Does your Hotel Price Positioning Strategy Make Sense?
By Patrick Landman - Xotels
Friday, 19th March 2010
Reflect your positioning on a matrix; does your positioning make sense?

How often are you more or less expensive than your competitors? Do you take into account your positioning and value offer when deciding of your daily rates?

A Rate or Price Value Matrix looks like this. (see chart 1 below)

Again something we have looked at or might remember from back in the days during marketing class but probably never used again. It is vital though to understanding and communication your hotel pricing strategy and positioning.

Choosing a clear price positioning strategy for your base rate will help strengthen your value perception to consumers. There are several strategies you can follow;

  • penetration pricing strategy
  • equal pricing strategy
  • surrounding pricing strategy
  • skimming pricing strategy
Penetration Pricing Strategy (see chart2 below)

The market accepts and understands your positioning: among the cheapest in the market. That can work if that positioning does not drive the market rates down. Is there an opportunity to still sell more expensive on specific periods? How does your client value your hotel?

Equal Pricing Strategy (see chart3 below)

The hotel sells at comparable rates. Your hotel value proposition will make the difference in the clients' decisions.

Surrounding Pricing Strategy (see chart4 below)

Your first room type will be the cheapest in the market or among the cheapest ones. Your superior room type will be sold at a rate close to the first available rates of your competition. The key success is to offer added value. Think in terms of roomtypes with better facilities or specific features, and additional amenities.

Skimming Pricing Strategy (see chart5 below)

The skim strategy is to position clearly your hotel among the most expensive. Price leaders often achieve among the highest profitability. Can you provide more value than your competitors? Can the consumers clearly understand the reasons that they would pay more staying in your hotel? What are the consumers ready to pay for?

For more information on how to implement yield strategies in your hotel click here: www.xotels.com/en/hotel-revenue-management


Patrick - Xotels

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