Raising Rates

We haven't since we opened: 2007.
This has been hands-down, our best year. Good weather a huge plus, a long term off season rental, and several week long kayak groups, plus, the website revamp.
Next year we won't have the kayak groups. They will be using another venue, not likely to have another extended rental either, but we will be adding (soon) a nightly vacation rental in a nearby city.
Our rates are already on the high side for our area, so a bit of trepidation about doing this, but it is time. Costs have gone up for everything, and a 15% increase is really just keeping up with costs.

That's a good long while.

If you put the rates up and it doesn't work you can always drop them or give people a discount. Not so easy to go the other way.

Costs are always going up.
Unless you have an overabundance on your waiting list I would be cautious about raising your rates. If you have one room that books ten times more than the other(s) than perhaps a slight increase in that room?
Do you offer an online discount or other? If not I would recommend doing that if you raise them $5 or $10, the perception of value is very important and everyone loves to get a deal.

Gradual increases go down a lot better than big increases.

Anon Inn said:

We haven't since we opened: 2007...a 15% increase is really just keeping up with costs.

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That's what you get into when you don't do tiny yearly increases. After 7 years of no increase, people will definitely notice a 15% jump at one time. Not many would have noticed a 2% increase each year. Or if they DID notice, the small amount wouldn't be a deal breaker for them. 15% at once may be.
Each January I check what the previous year's inflation rate was, and increase rates by that amount, plus a tiny bit more. It's important to keep up with inflation as you go. If you increase rates 15% now, you won't get back the money you lost to inflation for 7 years. You'll just be where you need to be for next year.

I raised my rates a few dollars every so often. I have probably gone as far as I can go with my rates now. IF I do get the king bed I want for the private bath guestroom and move the queen into where the full is (both will pretty much swallow the room - especially the queen, the tates for those rooms will jump. I can justify that because of bigger beds. When I went from 3 w/shared to one private, that room jumped $20 and went up another $5 since. It will go up by $15 with a king. The shared that has a queen also went up $15 because it went from full to queen. The last full will go up by $16 and match the price of the other room if my plans gel.
Rate increases MUST be done a little bit at a time every so often to keep pace with expenses AND stay acceptable to the public.
We are going through this in my City because for too many years Councils did not have the balls to raise water and sewer rates as costs went up. It is a long and laborious process to do that and they were afraid of the wrath of the people. The last time rates went up, we were ORDERED to raise them by the PSC. Now we are about to raise rates by another 35% for water and 32% for sewer so we can do the needed maintenance on the water plant and sewer plant. And you can almost smell the tar & feathers at the Council meetings and see the shadow of a noose.

I would suggest you raise your rates a moderate $10, then play a little yield management. If it's during a time where you're booking up, then raise the rate for those dates. This way you can see what the market will bear. If you don't have it already, you would need to change your prices to a range. Keep the lower range where your rates are right now and show the upper range at least at the 15% that you eventually want to get. If the winter is your slow time, then you can call it your winter rate (lowest on range) and gently increase when the bookings get stronger.

Breakfast Diva said:

I would suggest you raise your rates a moderate $10, then play a little yield management. If it's during a time where you're booking up, then raise the rate for those dates. This way you can see what the market will bear. If you don't have it already, you would need to change your prices to a range. Keep the lower range where your rates are right now and show the upper range at least at the 15% that you eventually want to get. If the winter is your slow time, then you can call it your winter rate (lowest on range) and gently increase when the bookings get stronger..

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I concur, I think yield management brings in more money than simply across the board increases.

Breakfast Diva said:

I would suggest you raise your rates a moderate $10, then play a little yield management. If it's during a time where you're booking up, then raise the rate for those dates. This way you can see what the market will bear. If you don't have it already, you would need to change your prices to a range. Keep the lower range where your rates are right now and show the upper range at least at the 15% that you eventually want to get. If the winter is your slow time, then you can call it your winter rate (lowest on range) and gently increase when the bookings get stronger..

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Thanks Diva. So far we haven't had summer and winter rates, but most seem to, and its expected, so a $10 plus yield management it is. I'm trying to get to the point (as I have with the air people) where the bite the OTAs take will be OK if we decide to go that direction. Plus I have long thought the $10 one-time discount for online booking is a GREAT idea. Time to implement that too.

Anon Inn said:

Breakfast Diva said:

I would suggest you raise your rates a moderate $10, then play a little yield management. If it's during a time where you're booking up, then raise the rate for those dates. This way you can see what the market will bear. If you don't have it already, you would need to change your prices to a range. Keep the lower range where your rates are right now and show the upper range at least at the 15% that you eventually want to get. If the winter is your slow time, then you can call it your winter rate (lowest on range) and gently increase when the bookings get stronger..

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Thanks Diva. So far we haven't had summer and winter rates, but most seem to, and its expected, so a $10 plus yield management it is. I'm trying to get to the point (as I have with the air people) where the bite the OTAs take will be OK if we decide to go that direction. Plus I have long thought the $10 one-time discount for online booking is a GREAT idea. Time to implement that too.
.

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Do you get a lot of phone reservations? If not, forget about the $10 online booking incentive. You're not that far from me and I bet we get the same type guests, and I get about 95% of my reservations online. If you're giving everyone a $10 discount, there goes most of your rate increase.

