Quantcast

?? on raising rates

INNspiring.com | Innkeeper Forum & Innkeeping Resources

Help Support INNspiring.com | Innkeeper Forum & Innkeeping Resources:

Baygirl

Well-known member
Joined
May 26, 2009
Messages
267
Reaction score
0
Hi all-
In our area we've just about peaked on what we can charge for our rooms. Currently we have weekday rates and weekend rates. I was thinking of raising the weekday rates to the weekend rates- a $10.00 difference and then raise the weekend rate $5.00. I don't know...I get worried about raising rates, but we haven't done it in a few years and as all of you know the price of food, fuel oil, etc...has all gone up.
We have two types of rooms...4 with jacuzzi tubs and fireplaces and 4 that do not have the add'l ammenities. All luxury rooms are the same rate and all standard rooms are the same rate. The difference of the price of the two types of rooms is $45.00.
I figure people are already willing to pay the weekend rate so it wouldn't be a huge shock for the weekday rate to go to that price and only raising the weekend $5.00 wouldn't put the rate as a sticker shock. Is anyone else toying with rate changes and if so how are you thinking of doing it? Raising rates to me is always a scary thing.......
 

Proud Texan

Well-known member
Joined
May 30, 2008
Messages
2,685
Reaction score
0
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked.
 

JBloggs

Moderator
Moderator
Joined
Oct 7, 2008
Messages
17,743
Reaction score
0
Most DO DO THIS. If they don't they are flying blind! Down to the cost of turn down chocolates. Perceived value...oh no not that discussion again.
But it is all part of what we need to know to operate our businesses efficiently and effectively.
Having sodas in our fridge that are on ocassion consumed is an add-on that people comment on and costs us very little. Giving away huge discounts or buying fruit out of season eats the bottom line very quickly.
It's all fun! We gotta know, so have fun doing it.
I would love to have a POLL when you are done for everyone to share approx room COST, so everyone can share anon. Would be interested in seeing that. Would need guidelines to stipulate what it included as I know some try to toss the mortgage into the mix or renovations. Just ACTUAL ROOM COSTS. What does it cost WHEN A GUEST OCCUPIES A ROOM. This means breakfast, linens, flowers, whatever you offer.
 

Alibi Ike

Well-known member
Staff member
Joined
Aug 8, 2010
Messages
2,928
Reaction score
0
Consider your occupancy. Is it high? If it is there is room for rising rates. If it's low, then you might want to look at reducing (behind the scenes) the expenses.
How about seasonal changes instead of across the board? If you have a few peak months, make those rates commensurate with the season and keep the rest of the year where it is now.
Do you do what hotels do and raise your rates on weekends that are filling up quickly?
Is there anyone else in the area with similar accommodations? What are they doing? Can you position yourself as 'the' place to be with some website changes that show the higher rates are worth it?
 

Generic

Well-known member
Joined
Feb 24, 2011
Messages
7,520
Reaction score
37
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked..
I tend to believe that small charges make people think about the item having a value and then I often don't charge. For example, if espresso is free then people will take one even if they don't really want them. Charge $1 and they think about it twice before asking. Or better, offer it as something special that you don't do everyday.
 

Alibi Ike

Well-known member
Staff member
Joined
Aug 8, 2010
Messages
2,928
Reaction score
0
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked..
I tend to believe that small charges make people think about the item having a value and then I often don't charge. For example, if espresso is free then people will take one even if they don't really want them. Charge $1 and they think about it twice before asking. Or better, offer it as something special that you don't do everyday.
.
We have an outfitter nearby that charges a nominal fee to 'test drive' what they sell. If it was free they'd be tied up all day with people with no interest at all in buying anything. As it is, someone with minor interest can have a very nice experience, come away thinking very highly of the company and they've made $20 into the bargain.
 

