Many hotels grapple with the problem of low room occupancy levels despite all the investment that hotel owners put in. There’s nothing as heart breaking to invest in a hotel , Lodge or resort , only to walk in year after year and all you read in monthly reports is hardly a 10-30% occupancy levels.
This can hardly take care of operational costs let alone other financial obligations like servicing existing loans. This has led to many hotel investors losing their hard earned investment to bank fore-closures and in some cases causing health complications to some owners due to stress related illnesses and premature deaths.
As a seasoned hotel expert and consultant , I’m here to tell you that it’s never too late to fix what’s not going well with your hotel investment . All it takes is the will and determination to get things working by engaging a hotel management professional , the same way you’d engage a medical expert to fix your health challenges.
One of the major root causes of low occupancy levels and low revenue generation has to do with poor pricing strategies. Overtime I have noticed many hoteliers, do what we call random pricing of their accommodation, meals and other related services without any justification or thought process being considered. Casual Benchmarking or ( copy and paste ) as you’d call it , is the order of the day for most hoteliers as they attempt to price their services. Of course , Competitor-based pricing is one of the pricing strategies, however if done without careful analysis of your own internal weakness and strengths , it’s set to back-fire leaving you with empty rooms .
Emotional and sentimental attachments to the business has also caused a lot of problems for most hotel owners as they attempt to price their services. It’s very common to hear sentiments such as “ I’ve invested too much in this hotel , to charge such a low price”, “ How can I charge X price when my competitors are charging Y price “, this mentality is always a recipe for disaster.
Ladies and Gentlemen, Hotel business and Hospitality Sector is a highly technical industry, that needs to be run professionally. Just as Engineering is a profession that requires, Engineers by training to do their job, Hospitality equally requires hospitality experts.
That said, one of the Keys to unlocking your Hotel Revenues is choosing the right Pricing strategy for your business. Pricing is a formula and there’s no such thing as one size fits all, the pricing formula for Resort is not the necessarily the same for a Hotel, neither is pricing strategy for a lodge the same as that of a motel. There are different determining factors to consider as you work out the perfect pricing formula for your hotel establishment for instance the nature of your accommodation facility, the type of target market, the number of rooms, location of your property, seasonality among others.
Are you a Hotel or Lodge owner and need help with designing a suitable pricing strategy for your hospitality enterprise, Feel free to engage us on Whatsapp or Email info@eyalamaconsulting.com