Each individual hotel’s situation is somewhat unique with differing internal and external pressures on how they price, but the overarching factors are universal. Before looking at external factors, let’s examine some of the key internal factors affecting how we make our rate decisions. We need to have an understanding of where we are before making forward-looking pricing decisions. Understanding your hotel’s business mix and segmentation will help inform the potential outcomes of price changes in the future. If a hotel’s business is primarily group and negotiated accounts, then changes to transient selling will have less of an effect on the hotel than in a hotel that sells primarily transient rates. It also is important to understand each segment’s typical booking window. Changing rates closer in will have less of an impact on segments that book further in advance. With an understanding of business mix and booking patterns, we can now look at available inventory. Every hotel has a finite number of rooms to sell. The old school method of yield management was simply to increase rates as we had less supply available. There was one critical piece of information ignored in these scenarios: Demand. We can’t talk about supply without considering demand. To have a price change be effective, the demand conditions must be right. If increasing the price, there must be demand to buy the remaining inventory at the higher price point. Decreasing price will not typically increase demand. There may be an opportunity to shift market share with lower pricing, but it is more often than not a small window of opportunity that will not yield long-term results. Get the full story at HotelNewsNow.com