Try googling the largest hotel chain in the world and see what pops up. It's a guarantee that Marriot International takes the cake. Being so successful must come from a solid strategy, right? Take a look at what you can learn from Marriott's pricing strategy.
Think about it.
What makes them hit this big and still so stable? Marriott Hotels have its unique strategies and one of them is the pricing strategy. In the hotel industry, price is one of the key determinants of success, making pricing design a very significant and challenging task.
What Is A Pricing Strategy?
The price of hotel rooms is a crucial aspect of managing hotel income. It's the price you set for each hotel room in an effort to fill as many rooms as you can and earn as much money from them as you can. It's the range between pricing enough to break even and charging fairly to avoid losing clients to other businesses.
You might wonder, "Is it really important to have a strategy for pricing my hotel rooms?"
Let me make it clear.
It supports room sales, increases in occupancy, and profitability. Additionally, if you don't charge enough, you risk losing money and being unable to pay your operating expenses. You don't wanna be at the short end of the stick just because you didn't bother to make a pricing strategy, right?
Truth is:
Without a pricing strategy, your hotel is gonna fall in two ways...
1. Suffer major loss in the long run
2. Not seeing any increase in revenue and room bookings
Marriott Hotel Pricing Strategy
The cost of Marriott International varies according to the hotels, clients, and regions. The company's main goal is to provide customers with an exceptional experience that goes above and beyond what they expect to receive for the amount they pay. Their pricing strategy is made to cater for its hotel.
Of course, we're not telling you to rip off their strategy. Instead, make it serve as a guide for you.
Let's start!
Here are the strategies that Marriott uses for its hotels.
1. Dynamic Pricing
Dynamic pricing or demand and supply pricing strategy will be determined by market supply and demand. It's frequently applied to raise prices during periods of strong demand. A hotel room rate is often raised when demand surpasses supply to maximize the average daily rate (ADR) and decreased when demand is low to boost occupancy.
In simpler words,
Higher demand = higher price and Lower demand = lower price
With Marriott always having a high demand, this strategy works well with them. They are the most famous hotel for a reason so it makes sense for them to take advantage of this strategy.
2. Competitive Pricing
Looking at the competition is the best way to gauge how well you're doing or the trends in the industry. In addition to offering helpful suggestions for how to develop, the competition also offers pricing tactics that you may use.
Check out how your rival determines the prices for each kind of room when they raise or lower their hotel rates, and how frequently they give discounts. To determine what clients are already paying and how much they are prepared to pay, compare your prices to those of your competitors. This is a practical method of setting a price.
This way you know you're setting the right price.
3. Curated Packages & Upselling
Marriott goes beyond offering individual rooms by offering enticing packages and upselling opportunities to enhance the overall guest experience. They understand the significance of fostering customer loyalty, and their pricing strategy aligns seamlessly with its loyalty programs, notably Marriott Bonvoy.
These programs are designed to reward loyal customers while providing personalized experiences and exclusive benefits. For instance, loyal customers might receive personalized email promotions or targeted discounts on room rates or packages that align with their preferences. This level of personalization not only strengthens the relationship between Marriott and its customers but also adds value by providing them with relevant and enticing offers.
Factors To Review When Making A Pricing Strategy
It's crucial you know the key factors that will help you take the guesswork out of your hotel room pricing strategy. You should consider these when making a pricing strategy:
- Your location
- Competition size
- Your services
- Target Market
- Property Size
5 Other Effective Pricing Strategies For Your Hotels To Choose
Listen, you can't get the perfect pricing strategy for your hotel right off the bat.
There isn't a single hotel revenue management plan that will be effective for all hotels. Instead, we advise you to employ a combination of several techniques based on the factors we mentioned before and the targeted demography of your local market.
Now, focus on these strategies:
1. Open Pricing
For independent hotels or small boutique hotels, open pricing is the best choice. Open Pricing requires establishing separate prices for different dates, room kinds, and distribution methods. With so many options, hotels can forecast more precisely.
If you're just starting in the hotelier business, this one might be a good start.
2. Price Per Segment Pricing
In this strategy, the same product will be offered at various pricing points according to the type of guest. With price-per-segment pricing, you may cut your prices if the visitor agrees to reserve a specified number of rooms or a certain number of nights.
Hoteliers must do market research, identify guest categories, and set pricing appropriately to implement price segmentation effectively.
If you don't do research first, you might put inappropriate prices which won't be fair to the guest.
3. Stay Length Pricing
This tactic entails varying your cost according to the guest's length of stay. You can establish a rule granting discounts to visitors who spend a minimum number of days. With this, you may raise occupancy during sluggish periods and build occupancy on busy nights.
To encourage guests to stay longer, a resort can offer a 4-night stay for a total of $350 in addition to its usual hotel rate of $100 per night.
4. Forecasting Based
Setting pricing based on what you anticipate the demand to be is successful when done through forecasting. This projection depends on knowing your hotel's occupancy statistics, revenue, room rate, and average expenditure per room.
By predicting the number of rooms that will be available in the future, you may change the pricing of hotel rooms by knowing what occupancy might be based on previous data.
You need to do thorough research for this strategy. But, once you get the hang of it, you'll be a pro in knowing what prices are suitable for each season.
5. Incentive Based
What's an incentive-based pricing strategy?
Simple. It's where customers are rewarded with cheaper prices through discounts, promotions, and other package packages. It easily encourages them to make a reservation. By encouraging repeat visitors to book directly with your hotel, you can adopt this technique by providing discount coupons or promotions through email marketing and web marketing to your loyal customers.
Are those enough for you?
There are tons of strategies you can try implementing for your hotel. You can experiment and combine these strategies to see which fits your business best.
The Most Inexpensive Marketing Strategy for You to Watch!
Conclusion
In conclusion, choosing the appropriate pricing approach for your hotel is crucial. This is so that the success of your hotel company will depend on the price you charge for your room. We're not advising you to copy from Marriott but it is advised to make them as an inspiration or reference to better understand them and develop a plan that will work for your property.
You can download the Guide to Increase Hotel Profit and Reduce Cost Per Booking. There is also the Hotel Excel Template for Sales Department. These two might help you with your hotel. Don't worry, they're free.
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