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Hotel Pricing Strategy: 9 Key Factors to Drive More Bookings

Setting the right price for your hotel rooms is crucial for driving revenue and maximizing profitability. However, there are many factors that can influence your hotel’s pricing strategies.

Special Deal - Credit to Artem Beliaikin on Unsplash
Special Deal - Credit to Artem Beliaikin on Unsplash

Before we dive in the strategies it is important to understand what Hotel Room Pricing is and how Hotel Revenue Management plays a part in deciding your hotel room price.

What is Hotel room pricing?

Hotel room pricing refers to the process of determining the rates for hotel rooms based on a number of factor, the price of a hotel room is the amount that guests must pay to stay in a hotel room for a certain period of time.

Hotel room pricing is a critical element of revenue management for hotels. Hotel managers and revenue managers use data analysis and revenue management tools to determine the optimal price for each room based on various factors such as occupancy rates, booking trends, and competitor rates.

The goal of hotel room pricing is to maximize revenue by charging the highest possible rate that guests are willing to pay for a room, while still maintaining high occupancy levels.

If you are new to Revenue management and would like to know more, read our in-depth ebook to help you understand better.

Now let’s look at the key factors while deciding the hotel room price:

1) Competitors

Understand your completion’s pricing strategy, tracking them using RateSTalk and setting up rates that keep you competitive. It is important to understand the rates of each of your competitor’s comparative rooms to be effective.

If your hotel is competing with other hotels in the same location, you may need to adjust your prices to stay competitive.

2) Guest Segmentation

Guest segmentation strategy is similar to what airlines apply, charging different people different prices for the same room. Guests can be segmented by volume (booking more rooms at once), attributes (those wanting a sea view room vs a garden view), service offering, time of purchase, time used, or more.

Similar to segment type, you can base the pricing on guest type, adjusting the price downwards for those who get more value. For instance, corporate clients may spend more on services within the hotel and get more volume of bookings throughout the year.

3) Forecasting

Forecasting is the lifeblood of revenue management. It’s a way to look into the future with the objective of enhancing the future.

Forecasting in revenue management relies on setting prices based on what you expect the demand to be.

This expectation relies on understanding your hotel’s occupancy data, revenue, room rate and average spend per room for the last couple of months and in the same period the previous year, as well as looks at demand and events. It is one of the most important strategies for hotels.

4) Flexible Cancellation Policy

Guests are looking for flexibility, now more than ever. It helps them to book stress-free and gives them the confidence to keep uncertainty in mind. People are even ready to pay a better price in order to have the flexibility to cancel. Also known as a non-refundable rate. It is handy to have this as a strategy.

5) Length of stay

Encourage your guests to stay longer and provide more opportunities for revenue by offering a cheaper rate for multiple nights and a higher rate for single-night stays. Although this method acquires less revenue per individual room night, it provides more revenue overall, and it also increases opportunities for guest spending.

STAAH Smart Pricing is an awesome feature in the STAAH Max Booking engine, it helps you target guests and price the room on the basis of different segments one of them being Multi-nights.

Read the in-depth blog on Smart Pricing and find out how it can help you drive more direct bookings.

6) Occupancy

Perhaps one of the most common pricing strategies, the occupancy approach works based on supply and demand; essentially when demand exceeds supply, you increase your room rates. On the contrary in low season, in order to ensure revenue, you can charge lower prices in order to increase occupancy.

7) Rate parity

Inspire trust in your clients by having the same rate across all channels. The WatchMyRate feature in STAAH’s booking engine enables you to display the rate for the same room across OTAs – a handy feature to prevent users from leaving your site and growing direct bookings.

8) Incentive based on Loyalty

Reward guests for the value they bring and loyalty through better pricing, including discounts, promotions and package deals. Typically, promo and discount codes are used to implement this strategy. This helps in repeat customers and is also a good way for guests to book with your direct.

9) Upselling, cross-selling and packages

Encourage guests to spend more by giving them the option to upgrade to a better room, suite or a sea view or add in services at the time of booking which helps generate more revenue per booking.

You’ve captured the client; upselling helps grow the revenue from them. Similar to upselling, cross-selling encourages guests to book additional services, such as spa services, tours, and airport transfers to grow revenue.

Bundled packages or value-added pricing where some complimentary services are added without reducing the rack rate is also a commonly applied strategy to grow revenue.

Overall, hotel room pricing is a complex process that requires careful analysis and strategic planning. By using these key factors you can plan your pricing.

We would love to hear from you, if you have any tips on how you plan your hotel room pricing, feel free to write to us at

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