Currently, the revenue manager is the one who is in charge in price setting in upscale hotels and he has to adapt the hotel's prices toward the markets and the clients. He has to be sure that his pricing decision is fair, for that he need to know which elements allow to define a fair price.
Related to the article, adapting fair price could helps clients to become loyal to the hotel because they will be convinced that they had great deal, in another hand the employees who sale the hotel would be much more effective salespersons and finally regulatory agencies will bring more business to the hotel.
In hospitality business pricing is something absolutely crucial and important to determine, this element will permit to increase the occupation rate and increase the hotel's profit. For these reasons the person in charge of pricing need to take into account all the criterias that will help him to take its decision.
The hoteliers will always try to keep their prices as high as possible in order in increase their profit but when the circumstances are not in their favor they will automatically reduce their prices in order to maximize their business. In that case the hoteliers are not in strong position to set the price that they would like to do. In reducing their prices they will feel that their prices are fair.
Contrarily, the customers are constantly looking for the lowest price, if they are convinced that the hoteliers are making to much profit in their price's proposition they will check to the competitor and will decide to not accept the deal. The price that the clients are ready to pay will be a fair price for them.
To sum up, the prices will always be fair for the seller first and then for the buyer. Hotels and clients don't have the same approach about fair rate. I follow the vision that the fairness of a price is determinated by the buyer and not by the seller.
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I think this article is very interesting: since internet and all the related technology are used by most of the consumers, they cannot "cheat" any more on the prices. They know the consumers are well informed and will compare the rates with their competitors and chose the hotel that has the "best value for money". They will take into account criteria like the location, the facilities, the different services provided by the hotel...Still, I think there is still a problem: if the rates may seem fair considering the physical assets an hotel possesses, does the quality of service worth the price? Isn't social aspect a key element in a hotel experience? I think it would be a good thing to take this component in consideration, it would maybe make react some professionals...
ReplyDeleteI think this article is very interesting: with the apparition and wide use of internet and the related technology, hoteliers are aware they cannot "cheat" with the prices. Consumers have the tools to check and compare the rates between the hotels and they will select the one with the best value for money. However, there is still a risk for the consumers looking only for the best deal: they will take into account the location, the facilities, the different services provided by the hotels...in brief the PHYSICAL assets of the hotels. Based on that, they will chose one. But don't they forget one of the most important criteria, which is,alas, not included in the price? It is one of the crucial element of the hotel experience, the human side of course or QUALITY OF SERVICE! It would be great if this component could be measured and included in the rates. It would maybe force some professionals to react...
ReplyDeletePricing is one of the key aspects of hospitality to improve the revenue of the property! The choice of the rates is so important because the price must reflect the POSITIONING of the hotel: in up scale hotels and luxury hotels, even if hotels often lower the prices to attract more customers, a low price can bring doubts to the bookers : "is that really a high quality hotel at such a rate ?" and they may finaly not book because they feel like there is a trap. In the same way if the price is too high, it will discourage the customers. They will always book only if they think that the price is fair!
ReplyDeleteIt is always the same issue : how to offer the right price, at the right moment, to the right person! :D
Thank you Lauriane for your comment.
ReplyDeleteIn this new generation Internet takes a huge place in customer’s behavior and all the social network help them to make correct choice in responding to their questions and fears.
The changing has taken a comfortable place thanks to the apparition of the different tools in the net that permit the customers to compare easily all the prices, the services and the remarks toward hotels.
I’m curious to know how things will evolve in 10 years ahead.
Thank you caroline for your comment.
ReplyDeleteAll the elements you just mentioned make the revenue management job as difficult as it is. How to set a good price, at the good moment for the right person?
Sometimes upscale hoteliers decrease their price online without mentioning their brand name in order to don’t attempt their reputation.
Hoteliers are looking to increase the occupancy rate in the same time in increasing the ADR in order to maximize their profit. In my point of view hospitality industry completely changes their vision of client’s services.He is not any more service industry but much more profit industry and that due to the news shareholders who are looking for higher return on investment in forgetting the hospitality industry fundament.
With that in mind, we could understand why brand loyalty tents to disappear slowly.