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TheBeachHouse's picture
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This past summer we had two rates.

One for the three king bed rooms and the two room suite and one $50 less for the 'down the hall' room and the 'limited view' room.

Naturally, the two 'cheap' rooms sold out first.   One of the expensive rooms was almost always empty (hand held shower, we think is the reason.)

We talked it over and decided we might sell more if we lowered the price of two of the four expensive rooms.  We will leave the two with the best views and the kitchenette at the highest price and lower the two others to $20 less.

Have you had any experience with creating interest with lower prices?   

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Madeleine's picture
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I spoke too soon. Got the first of the  "I only want to spend $80" folks tonight.

Because the season is over, right?

It's OK. I know what everyone charges so I called to see if one other place had anything open, they did, and another hopefully happy camper went on his way.

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Generic's picture
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You actually call around for these people? Seriously?

Enjoy your knight at Motel 6 or Super 8.

Honestly, if they called and said that to me on the phone, I would simply say, sorry we don't have anything available at that price. Good luck. >click<

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Madeleine's picture
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BTW, thanks for the translations! I got mil's book done. Have to order it now so she can enjoy it.

Madeleine's picture
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Jon Sable wrote:

You actually call around for these people? Seriously?

Walk in. I'm already not doing whatever I was doing before the bell rang so it doesn't hurt to make a call.

Of course if someone is nasty about it, I'm not likely to be helpful.

I also told him where to go for breakfast.

On the phone I just give them the names of places likely to have the price they want. Like what you mentioned.

But at the door it doesn't hurt to be helpful.

Yesterday someone rang the bell and I got her set up at a place up the street. Then found out she was driving a huge rv that wasnt going to fit in anyone's driveway. The other innkeeper watched the rv slow down, look at the driveway and keep going.

People could at least help me help them by explaining what they're driving.

 

Generic's picture
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I get a few at the door. I usually tell them the places in the neighbourhood. I don't know prices, I just tell them the three places around that they can try.

Honestly.... even when we have it, we don't usually take people at the door. Experience has shown that most of them aren't our customer. They shop price and aren't interested in what I offer unless it's cheap. And one thing I'm not... cheap.

gillumhouse's picture
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I never get what you term walk-ins. I consider a walk-in someone who finds me on GPS as they are driving down the highway. The one time I had someone pull up on a Sunday evening expecting to just get a room, I was full so they had to drive on. And even that one had to find me on GPS.

happykeeper's picture
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Walk-ins, drive-ups, last minutes, finding us on their phone. To us- that's a harder business to be in.

Once in a while we get folks that will call us a day before or in the morning and have seen us on TA and been to our website and would like to stay for a night a two if we have it. They are calling with the intent to book, they know our prices, and an occasional res like that usually works out.

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Madeleine's picture
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It's a much harder business. Luckily for us, it has fallen off tremendously over when we first started when last minute, walk in, tourist center referral guests were 40% of our season business.

Now, with 2 chain hotels taking up the slack, we rarely get walk ins. In a way, it has markedly decreased our summer business but we've raised our rates substantially to cover the loss.

Walk ins expect, and have been trained to expect, huge discounts based on what they read online from travel advisors who speak about hotel mindsets of heads in beds regardless of the price.

Which is why we're getting the $80/night crowd now. The hotels are full. B&B's are the fallback plan. The hotels are calling us asking for rooms for their walk in guests but the guests are not willing to pay the rates.

happykeeper's picture
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Wow. 40% is a scary percentage for walk-ins. Glad that has changed.

I often feel I am in the great minority around the "heads in beds" issue. We behave more like the airlines do now. Book early and online and you can save a little. Book late by phone and you will pay our highest rate.

We got a great deal on a flight to Europe. It was one of those amazing prices that was only there for a short time. Probably to help them get the capacity out of the red. Then it was gone and the prices skyrocketed. We got on the plane and is was barely half full.

I imagine that is why they have gutted their FF programs, so that they can start selling those seats at a steep discount without coughing up a lot of miles and extra perks to bargain hunters. Needless to say, we won't be following them down that road.

happykeeper's picture
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We do perhaps 1% walk-in. We do everything we can to squelch it.

Kay Nein's picture
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Just sharing my experience with rates:

When we took over they were dirt cheap $89 a night.  No occupancy - go figure.  We came in and immediately raised to $110.  That went well for about a year as we built up the business.  Then raised to $130, all was good.  But, as soon as we tried $150 we stopped getting walk-ins and the advance reservations slowed down.  We could tell almost immediately that the price was turning people off.  We backed down to $140 and reservations picked up.  It was alarming how noticeable it was that people didn't like that price.  Now we have been at that rate (for our King, in season) for over a year and it's working out great. 

