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M

Mac

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We're thinking of raising our rates next year by 10%. How often, if ever, and by how much do YOU raise your rates?
 
I prefer smaller increment, so my suggestion for you would be to raise your rates 5% this year and 5% next year. Most people won't see/feel the difference and you'll get even more revenue this year.
If you have lower rates, 10% won't matter. $100 night to $110 is nothing. $210 a night to $235 feels more.
 
We had a discussion of this a few months ago. In the last few years inflation has been low, like from 1% to 3%/year, but after a few years even this adds up and after 5 years you can easily become 10% to 15% behind inflation if you don't do something.
Several suggested a small yearly increase that's not real noticeable to guests, at least to keep up with inflation, to avoid having to make a one-time large jump every 5 years or more, that IS noticeable.
 
I may be the outlier on these questions. Work smarter. We have been in a trend where we are raising our rates to test the ceiling. It is scary but it has made an enormous impact on our revenue stream.
 
I look at where the biggest demand is in our schedule and then raise the rates based on that. This year I added, $15, $5, and $25 per night to our 3 accommodations. The most popular, and most expensive accommodation got the biggest raise, the smallest, least expensive got the $15 raise and the one I want to keep about the same got only a $5 raise.
 
Prior to 2008, I raised my rates by $2.50 every couple years unless I added some thing to the rooms like the bigger beds or the flat screen TVs or the created private bathroom generated a bigger raise. In 1996 my rates were $55, 50 and 50. They are now 149.75, 125 and 115.
 
Thank you for the good advice. Around here a lot of hotels double their rate for football games, making a $150 a night room $300, with a two-night minimum. That's a $600 weekend (yes, I know you can add too. I just wanted to emphasize the point). While we adhere to the two-night minimum, we don't fiddle with our room rate of only $100 + 8.75 motel/hotel tax. We also provide so many extras - covered porches, fire pit, gazebo, grills, pavilion, pond, trails, golf cart, and scavenger hunt, to name most of them - that I feel we should be charging more. Like the B Diva said, $100 to $110 would be nothing. Can't raise this year since the money-making weekends are already booked but we can start getting the guests used to the idea. Most of them are so much richer than us that they won't bat an eye!!
 
Mac said:
Thank you for the good advice. Around here a lot of hotels double their rate for football games, making a $150 a night room $300, with a two-night minimum. That's a $600 weekend (yes, I know you can add too. I just wanted to emphasize the point). While we adhere to the two-night minimum, we don't fiddle with our room rate of only $100 + 8.75 motel/hotel tax. We also provide so many extras - covered porches, fire pit, gazebo, grills, pavilion, pond, trails, golf cart, and scavenger hunt, to name most of them - that I feel we should be charging more. Like the B Diva said, $100 to $110 would be nothing. Can't raise this year since the money-making weekends are already booked but we can start getting the guests used to the idea. Most of them are so much richer than us that they won't bat an eye!!.
Click to expand...
Mac said:
Thank you for the good advice. Around here a lot of hotels double their rate for football games, making a $150 a night room $300, with a two-night minimum. That's a $600 weekend (yes, I know you can add too. I just wanted to emphasize the point). While we adhere to the two-night minimum, we don't fiddle with our room rate of only $100 + 8.75 motel/hotel tax. We also provide so many extras - covered porches, fire pit, gazebo, grills, pavilion, pond, trails, golf cart, and scavenger hunt, to name most of them - that I feel we should be charging more. Like the B Diva said, $100 to $110 would be nothing. Can't raise this year since the money-making weekends are already booked but we can start getting the guests used to the idea. Most of them are so much richer than us that they won't bat an eye!!
Click to expand...
Even if your money making weekends are already booked (by the way, if they're already booked, you're not charging enough), you still should raise the rates this year! Just do it, don't even think about it. The money adds up over the rest of this year and you'll rent those rooms whether you raise the rate or not.
 
Mac said:
Thank you for the good advice. Around here a lot of hotels double their rate for football games, making a $150 a night room $300, with a two-night minimum. That's a $600 weekend (yes, I know you can add too. I just wanted to emphasize the point). While we adhere to the two-night minimum, we don't fiddle with our room rate of only $100 + 8.75 motel/hotel tax. We also provide so many extras - covered porches, fire pit, gazebo, grills, pavilion, pond, trails, golf cart, and scavenger hunt, to name most of them - that I feel we should be charging more. Like the B Diva said, $100 to $110 would be nothing. Can't raise this year since the money-making weekends are already booked but we can start getting the guests used to the idea. Most of them are so much richer than us that they won't bat an eye!!.
Click to expand...
If you FEEL you should be charging more, you SHOULD be charging more. In all cases, The failure to charge what you are worth is the number one way innkeepers are leaving money on table.
 
We constantly change rates. We put rates up and down. In fact the tinkering has brought us in at least 6% more last year. One room left, price goes up. Long weekends? Holidays? Small increases. Make changes.
 
We actually lowered rates on two rooms creating three specific price tiers.
We think it tells the guest that if he spends more, he gets more and if he choses the cheapest room, there is a reason for that price.
We did it for two reasons. 1. to head off complaints about the least expensive rooms as it is now very obvious that we price based on desirability.
2. though these two rooms (that we lowered the price on) are both very spacious and have all the amenities, they are on the second floor of a three story house so that their ocean views are not as desirable as the third floor rooms. Now everyone should be able to see that the third floor rooms are the 'premium' of the house.
 