Joey Camb

Well-known member
Joined
Apr 2, 2010
Messages
4,793
Reaction score
0
It is what I am always saying half of making a profit is getting money in and half is keeping a close watch on what is going out. (think it was joe that made the case for her friends who were always broke but had good jobs cos they were spending $20 a day on coffee!!!) Was in discussion with my friend who uses a particular brand of toiletries turns out she pays $40 just to have the things delivered told her she should knock that on the head! the company I use the bottles are half the price and are delivered free! (over a minimum order) It is all about looking at what you are spending and having a look at the alternatives (not compromising on quality mind) Also if there are any suppliers you have used for years take a long hard look at them. For example the previous owners to us used a laundry service I will call UM and had done for years (they look after us becuase we are such good customers LOL) I thought the bill seemed a little high but couldn't catch them on anything ie saying they were sending more than they were is the usual fiddle. Spoke to my neighbour who also uses them and they had a different and considerably cheaper price list! their bathmats were half the price and the duvet covers were $1.00 each cheaper! How they didn't think I would catch them is beyond me as I am tight with my neighbours as we watch out for each other. Moved to another company as soon as practical and am saving $500 a month. Turns out later on that the owner of this company is a nasty bit of work who when PO complaned about something they said Well we can shut you down and take everything. I would have said best of luck you better bring a lot of bags! and gone out and bought enough to manage till I could get another contract in place. Would never allow anyone I was a customer of speak to me like that or threaten me like that!
 

Generic

Well-known member
Joined
Feb 24, 2011
Messages
7,520
Reaction score
37
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked..
I should mention that there are a lot of psychology in pricing. For example, prices ending in .98 instead of .99 indicate to people that you are just a little bit cheaper. And prices with end in .x4 or .x7 usually indicate a precise price and people tend to argue less about them.
When I put a room's price on special I have a table that sets the room price before tax, so that with the the room price ends .99. For example, our taxes here are 17.912375% (don't ask, it's three different taxes that compound). So if I normally charge $100 for the room, with tax it would be $117.91, but I want it to be $114.99 with tax, so I simply divide it back and put down a price of $97.52. (With the online discount the list price would be $110 and $107.52) and basically with tax the price comes to end in .99 or .98. I know that prices that end in anything that is unusual is a discounted rate and people don't seem to ever argue with a price that just seems so odd as to be precise in a way they don't understand.
 

Alibi Ike

Well-known member
Staff member
Joined
Aug 8, 2010
Messages
2,928
Reaction score
0
It is what I am always saying half of making a profit is getting money in and half is keeping a close watch on what is going out. (think it was joe that made the case for her friends who were always broke but had good jobs cos they were spending $20 a day on coffee!!!) Was in discussion with my friend who uses a particular brand of toiletries turns out she pays $40 just to have the things delivered told her she should knock that on the head! the company I use the bottles are half the price and are delivered free! (over a minimum order) It is all about looking at what you are spending and having a look at the alternatives (not compromising on quality mind) Also if there are any suppliers you have used for years take a long hard look at them. For example the previous owners to us used a laundry service I will call UM and had done for years (they look after us becuase we are such good customers LOL) I thought the bill seemed a little high but couldn't catch them on anything ie saying they were sending more than they were is the usual fiddle. Spoke to my neighbour who also uses them and they had a different and considerably cheaper price list! their bathmats were half the price and the duvet covers were $1.00 each cheaper! How they didn't think I would catch them is beyond me as I am tight with my neighbours as we watch out for each other. Moved to another company as soon as practical and am saving $500 a month. Turns out later on that the owner of this company is a nasty bit of work who when PO complaned about something they said Well we can shut you down and take everything. I would have said best of luck you better bring a lot of bags! and gone out and bought enough to manage till I could get another contract in place. Would never allow anyone I was a customer of speak to me like that or threaten me like that!.
Yes, local contract companies should think about how much the people they contract to talk to each other. We had a service here that was charging us double what they charged another place. The following year the guy found himself left with the one business he was charging the least, the rest of us moved on. He could have had a nice little business in about a quarter mile had he only been fair with everyone.
 

