Dynamic Pricing for Upgrades: Why is it important for your hotel?
Jos Schaap | ROOMDEX
Table of Contents
Dynamic pricing for hotel rooms is a well-established practice, but the hotels that adopt a dynamic pricing algorithm for their upgrades fare even better than the competition.
What is a hotel dynamic pricing algorithm?
General revenue management systems have used dynamic pricing for decades to maximize revenue and profitability. Dynamic pricing algorithms for general room rates give revenue managers the ability to adjust the pricing of available guest rooms and upgrades to real demand fluctuations. Managers gain greater revenue out of their existing property based on effective yield and smart revenue management.
Why adopt a hotel dynamic pricing strategy?
Using a dynamic pricing algorithm is a huge advantage to hotels at any time, but now even more so due to COVID and when potentially facing an economic downturn, it is wise to adopt this strategy.
Hotels have lost several months of revenue because of the coronavirus pandemic, and the rebound is slower than initially expected. Dynamic pricing algorithms support hotel recovery. Hoteliers can make the most of every booking when they implement dynamic pricing and it is easy to do so with dynamic hotel pricing software.
How do hotels take a new approach with yielded upgrade pricing?
Imagine taking rate optimization one step further by applying your dynamic hotel pricing algorithm to upsell higher room categories. At ROOMDEX we did just that. Upselling is a common way for hotels to generate more revenue. Whether you are a small family-run hotel or a multi-property brand, it is just as efficient an option for every property type.
But, for most hotels, upselling has a low success rate. Why? Primarily because it is a tedious process that requires a large amount of manual work to be efficient. More often than not, hotels make broad assumptions about guests before offering an upsell. As such, there is a high probability that upsells go out at the wrong price, to the wrong person, and at the wrong time – all resulting in low conversion.
ROOMDEX Upgrade Optimizer dynamic hotel pricing software solves this problem. Like the revenue management tools you use for reservation acquisition, we use dynamic pricing to ensure your offers are optimized for maximum profitability. With Upgrade Optimizer, you automatically upsell revenue without the need to spend time on the manual intricacies. Here is how.
How does automation work with the Upgrade Optimizer dynamic pricing algorithm?
There is much data out there – historical, transactional, and guest preference – to help revenue managers identify upgrade opportunities and establish optimal pricing. Done manually, dynamic hotel pricing is a cumbersome and fruitless task. With the ROOMDEX Upgrade Optimizer hotel dynamic pricing algorithm, there is no longer a need to set prices daily or do time-wasting manual data entry. Instead, hotels automatically act on data with little-to-no intervention, helping drive more profit to the bottom line.
How does Upgrade Optimizer generate better price matches with a dynamic pricing algorithm?
Many hotels set static rates for room upgrades, which are not responsive to demand, occupancy, and forecast conditions. ROOMDEX Upgrade Optimizer dynamic hotel pricing software leverages stay history, reservation, and available room data to intelligently calculate the best price for upsell offers. It automatically creates upgrade emails that are primed for conversion. A real-time dynamic pricing algorithm puts highly targeted offers in front of your guests. For the right price, guests do not mind spending a bit more to get an improved hotel experience.
What about personalization and hotel dynamic pricing?
Personalization is a major driver for travel booking conversion. According to consumer research, 72% of consumers only engage with marketing messages that are customized to their specific interests, with 61% of consumers likely to spend more money if an additional service compliments or enhances their main purchase. Knowing what your guests like, and targeting their specific needs and preferences during booking, almost guarantees an upsell.
ROOMDEX uses reservation and guest data, with proprietary persona and pricing algorithms, to deliver personalized digital hotel room offers. Gone are the days of irrelevant upsell and upgrade emails. We are now in the age of Hyper-Intelligent offers.
How can you meet changing market demands with our hotel dynamic pricing algorithm?
Upgrade sales are not a new concept, but they are rarely seen as a serious part of hotel revenue. The current times of economic flux, however, require that hoteliers be extremely asset-specific and sales-oriented. ROOMDEX Upgrade Optimizer dynamic pricing software helps hotels meet changing market conditions and react accordingly to maximize revenue opportunities. Using real-time dynamic pricing intelligence, ROOMDEX readily equips hoteliers with the tools they need to properly capitalize on upsell revenue.