Arks's picture
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Kay Nein wrote:

But, as soon as we tried $150 we stopped getting walk-ins and the advance reservations slowed down.

A few years ago I saw a study showing you can actually sell more widgets priced at $59 than you can when they're priced at $50! 

There's a lot of psychology built into pricing.

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happykeeper's picture
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Interesting article. Admittedly, this is culled from it with out attempting to respond to the full content of psychological pricing.

"Another phenomenon noted by economists is that a price point for a product (such as $4.99) remains stable for a long period of time, with companies slowly reducing the quantity of product in the package until consumers begin to notice. At this time the price will increase marginally (to $5.05) and then within an exceptionally short time will increase to the next price point ($5.99, for example).[6]"

For us, the product is a combination of what we sell, what we add at the sale, and what we add after the sale. We are getting ready for a price increase, so we have to find a way to add value- perhaps by taking something that we add after the sale and promoting it at the sale, and then adding something new after the sale. (the unexpected perk)

Our goal in the past price increases has been to add enough value to offset the quantity loss until the new price point and its new value. Work smarter

 

Madeleine's picture
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Another way to do it is to wait until someone else in the same market raises their prices. That way you're not having to figure out what new thing the guest wants.

Beachy can look at the established businesses to see how they have met the challenges and then adapt those ideas to how she wants to run.

But, if she's at 90%+ occ right now and 30% next month, raising prices now to offset the income drop next month can really be a boon.

And the occ drop next month may be temporary. Once everyone realizes it's not winter just because labor day has passed, the bookings will pick right up again.

It's never been my goal to be on the bleeding edge so it helps to know that about my way of doing things. I don't want the stress of being the premier place in town.

I'm happy to be in the middle. Not needing every new perk, but not at the bottom where it's 'just a room'.

happykeeper's picture
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I get that there is a limit, and I get that every area has a different limit, and I am glad that what you are doing is working, and I am really glad you are sharing.

So I present you with a potential future challenge-- and my question does not suppose I know the answer- if you tie your rates to what the public tells you, how are you going to tell the public what your rates are when you have to raise them or, for example, go out of business?

gillumhouse's picture
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happykeeper wrote:

I get that there is a limit, and I get that every area has a different limit, and I am glad that what you are doing is working, and I am really glad you are sharing.

So I present you with a potential future challenge-- and my question does not suppose I know the answer- if you tie your rates to what the public tells you, how are you going to tell the public what your rates are when you have to raise them or, for example, go out of business?

You raise them by 2.50 or 5.00 every few years - starting with the best room if not across the board - rather than do a $10 jump. IF I get the king bed for the Gillum Room for next year (which guess who thinks I am foolish to even consider), that rate will jump by $15 as the others go up by $5. By doing slight increases guests do not notice as much and you get to keep up with the costs that are raising.

Breakfast Diva's picture
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I think that one of the answers to this is something we talked about recently. It's about making who/what you are different from the rest. If you have a niche that others don't have, then you can also set your rates differently than all those others around you. It's pretty tough to compare apples and oranges.

Yes, you will eliminate those that are just shopping for a room, but you will attract others that are looking for what you offer. When they are looking, they may not even know that that's what they want, but when they see your website, it hits them in their core! Yes, I WANT THAT! they will think to themselves. The only way to make that happen is to have an effective website.

I actually saw and experienced one of those websites yesterday. It hit me at my core. I want to go there. I will spend the money it takes to stay there. It probably would not have the same effect on everyone, but it's attracting me. And isn't that what we really want? To fill our rooms with those that really like what we offer and not just folks that are looking to some place to stay.

I'm not saying that I have achieved that myself, but that's what I can work toward.

 

 

happykeeper's picture
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I concur, at least I think I do. We often say that we do not have any competition because no one else is like us. This gives us the strength and courage to raise our rates. Hence, the challenge. If you are letting the market forces control your rates, won't it eventually catch up with you? If you control the market forces, as best as you are able anyway, then isn't just a matter of marketing?

Madeleine's picture
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Kay Nein wrote:

Just sharing my experience with rates:

When we took over they were dirt cheap $89 a night.  No occupancy - go figure.  We came in and immediately raised to $110.  That went well for about a year as we built up the business.  Then raised to $130, all was good.  But, as soon as we tried $150 we stopped getting walk-ins and the advance reservations slowed down.  We could tell almost immediately that the price was turning people off.  We backed down to $140 and reservations picked up.  It was alarming how noticeable it was that people didn't like that price.  Now we have been at that rate (for our King, in season) for over a year and it's working out great. 