Alibi Ike

Well-known member
Staff member
Joined
Aug 8, 2010
Messages
2,928
Reaction score
0
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked..
I should mention that there are a lot of psychology in pricing. For example, prices ending in .98 instead of .99 indicate to people that you are just a little bit cheaper. And prices with end in .x4 or .x7 usually indicate a precise price and people tend to argue less about them.
When I put a room's price on special I have a table that sets the room price before tax, so that with the the room price ends .99. For example, our taxes here are 17.912375% (don't ask, it's three different taxes that compound). So if I normally charge $100 for the room, with tax it would be $117.91, but I want it to be $114.99 with tax, so I simply divide it back and put down a price of $97.52. (With the online discount the list price would be $110 and $107.52) and basically with tax the price comes to end in .99 or .98. I know that prices that end in anything that is unusual is a discounted rate and people don't seem to ever argue with a price that just seems so odd as to be precise in a way they don't understand.
.
I've tried the 'ends in 9' vs ends in '0' or '5' here but have never noticed a difference in reservations. Maybe I'll try the '4' next time.
 

Generic

Well-known member
Joined
Feb 24, 2011
Messages
7,520
Reaction score
37
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked..
I should mention that there are a lot of psychology in pricing. For example, prices ending in .98 instead of .99 indicate to people that you are just a little bit cheaper. And prices with end in .x4 or .x7 usually indicate a precise price and people tend to argue less about them.
When I put a room's price on special I have a table that sets the room price before tax, so that with the the room price ends .99. For example, our taxes here are 17.912375% (don't ask, it's three different taxes that compound). So if I normally charge $100 for the room, with tax it would be $117.91, but I want it to be $114.99 with tax, so I simply divide it back and put down a price of $97.52. (With the online discount the list price would be $110 and $107.52) and basically with tax the price comes to end in .99 or .98. I know that prices that end in anything that is unusual is a discounted rate and people don't seem to ever argue with a price that just seems so odd as to be precise in a way they don't understand.
.
I've tried the 'ends in 9' vs ends in '0' or '5' here but have never noticed a difference in reservations. Maybe I'll try the '4' next time.
.
Try the ends in random .xx instead .47 .52 .38 .26 and so on. An even price seems so much more negotiable than a specific number.
 

Alibi Ike

Well-known member
Staff member
Joined
Aug 8, 2010
Messages
2,928
Reaction score
0
We are in the process of doing an actual costs analysis to determine what we are spending per room/per visit versus what we are taking in. I know most don't do this, but we want a clear picture of the business. We will raise our rates if we determine that our profit margin is too low.
Right now, we stand at the median range of room rates for our area. We would like to strike a balance with actually making a profit and creating the perception of value for the money for our guests. Our competitors who have lower rates have only hurt themselves by creating an impression of being "less than" or B&Bs in the area. The competitors who are higher, I feel, have hurt themselves by narrowing their market.
Our star rating on B&B.com indicates that our guests perceive they are getting value for the money. However, we are wondering if we are providing too much value for the given rate. Presently, we offer a 10% returning guest discount. We may stop that.
We've also rethought our amenities package and have been able to save some money while still maintaining an air of hospitality. We were able to identify areas of waste or amenities that weren't being utilized. This in and of itself was a big cost savings that ultimately improved our bottom line.
We are also now charging a modest fee for services that we used to do for free. So far, no one has balked..
I should mention that there are a lot of psychology in pricing. For example, prices ending in .98 instead of .99 indicate to people that you are just a little bit cheaper. And prices with end in .x4 or .x7 usually indicate a precise price and people tend to argue less about them.
When I put a room's price on special I have a table that sets the room price before tax, so that with the the room price ends .99. For example, our taxes here are 17.912375% (don't ask, it's three different taxes that compound). So if I normally charge $100 for the room, with tax it would be $117.91, but I want it to be $114.99 with tax, so I simply divide it back and put down a price of $97.52. (With the online discount the list price would be $110 and $107.52) and basically with tax the price comes to end in .99 or .98. I know that prices that end in anything that is unusual is a discounted rate and people don't seem to ever argue with a price that just seems so odd as to be precise in a way they don't understand.
.
I've tried the 'ends in 9' vs ends in '0' or '5' here but have never noticed a difference in reservations. Maybe I'll try the '4' next time.
.
Try the ends in random .xx instead .47 .52 .38 .26 and so on. An even price seems so much more negotiable than a specific number.
.
Here's how I think...I see odd-looking prices and I think the people or the place is odd and then I think how odd do I feel like being on my vacation? Usually it's not that odd and I go somewhere the prices are normal. But it's an idea.
There was a restaurant in Burlingotn, VT called Carburs and they had odd prices. But everything about the place was odd. It's was always fun to get a non-local in there and convince them to order the 'Queen City Special' which involved almost everyone in the restaurant marching around with your food banging on pots and pans and blowing a bugle until they got, very circuituously, to your table where there was absolutely no difficulty in figuring our who ordered it...the person hiding under the table!
 

