I love to travel. Over the years I have travelled on my own for business, with friends, with my husband, and with my family.  In each of those instances, my travel plans started with what I needed most to make my travel comfortable in keeping with my budget. 

When traveling for business, I had a budget that was set by the company. Within that per diem, I would look for the best value for money. The best-case scenario would be a room with a king bed and a comfortable set up to work. Traveling with friends for a weekend getaway usually requires two beds, and our allowance is slightly higher because we are sharing the costs. With my husband, I want a king bed and maybe a nice view. The location is important because we like to walk around and visit, but if we decide to order breakfast through room service, we want a comfortable set up. 

Now that I have two young children, comfort is an even more important factor, and I am willing to pay for certain things. Our ideal scenario includes a fridge and microwave, a closed bedroom with a separate living room and access to the bathroom without going into the bedroom. The kids go to bed at 7pm and my husband and I need time to unwind! If there are no suites available, we still need enough space to put the crib for our youngest. We very rarely book the standard room when traveling as a family, and we are happy to pay more if it means we will have a nicer time. 

When thinking about pricing your hotel’s different rooms, consider the above buyer personas. You can evaluate which rooms sell out faster for different travel periods. Once you understand the unique trends for your hotel, set up a pricing strategy that matches that. While many hotels offer superior rooms at fixed price differentials, Rate Yield allows for dynamic room type management.  

One example is that differentials can be set in percentages rather than by dollar amount. If your standard room sells for $200 in January and your superior is $50 more, that is a differential of 25%. But if your standard room sells for $400 in July and your superior is still sold for $50 more, your price differential is 12.5%. If you were to set your differential at 25%, this pricing would fluctuate according to the buying power of your customer. Another available option is to manage your room types differently by season or by day of week. There are also multiple override options that make it easy to increase revenue by optimizing your pricing for each room type.

Managing the pricing for different room types is a crucial part of optimizing revenue, and Rate Yield makes it easy to do just that! 

The idea of a competitive set is not new to the hotel industry. A quick Google search will result in hundreds of definitions and step-by-step guides with a very similar train of thought: look at the quality of the hotel (star rating & reviews), the location, and the facilities (including meeting rooms and on-site services). 

As a hotelier within your market, you have a privileged understanding of your hotel, the neighborhood, and the city you are located in. Travelers regardless of their purpose within your market might have a very different perspective and comprehension of this.  At Rate Yield, we don’t believe that a hotel is limited to only one comp set, but rather competition that differs based upon the guests you are seeking to appeal. 

For benchmarking, you will likely want to pick hotels that resemble you the most in terms of location, services offered, pricing and star rating. The comp set definitions found online are mostly aligned with the benchmarking comp set. 

For corporate groups, meetings and events, clients will likely make decisions based on meeting facilities, number of guest rooms available, proximity to office buildings or the convention center, weekday rates and brand or loyalty points for the meeting organizers. 

For individual business travel, location will be important as the traveler has a specific purpose during his visit into the city. They may seek to have breakfast available, room service, a gym or other conveniences offered at the hotel. Brand and loyalty points may be a consideration, and the price will matter as business travelers have budgets and per diems designated by their company. 

For leisure travelers, the traditional view of a comp set does not represent the shopping experience. Allow me to demonstrate with a personal example. I plan to travel to New York City over Thanksgiving weekend with my husband and two young children (3 and 1 years old). We have two other trips planned this year so the most important factor I am looking at when selecting a hotel is the price. I also need to consider that my one-year-old still sleeps in a crib, so we need space in the room to accommodate for this, the kids go to bed early so a suite would be ideal, and I don’t mind traveling from a hotel that is not centrally located because my son will be impressed by the subway, a bus or even a ferry. Lastly, we will be going by car so the cost of parking will be a consideration for me. I had originally planned on staying in Brooklyn, but unfortunately the hotels in Brooklyn do not satisfy my needs for the price I am willing to pay. Instead, I am considering hotels in New Jersey or Staten Island which have offerings closer to what I am looking for. 

At Rate Yield, we believe that you should be able to account for different comp sets based on segmentation, day of week or seasonality. Not all competitors are created equal and consequently should not have an equal bearing on your suggested pricing. Furthermore, with our advanced competitive set module that includes weighted scoring, hotels can include competitors which aren’t part of their benchmarking comp set at a lower level of significance. This allows the pricing suggestions to better reflect the options that travelers have when visiting your city. 

If you’d like to know more about our groundbreaking benchmark pricing, schedule time with one of our representatives below.

About Rate Yield  

Rate Yield was created in 2019 by seasoned Revenue Management consultants with over 30 years of experience within the field. Rate Yield RMS was designed to adapt to small hotels, inns, resorts as well as large hotels in city centers. With settings and thresholds that can be modified against a hotel’s unique market trends, Rate Yield makes it more accessible than ever to implement AI in revenue management strategies. With real-time insights, agile strategy development, modules for budgets and forecasts, as well as a tool for displacement analyses, Rate Yield provides a complete software that will help your hotel to yield more revenue, period! To learn more, visit us at www.rateyield.com  

Every hotel faces challenges. Whether it be difficulty finding and retaining staff, low demand periods due to seasonality, group wash or managing the business mix, hotel management can be an uphill battle. But small hotels located in large cities face unique challenges as well. Low demand hits harder when costs are distributed across fewer rooms. A limited marketing budget and reach means a higher dependence on OTAs which reduces the bottom line. Reviews, and therefore service, are of utmost importance as one bad review will have a bigger impact on the hotel reputation more greatly than a larger hotel with a higher quantity of rooms. Finally, a smaller hotel is typically run with fewer staff, at times even a sole operator, making yield management next to impossible. 

Understanding the complexities of small hotels in big cities and their competitive landscape is something Rate Yield’s revenue managers are experts at. Here are some of our tips: 

1. Don’t sell out too early. Offering discounts to secure bookings in advance has the advantage of securing non-refundable revenue, however larger hotels are more likely to increase rates as their occupancy levels rise.
2. Don’t wait to the last minute to sell rooms, larger hotels may try to sell distressed inventory at low rates at the last minute, make sure you are not in a position to compete on price in short booking windows.
3. Set differentials for your different room types and be sure that these are dynamic. For example, rooms with two beds are in high demand for families and leisure travelers but may not be the required room type for business travelers.
4. Understand review scores when picking your competitive set and where your property fits in
5. Maintain price integrity – you have costs, and your reputation is important. Don’t drop your price for no reason. Be competitive but understand your value.
6. Yield according to your market and your occupancy levels along with your targets. Manage your rates on a regular basis to be sure you are still competitive with your comp set. 

About Rate Yield  

Rate Yield was created in 2019 by seasoned Revenue Management consultants with over 30 years of experience within the field. Rate Yield RMS was designed to adapt to small hotels, inns, and resorts as well as large hotels in city centers. With settings and thresholds that can be modified against a hotel’s unique market trends, Rate Yield makes it more accessible than ever to implement AI in revenue management strategies. With real-time insights, agile strategy development, modules for budgets and forecasts, as well as a tool for displacement analyses, Rate Yield provides a robust and well rounded software that will help your hotel to yield more revenue, period! To learn more, visit us at www.rateyield.com