I've raised our rates $5 to $10 for each of the last couple years because of food cost, propane and tax increases - it's necessary. We have always increased our business each year even with these increases. I would also suggest showing a range of price on your website -- $190 to $240 for example and do yield management. Don't be afraid to raise rates, you deserve it and your business needs it.

Breakfast Diva said:

Anon Inn said:

Breakfast Diva said:

I would suggest you raise your rates a moderate $10, then play a little yield management. If it's during a time where you're booking up, then raise the rate for those dates. This way you can see what the market will bear. If you don't have it already, you would need to change your prices to a range. Keep the lower range where your rates are right now and show the upper range at least at the 15% that you eventually want to get. If the winter is your slow time, then you can call it your winter rate (lowest on range) and gently increase when the bookings get stronger..

Click to expand...

Thanks Diva. So far we haven't had summer and winter rates, but most seem to, and its expected, so a $10 plus yield management it is. I'm trying to get to the point (as I have with the air people) where the bite the OTAs take will be OK if we decide to go that direction. Plus I have long thought the $10 one-time discount for online booking is a GREAT idea. Time to implement that too.
.

Click to expand...

Do you get a lot of phone reservations? If not, forget about the $10 online booking incentive. You're not that far from me and I bet we get the same type guests, and I get about 95% of my reservations online. If you're giving everyone a $10 discount, there goes most of your rate increase.
.

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I agree that you don't give away your rate increase and that yield management can help.
We do offer discounts for longer stays, but guests must choose this package and it is only bookable in advance online. This has done two things. Helped us see that many of our guests book at full price. Kept guests from asking for the discount after arrival. Mind you, we get something back (longer stays) for that discount other than them booking online.
I might add, because I am an "add value" advocate, that if you can add and show value, this can help as well.

We haven't raised rates in 3 years. Our sales tax went up so my rooms would be over the magical $200 threshold that I think guests balk at. I think we're at the max so I do yield management instead and raise rates as we're filling up. Those rooms then book slower, but eventually book when pickings in town get slim. The way I did my rate increases before was alternating the price from $155 to $159 and then to $165. So, a $4 rise one year and then a $6 rise the next.
Next year I should do something. It will be too long a time if I wait another year. But, it's strictly inflation, we are not adding amenities unless I can add something perceived that doesn't cost me more time (in cleaning around it like an in-room coffee machine or fridge) or money (like adding bottled lotions, etc).

Madeleine said:

We haven't raised rates in 3 years. Our sales tax went up so my rooms would be over the magical $200 threshold that I think guests balk at. I think we're at the max so I do yield management instead and raise rates as we're filling up. Those rooms then book slower, but eventually book when pickings in town get slim. The way I did my rate increases before was alternating the price from $155 to $159 and then to $165. So, a $4 rise one year and then a $6 rise the next.
Next year I should do something. It will be too long a time if I wait another year. But, it's strictly inflation, we are not adding amenities unless I can add something perceived that doesn't cost me more time (in cleaning around it like an in-room coffee machine or fridge) or money (like adding bottled lotions, etc)..

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Madeleine said:

We haven't raised rates in 3 years. Our sales tax went up so my rooms would be over the magical $200 threshold that I think guests balk at. I think we're at the max so I do yield management instead and raise rates as we're filling up. Those rooms then book slower, but eventually book when pickings in town get slim. The way I did my rate increases before was alternating the price from $155 to $159 and then to $165. So, a $4 rise one year and then a $6 rise the next.
Next year I should do something. It will be too long a time if I wait another year. But, it's strictly inflation, we are not adding amenities unless I can add something perceived that doesn't cost me more time (in cleaning around it like an in-room coffee machine or fridge) or money (like adding bottled lotions, etc).

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We're in the same position Maddie. On Jan 1st of this year our lodging tax went from 1% to 11%. There's no way I could do a rate increase on top of that. We'll see what happens next year.

Breakfast Diva said:

Madeleine said:

We haven't raised rates in 3 years. Our sales tax went up so my rooms would be over the magical $200 threshold that I think guests balk at. I think we're at the max so I do yield management instead and raise rates as we're filling up. Those rooms then book slower, but eventually book when pickings in town get slim. The way I did my rate increases before was alternating the price from $155 to $159 and then to $165. So, a $4 rise one year and then a $6 rise the next.
Next year I should do something. It will be too long a time if I wait another year. But, it's strictly inflation, we are not adding amenities unless I can add something perceived that doesn't cost me more time (in cleaning around it like an in-room coffee machine or fridge) or money (like adding bottled lotions, etc)..

Click to expand...

Madeleine said:

We haven't raised rates in 3 years. Our sales tax went up so my rooms would be over the magical $200 threshold that I think guests balk at. I think we're at the max so I do yield management instead and raise rates as we're filling up. Those rooms then book slower, but eventually book when pickings in town get slim. The way I did my rate increases before was alternating the price from $155 to $159 and then to $165. So, a $4 rise one year and then a $6 rise the next.
Next year I should do something. It will be too long a time if I wait another year. But, it's strictly inflation, we are not adding amenities unless I can add something perceived that doesn't cost me more time (in cleaning around it like an in-room coffee machine or fridge) or money (like adding bottled lotions, etc).

Click to expand...

We're in the same position Maddie. On Jan 1st of this year our lodging tax went from 1% to 11%. There's no way I could do a rate increase on top of that. We'll see what happens next year.
.

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Ouch! Mine only went up 1% and they're supposed to go back down next year. Of course we never know what will happen with taxes.