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The most important factors in creating your hotel pricing strategy

Among many different business strategies, pricing strategy is one of the most important. There are many different factors that you should pay attention to when creating your hotel's price strategy: guests, market tendencies, tourism changes, competitors and etc.

Why you need a pricing strategy for your hotel?

The hotel can't reach successful growth and stay in business if they have no strategies. In order to succeed, business needs a marketing strategy, sales strategy and also the pricing strategy. Small hotel owners sometimes come up with prices which they think would do just fine. However, "gut feeling" is not a smart choice when talking about pricing. Sure, things might work out at the beginning, but success driven on coincidence is not going to last long.

Pricing strategy is a very dynamic element. You need to be flexible and adjust your price plan based on the market changes, happening in the city/country or even happenings at your own hotel.

Know your guests and what they want to see. If you are a holiday resort, focusing on long stays, you should have plenty of time-based pricing offers (LOS = Length Of Stay). These guests, who are staying for a long time period, don't really pay attention to the daily price, so it is enough if you display your price offer as a total price.

However, if your main target is short staying guests (hotels near the airports, convention centers, motels), then you should work on your daily rates. Meaning that prices should be formed and displayed on a daily bases.

Factors to consider when creating your hotel's pricing strategy

There are many articles and ideas of price strategies for the hotels. They all could be applied in practice and all could be useful at some level. I just want to run through some of those factors and summarise the idea of a good pricing strategy.

  • Demand forecasting. You should analyze some historical data from your hotel in order to see what are the tendencies of the demand. Most probably, around the holiday season or other special events, a number of bookings are raising. Meaning that you should also increase your prices based on these events. When the season is low and you can see a clear drop of reservations, you should adjust the prices and lower them accordingly.
  • Partner up. If you have contracts with travel agencies or corporate partners, prepare prices for them. Most of the PMS systems have a possibility to have different rate plans, so with the help f your PMS, create different pricing for different partners.
  • Special offers. Always make sure to have some special rates at your OTAs as well as on your own website. However, you shouldn't abuse this feature. Have those special offers for a short period of time only. If you will always have a low price, people will start to think that your place is not doing very well and will get suspicious about the value they can get.
  • Be transparent. This include rate parity strategy among all your sales channels. People usually are checking several booking platforms. Seeing a difference in the prices might confuse them, they might think that different value represents different service level.
  • Create packages. Even if rate parity is strongly recommended, you still can have some special deals on your own website. Creating packages is a great example of how you can encourage your guests to book directly with you. Create a package that includes not only the accommodation but also something extra, like breakfast, transfer, city tour and etc. This will show the added value and guests will be tempted to book directly.
  • Create coupons. This is another part of your pricing strategy - discount coupons and loyalty boost programmes. With the help of discount coupons, you can increase direct bookings on your website and also motivate guests to book next time on your website with the special code. This is already a one-step into bigger loyalty programme picture.
  • Play with the cancellation policy. In exchange of low rates, you can go with the non-refundable policy. By doing this, busy hotels can benefit even twice if the room is being canceled.
  • Upselling and Cross-selling. Besides accommodation, you should try and offer more value to your guests. Differences between these to terms is: Upselling - encouraging guests to spend more on a comparable higher-end product that they already got (e.g. upgrading to a better room; getting a king size bed instead of simple double and etc.) Cross-selling - encouraging guests to purchase some additional services to their initial buy (city tour, car rental, dinner...).
  • Psychological pricing. It has been proven that you can expect more sales when you have prices ending with .99. Maybe it is more convenient to have rounded prices and plus visually it looks better, but studies show that customers are more tend to buy something if the price ends with .99 because creates an illusion of cheaper product/service.


These are just a few factors, that you should consider when creating a pricing strategy for your hotel. If you are not sure how to proceed or where to start, you can always seek help from the experts. They can overview your current situation and give insights on the improvement plan.

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