Very true. Guests will let you know for sure!

Next week is when everyone and their uncle thinks rooms here should be $50. The season is over, right?

We cannot get walk ins at anything over $100. We don't even bother trying to talk to them.

I bet 75% of our guests think our peak season is winter.

Madeleine's picture
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Get creative with the pricing. Raise all the prices as you start to fill up. Lower prices if you're not busy enough.

We keep prices mostly stable but I do raise them as we hit 60% occ. Then, if we aren't full enough I can 'discount' but still get my rack rate.

This is hard to do if you're getting most of your guests from booking as you have to do this in multiple places.

Flower's picture
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My tall guests both women and men Love! the hand held shower. AS she said this morning . That is the best shower I have had in a few days. He thought it was great also. As he said man I can shower standing up. My older people love it cause they can direct the water to where they want.

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gillumhouse's picture
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ALL the showers in my house have the regular shower head AND the hand-held "personal shower". The claw-foot tub has a "telephone shower" attachment if a shower is wished at the end of a "soak". This is because for 10 years that WAS the shower.

The personal shower attachment also makes cleaning the shower a lot easier. I spray on the cleaning solution, scrub with a sceub brush, and use the personal shower to rinse. Makes life easier when you have a 60 inch shower to clean.

Madeleine's picture
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We did this with our room with the bathroom down the hall. It can be up to $60 less per night. We saw a big jump in the bookings.

And, because it books quickly, it's not left sitting at the last minute when no one wants cheap, they want all the bells and whistles.

As long as it's clear why the difference, it works. But. 50% of guests either online or on the phone who ask for the cheap room never read why it was cheaper. I always mention the bathroom before I get their info.

Be sure it's clear why your other rooms are more (or less) .

Generic's picture
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Okay, think of it this way, your need heads in beds. People want to feel that they get value for their money. That being true, you also need to make those who spend the most feel like they got something they wanted for the money.

So, let's say you have three different rooms, A, B and C. Classify them. In my case this what A, B and C are....

A. It's a chance to splurge for them. They appreciate that they have the small room, but they still get to enjoy the same house, the same breakfast, the same hosts, the same everything else. It's the experience without the price. And amazingly enough, when they come back, they covet moving up to B, not C.

B. It's the dream room with a small downside. It's the almost perfect room. 

C. It's the room that's not the dream, but has the amenities that they really want. For some, this is the dream room because they won't accept the compromise.

Now, I have people who book C and covet B and people who will only book C. But the A people come back and either they love you and A or they move to B and bring friend to A.

Let's put it this way, you don't start going to the Ritz. And when you do, you start in the standard room and move up. It's the same thing, people want certain things and you have to make them feel there is a reason to pay the price of B versus A and then C versus B. That being said, it's not for everyone. Cell phone companies prove that all the time. Their marketing just doesn't aim for me as a customer. So you have to hit on the amenities they are willing to pay extra for and promote them.

TheBeachHouse's picture
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That pretty much explains our reasoning.

The two that aren't as good (unattached bath and lousy view) are the cheapest.  They are both lovely. 

The two that aren't the best (no shower and queen bed) are the middle.  Both are very comfortable and have good views.

The two at the top are on the third floor so have the most views, the most privacy, king beds and a kitchenette.   So they are the best rooms.   I want people to decide to 'splurge' for the best room or enjoy the 'bargain' of the not as good rooms without thinking they were ripped off.

happykeeper's picture
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Tier pricing is an effective marketing strategy and can work well. We do not use that strategy because our rooms are so similar with one exception. The best thought about this comes from BD.

We have never lowered prices. Prices must go up. If you want to set a spread, raise the price of your best rooms and add value. Each and every year, we look at how we can raise prices and add value. Next year is scary because we are crossing a psychological price threshold, but scary doesn't deter us. Failure to stay ahead of the inflationary pressure on your business is a leading cause of innkeepers burn out IMHO.  

Breakfast Diva's picture
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I have a different take on this. Please don't take offense, but I think it's your website. I took a good look at it this morning and the very limited photos of your rooms and the descriptions need some help. You need to sell the rooms...beautiful pictures and descriptions of what they will experience in each room. The way it is right now, I would also choose the least expensive room because I can't really tell that there is a big difference.