Breakfast Diva said:
Has anyone used the Yield Management feature on ResKey?.
Click to expand...
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
 
undersea said:
Breakfast Diva said:
Has anyone used the Yield Management feature on ResKey?.
Click to expand...
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
.
Click to expand...
undersea said:
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
Click to expand...
This is experience talking. You get to know this by doing it yourself or watching your competition. You should be watching your competition right now. You should understand the differences in what you each offer and how that translates into bookings and pricing.
If you want to buy software to do that you are then relying on someone else's interpretation of your business.
Just reading here you should see that one side does not fit all. We are less than an hour away from some of the other members here and our businesses are completely different.
 
Morticia said:
undersea said:
Breakfast Diva said:
Has anyone used the Yield Management feature on ResKey?.
Click to expand...
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
.
Click to expand...
undersea said:
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
Click to expand...
This is experience talking. You get to know this by doing it yourself or watching your competition. You should be watching your competition right now. You should understand the differences in what you each offer and how that translates into bookings and pricing.
If you want to buy software to do that you are then relying on someone else's interpretation of your business.
Just reading here you should see that one side does not fit all. We are less than an hour away from some of the other members here and our businesses are completely different.
.
Click to expand...
Morticia said:
undersea said:
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
Click to expand...
This is experience talking. You get to know this by doing it yourself or watching your competition. You should be watching your competition right now. You should understand the differences in what you each offer and how that translates into bookings and pricing.
If you want to buy software to do that you are then relying on someone else's interpretation of your business.
Just reading here you should see that one side does not fit all. We are less than an hour away from some of the other members here and our businesses are completely different.
Click to expand...
Good point. We looked at the other inns in town and weighed location, amenities, views etc.
What they offer than we don't - full plated breakfast, pool, walk to town, restaurant on premises. What we offer that they don't - front porch with a view, koi pond, view from the room, walk to water.
Some have all hallway bathrooms, some have no common rooms, some are bigger, some smaller.
We also do seasonal rate changes. We are $40 less expensive per room in the winter than in the summer.
 
Morticia said:
undersea said:
Breakfast Diva said:
Has anyone used the Yield Management feature on ResKey?.
Click to expand...
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
.
Click to expand...
undersea said:
I would be very interested in something like that. I saw 1-2 startups that supposedly are trying to help hotel/B&Bs determine pricing, but they seem to be in beta.
For example, pricing compared to competitors, seasons, your current booked %, what % of rooms should be booked at 1 week, 1 month, and X months into future based on certain pricing...
Click to expand...
This is experience talking. You get to know this by doing it yourself or watching your competition. You should be watching your competition right now. You should understand the differences in what you each offer and how that translates into bookings and pricing.
If you want to buy software to do that you are then relying on someone else's interpretation of your business.
Just reading here you should see that one side does not fit all. We are less than an hour away from some of the other members here and our businesses are completely different.
.
Click to expand...
Correct. The startups supposedly were doing future yield management - determining how to change prices based on your % occupancy going out days, weeks, months. Raising or lowering your prices to get the best return as time passes. Supposedly they based it on nationwide trends, but it was also supposed to key off your own occupancy. Saw them in WSJ or similar. Again they are beta, so it was theory. Obviously one's own place and the local competition can be very different from what goes on nation/worldwide.
 
My big challenge is butting up against psychological barrier price points ($99, $199, $249, $299, etc.) When we get to the point where we need an extra $10 a night for these rooms, we see a big dropoff in bookings when we price rooms at $209 compared to $199.
I even experimented with getting rid of the "x99" gimmick by pricing rooms at something like $127 and $207, but there didn't seem to be a great benefit.
I use the ResNexus Yield Management tool, with mixed results. I like creating rules that boost my rates $10 or $20 as I get to full occupancy, or dropping them by the same amount as we get within 3 days of booking with no bites.
Only problem is when I set a 3-day drop, I sometimes have guests who see:
Sunday: $149, Monday: $149, Tuesday: $169.
Guests always want to know what's so special about Tuesdays.
 
PhineasSwann said:
My big challenge is butting up against psychological barrier price points ($99, $199, $249, $299, etc.) When we get to the point where we need an extra $10 a night for these rooms, we see a big dropoff in bookings when we price rooms at $209 compared to $199.
I even experimented with getting rid of the "x99" gimmick by pricing rooms at something like $127 and $207, but there didn't seem to be a great benefit.
I use the ResNexus Yield Management tool, with mixed results. I like creating rules that boost my rates $10 or $20 as I get to full occupancy, or dropping them by the same amount as we get within 3 days of booking with no bites.
Only problem is when I set a 3-day drop, I sometimes have guests who see:
Sunday: $149, Monday: $149, Tuesday: $169.
Guests always want to know what's so special about Tuesdays..
Click to expand...
Apparently there is a different between ending in 109.99 and 109.95 and even 109.94. People somehow don't like the ending in .94 but perceive the .95 as higher quality than .99 which is the general ending.
See http://en.wikipedia.org/wiki/Psychological_pricing
But the truth is that having pricing the differs by day is nothing new. Airlines change prices depending on the day of the week and availability all the time. The answer to the Tuesday question is simple, we have less rooms available because it's popular that week and booking quickly.
 
PhineasSwann said:
My big challenge is butting up against psychological barrier price points ($99, $199, $249, $299, etc.) When we get to the point where we need an extra $10 a night for these rooms, we see a big dropoff in bookings when we price rooms at $209 compared to $199.
I even experimented with getting rid of the "x99" gimmick by pricing rooms at something like $127 and $207, but there didn't seem to be a great benefit.
I use the ResNexus Yield Management tool, with mixed results. I like creating rules that boost my rates $10 or $20 as I get to full occupancy, or dropping them by the same amount as we get within 3 days of booking with no bites.
Only problem is when I set a 3-day drop, I sometimes have guests who see:
Sunday: $149, Monday: $149, Tuesday: $169.
Guests always want to know what's so special about Tuesdays..
Click to expand...
That is why my best room now has a rate of 149.75 - it is under 150
 

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