield allows revenue managers to configure these variations in value in advance and closely monitor the performance through reporting. Reach out today for a demo if you’d like to see how we’ve designed the system to empower you to optimize the revenue from each room!
