Beliefs in how to price a room seems to come in a multitude different shapes and sizes....like religions.

Hotels and Guesthouses located in city centres seem to have this sorted. If you have a property in Dublin, London or Paris there is simply a huge amount of demand for rooms, and reducing a room price by 3 euro can generate instant sales. Likewise listening to the radio for announcements of concerts and events can allow them to raise the room prices on high demand days.

If you told a city centre hotel to set 'fixed' prices they would assume you are having a meltdown, they live and breathe rate flexing and are doing it on a daily basis....this might only be a job of 60 seconds, but it IS done on a regular basis.

Here is an example of pricing for a city centre hotel as the rates bounce around from 154 to 314 over a 2 week period.

Hotel Rate Flexing — City Centre Hotel Example of Rate Flexing

Properties outside the cities seem to have a different set of beliefs;

Im not getting out of bed for less than........

I dont want to be a busy fool......

I met John the Manager of Dodgy Rooms down the road at a Hotel Federations meeting and he told me hes getting 200 a room so thats what i want!

I stayed in London on a bank holiday weekend and was charged 250£ for a park bench so i want 150 for my hostel in the Croagh Mountains.

A marketing guy told me to protect my rate at all costs!

A marketing guy told me to add value, dont reduce the rate!

A marketing guy told me........

All these beliefs hide 2 facts;

You can want whatever you want, you will only achieve what the market is willing to pay.

Rooms are perishable goods, like tomatoes or apples, if you dont sell a room tonight you will NEVER see that money ever again. Unlike the businesses that the 'marketing guy' has worked for who are likely to be selling cars or cans of beans. If they dont sell them tonight they can sell them tomorrow. You dont have that advantage.

If you have sufficient money in your bank account you can indeed set a fixed rate and close up the property on a quiet night and go and watch Netflix. If this is you, read no further.

Smaller owner/managed B&Bs and Guesthouses tend to have the advantage because they will not see their property empty if it only takes a bit of rate flexing to drive up occupancy. Larger Guesthouses and Hotels tend to struggle because they dont have staff motivated enough to do this, or the nominated 'Revenue Manager' doesnt have the guidelines on how to flex that rates (ie upper and lower rate limits). And remember turkeys dont vote for Christmas! Why should i be interested to pack out the property if it means more work for me?

Here is an example of a set of guidelines issued to a hotel receptionist to allow them to carryout rate flexing on a regular basis. it uses good old fashioned 'Price Buckets' and varies the rates according to how many rooms are sold in the property

Rate Flexing Guidance for a Hotel Receptionist — Rate Flexing Guidance using ‘Price Buckets’

However the majority of our customers need their property to be making money, in this case it would theoretically make sense (and only theoretically) to sell a room for fiver more than the cleaning cost. It gives you a fiver you would not have had and takes away business from a competitor.

Of course the reality is nowhere near as drastic, the answer is to reduce the rates when its quiet to try and boost demand and increase the rates when you are busy. Very few people would argue with this (certainly not Ryanair!), but heres the rub; Very few properties outside of cities are actively doing this. Yes they might have a winter rate set up, but they are not actively flexing it to suit the demand. By actively we suggest that a property is checking their rates at least daily, possibly using the app for 'on the go' editing and flexing the room rates. With practise this might take 2 minutes a day.

This becomes even more critical if your property has a Food and Beverage element ie a Restaurant or Bar. Flexing the rates to drive up your room occupancy should hopefully have a positive influence on the Bar or Restaurant as they drop in for a pint or a basket of chips.

Is there anyway to avoid this?

Yes there is. You could put in place a properly funded and managed Sales and Marketing Campaign to drive business on days when demand is weak. We estimate out of our 700 properties 5 may be doing this.

What is your belief?