Why Bother Guessing About Raising Rates?
By Jean Francois Mourier, CEO of REVPAR GURU
Friday, 18th March 2011
Instead of listening to industry experts, let your software determine what your next move should be -

Recently, there has been a lot of discussion regarding the incremental raising of rates to bring them up to pre-recession levels. 

While this may be warranted in some areas, it is not necessarily the best "general rule" everywhere.  Of course, I don't think there should be a general rule: rates need to be adjusted constantly, both up, and down.  If you are raising or lowering rates based on what the competitor next door is doing, you are essentially designating him as an expert and relying on his judgment alone. 

I think TravelClick's Kristi White summed it up nicely in Lori Weisberg's recent article, "Lodging Leaders Offer Advice on the Hotel Room Rate", in the San Diego Union-Tribune: "what if the guy next door is an idiot?1"

According to a recent Washington Post article, "Hotel Rates to Start Rising in 2011," leading hotel operators, such as Marriott International, Hilton Worldwide, and Starwood Hotels and Resorts are incrementally upping average daily rates in response to 1) "the return of leisure and business travel," and 2) "the relatively fixed supply of rooms given the lack of new construction.2" Of course, it's great to hear this general advice from the top hotel revenue management experts; however, there is a need to step away from general advice and recognize trends more specific to your property.

Micromanaging local trends, room rates, and other variables within your own sphere is the best way to capitalize on raising (or lowering) room rates based on your inventory.  Add to this feat of micromanagement, the multiple channels of booking - traditional, online, OTA and mobile - and you have quite a task at hand. 

The fact is, you have too many things to take care of to micromanage all of these variables.  And whose advice are you going to take?  A hotel executive's from 1,000 miles away?  Your competitor's next door?  Why not put all of this into the "hands" of a real-time revenue management software system that analyzes the best, most relevant information to your property?  Such a system makes all opinions superfluous, because it has already made the best decision long before the experts prognosticate.

Now that we've talked about what a revenue management system can do for you "now," let's look at what it can do in the future.  After all, isn't that what expert opinions are for¾predicting booking trends in the near future?  The best revenue management system software uses algorithms to instantly calculate projected performance and future booking patterns based on your market. 

These systems incorporate past and current data into realistic projections to give you the best estimation of future booking trends.  And because it's instant and automatic, your guesswork and input are spared to be used in other areas.  Instead of waiting and listening for opinions, revenue management software systems instantly react to vital data and adjust inventory and rates accordingly.

So why bother guessing about raising rates?  You shouldn't, because your time is better spent elsewhere.  Quite frankly, why waste time guessing and applying analysis when a revenue management software system can do it better and faster?

Revenue management software systems micromanage booking trend data and give you time to identify these larger trends happening within your market, and will remove the pressure of making decisions about when to raise rates back to pre-recession levels. 

Instead your rates will manage themselves, earning you more money and freeing up your time for more productive strategic decisions and activities… a win/win situation for you, your customers and your property's bottom line.


REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment.  REVPAR GURU's  solution offers dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU's software solution has been used by hotels worldwide to increase occupancy and RevPAR. 

Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.
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