Your room rates are not really expensive and I know that you're getting a lot of reservations from book ing dot com which means you're actually getting 15% less for each reservation. With the occupancy rate you shared with us the other day, there is no reason to lower your rates. Put time and a little $ into making your website show off your rooms better.

Consider doing a separate page for each room. Show us beautiful photos and describe each room as if you were reading about it in a book...how are they going to feel in each room? Why not have that large homepage picture scroll through with beautiful pictures of your rooms? Your photo gallery doesn't even have room pictures...sell those rooms!

 

Arks's picture
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Breakfast Diva wrote:

You need to sell the rooms...beautiful pictures and descriptions of what they will experience in each room.

Best advice I've heard this week. Rather than cutting rates, rooms that aren't being booked may just need better photos, better descriptions, better explanation of what's great or special about them.

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Breakfast Diva wrote:

I have a different take on this. Please don't take offense, but I think it's your website. I took a good look at it this morning and the very limited photos of your rooms and the descriptions need some help. You need to sell the rooms...beautiful pictures and descriptions of what they will experience in each room. The way it is right now, I would also choose the least expensive room because I can't really tell that there is a big difference.

Your room rates are not really expensive and I know that you're getting a lot of reservations from book ing dot com which means you're actually getting 15% less for each reservation. With the occupancy rate you shared with us the other day, there is no reason to lower your rates. Put time and a little $ into making your website show off your rooms better.

Consider doing a separate page for each room. Show us beautiful photos and describe each room as if you were reading about it in a book...how are they going to feel in each room? Why not have that large homepage picture scroll through with beautiful pictures of your rooms? Your photo gallery doesn't even have room pictures...sell those rooms!

 

 

No offense taken.  I asked!  Good feedback.  Thanks.

Updating the website with better pictures is the big winter project.   I just finished updating the room descriptions on the brochure with words like romantic, tranquil, and sweeping views and spacious.

We are planning pictures of the bed, sitting area, fireplace and view for each room.     

Generic's picture
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Depends on the season for us. But basically the most expensive and least expensive are often booked first. Funny, but our best rooms are the last booked because people don't realize the value. (shared bath, but incredible room).

TheBeachHouse's picture
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We will have a $20 tier.   expensive minus $20, then minus $20 for cheap.   So it will be a $20 spread.

We think it will help sell the middle rooms and make the expensive rooms more desirable.

gillumhouse's picture
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What I meant by the $50 spread in rates being too much was that the less expensive rooms should be MORE. I would have a much smaller spread between most expensive and budget. What you are planning sounds as if it will be a $40 spread between best and budget. You offer private baths - even if it is down the hall. Get robes and you are the lap of luxury.

TheBeachHouse's picture
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gillumhouse wrote:

What I meant by the $50 spread in rates being too much was that the less expensive rooms should be MORE. I would have a much smaller spread between most expensive and budget. What you are planning sounds as if it will be a $40 spread between best and budget. You offer private baths - even if it is down the hall. Get robes and you are the lap of luxury.

 

The PO said we weren't charging enough, too.   But we are among the most expensive in town.  We're undercutting the most expensive by about 10 or 20.  There are two.  One has a way better view and the other serves full plated breakfast.  Will keep your advice in mind.   And take another look at the comps.

gillumhouse's picture
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I have a $36 spread between my best room and my budget room. Personally I think a $50 spread is too much - but that is your inn.

I would have a $20 difference max between the hand-held shower and the "limited view" and up the rate on the budget rooms by at least $10 or $15. I would hazard to guess that would give you several "layers" of bargain hunters, perhaps get heads in all the beds, and not give you a revenue hit. If it does not work, you can always make adjustments the following year - or even mid-year.

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gillium, here in the NE a $50 spread is not too much.  We have a three tiered rate for our 3 accommodations so there is $100 between our smallest and most luxurious accommodation.  The best (cottage) gets the most reservations, the next largest (3-room suite) gets the next and the charming but least expensive gets the fewest reservations.  

But I agree with the idea of selling your rooms with more pictures and descriptions.  Each one has charm and they all get YOU as their innkeeper.  yes

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We did this with our jacuzzi room with the corner shower.  It's only $10 less than one with larger bathroom and $30 less than the biggest.  It gives a range and even that $10 seems to matter to some.

 

our room spread is $190 to $315 but there is a huge difference  in the 9 rooms.

Summer less expensive rooms book first, winter most expensive jacuzzi ones do.

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Our most expensive rooms sell first. But we are a diff demographic, yours are wanting a destination ours in those rooms are celebrating an anniversary or something. 

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