Thursday, May 23, 2019

Why Hotels need a Pricing Management System

As every hotel operator knows, establishing room rates is a balancing act. The number of rooms available in the area must be balanced against the demand -- and both factors vary by time of year, special events in the area, economic conditions, weather and other influences. Overhead costs must also be considered. Some of these costs are fixed, such as insurance rates and property taxes, while others can vary by occupancy, such as wages for housekeeping staff.

Determining the optimal rate for a given date is crucial. If rates are too low, occupancy may increase, but profits may actually decline as overhead costs will increase accordingly. If the rates are too high, it may be difficult to secure enough bookings to meet the minimum revenue required to earn a profit.

Most hotels offer a variety of rates. If guests book two weeks in advance, for example, they might qualify for a substantially lower rate than those who wait until the day before their stay to make a reservation. Hotels may offer discounts for guests who are members of specific organizations, corporate clients or guests who have joined the hotel's customer loyalty program.

A pricing management system can help hotel operators determine the best rate structure for their rooms on any given date. Information about competitors' available rooms and rates can be obtained from online sources and downloaded automatically. Rates, booking or stay restrictions, recommended promotions and the rate mix for each room type can be suggested by the program.

Pricing management systems help hotel operators determine the optimal rate mix for every type of room. It is rare for a hotel to be able to charge its highest rate for every data and still attain 100-percent occupancy. For most, it is a matter of determining the point at which the greatest profit will be realized. It might be achieving 85-percent occupancy at an average rate of $125 per night or 90-percent occupancy at an average of $115. A pricing management system can provide the data in the form of reports, graphs or charts to give operators the information they need, when they need it.

PhaseAlpha offers quality custom software development for virtually all industries. We provide superior products and outstanding customer service at competitive rates. If you would like to discuss a pricing management solution or any other software need, you can reach us by phone at (913) 648-9200 or by email at info@phasealpha.com.


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