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Hotel Room Sales Pricing Policy

The total operational revenue of a hotel is significantly influenced by the pricing policies applied.

Summer Fun : Media by WiX
Summer Fun : Media by WiX

For instance, when boarding a flight to a city and conversing with passengers nearby, one might discover that each passenger purchased their ticket at a different price, despite being on the same flight receiving the same service. Similarly, guests booking hotel rooms may find that prices for the same room type on the same night vary.



With advancements in computer systems and IT, hotel operational prices are influenced by time, the number of sales channels, and the law of supply and demand. All of this aim to maximize total revenue by month-end.


Hotels need to harmonize their pricing to ensure all sales channels and market segments operate effectively:

- OTA Rate vs Corporate Rate: Guests purchasing through Online Travel Agencies (OTA) typically book within 1-3 days, whereas corporate bookings are often made more than 3 days in advance. Thus, setting prices on OTAs far in advance may not be productive, especially if OTA prices are lower than the corporate rates within the corporate booking window, as corporate clients might choose to book via OTA.



- Direct Booking Online vs OTA: Direct online bookings, managed by the hotel itself, incur no commission fees, unlike OTA bookings, which are subject to 15-25% commissions. To make direct bookings more appealing, hotels can offer prices 10% lower than OTA prices.


- Offline Travel Agent Price vs OTA Price: Guests using offline travel agents usually plan vacations well in advance, sometimes months ahead, and compare prices with those on OTAs. If OTA prices are lower, guests are likely to book via OTA.


- OTA Price vs Walk-in Price: The walk-in price, offered directly at the hotel reception, may be higher than OTA prices. In such cases, guests tend to book through OTAs.



With a well-functioning computerized operational system, hotels can track bookings well in advance. If the system shows a high number of bookings before the arrival date (H-day) and predicts high occupancy, the hotel can leverage the law of supply and demand by increasing room prices. Higher occupancy allows for higher room rates.


Conversely, if hotel occupancy is unexpectedly low on the arrival date, the hotel may consider lowering prices for that day. Data indicates many guests, especially Free Independent Travelers (FIT), book rooms for the same day via online portals.


Additionally, if hotel occupancy remains low past midnight, the hotel may implement a pricing policy for selling "remaining time" (up to 12 hours) at a special rate, recognizing the potential for unsold rooms being less competitive.

 

About Writer :

Ojahan Oppusunggu : Former Technical PM – DTS ACCOR Indonesia & Malaysia, Former CTO of Topotels Hotels & Resorts, Former Director of Technical & Technology of Artotel Group and Currently as Project Director/Owner Rep. Kapuk Hills Hotel Jakarta – Handwritten Collection

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