JBloggs

Moderator
Moderator
Joined
Oct 7, 2008
Messages
17,743
Reaction score
0
I agree, I prefer order. Tidy numbers, tidy rooms, tidy websites, tidy information all round.
Clear colorful images. Clear room rates and how to reserve a room online. Clear innkeeper or inn information (unlike the one I have seen where it has an About the Innkeepers section and there is a dog(s) sitting there)!
If I am staying in YOUR HOME, let me know who you are and don't play games (and yes I love dogs!)
 

agoodman

Well-known member
Joined
Oct 18, 2008
Messages
818
Reaction score
0
although everyone can give general advise, only you know your Inn and your area and what the market can bear. I just raised my rates $6, not enough but I don't think it can take more. I also took away the single rates however as a single traveler I have to admit I appreciate a single rate and esp at a B&B where it is really unfair to charge a single traveler that we are only feeding one breakfast the rate for 2.
I also mantain weekend and weekday rates and while weekday are generally business who maybe can pay more, they also have the option of staying somewhere for less so I had to weigh that in in deciding whether to align weekend and weekday rates. Some Inns may have MORE business during the week and may thus need to lower rates over the weekend to get the business in.
I stayed at an Inn on the weekend and I realized that maybe I am undercharging based on what I provide, the quality of my rooms and my breakfast - or maybe they are overcharging? So if you have some Inns around you that you can stay at then maybe you can look at how yours compare. It was a good exercise, not to mention I managed to leave the Inn for ONE WHOLE NIGHT (had no guests lol!!)
 

Generic

Well-known member
Joined
Feb 24, 2011
Messages
7,520
Reaction score
37
although everyone can give general advise, only you know your Inn and your area and what the market can bear. I just raised my rates $6, not enough but I don't think it can take more. I also took away the single rates however as a single traveler I have to admit I appreciate a single rate and esp at a B&B where it is really unfair to charge a single traveler that we are only feeding one breakfast the rate for 2.
I also mantain weekend and weekday rates and while weekday are generally business who maybe can pay more, they also have the option of staying somewhere for less so I had to weigh that in in deciding whether to align weekend and weekday rates. Some Inns may have MORE business during the week and may thus need to lower rates over the weekend to get the business in.
I stayed at an Inn on the weekend and I realized that maybe I am undercharging based on what I provide, the quality of my rooms and my breakfast - or maybe they are overcharging? So if you have some Inns around you that you can stay at then maybe you can look at how yours compare. It was a good exercise, not to mention I managed to leave the Inn for ONE WHOLE NIGHT (had no guests lol!!).
I used to offer single rates until I realized that I forgo the income from the second person who could be in there. So we stopped.
 

Alibi Ike

Well-known member
Staff member
Joined
Aug 8, 2010
Messages
2,928
Reaction score
0
although everyone can give general advise, only you know your Inn and your area and what the market can bear. I just raised my rates $6, not enough but I don't think it can take more. I also took away the single rates however as a single traveler I have to admit I appreciate a single rate and esp at a B&B where it is really unfair to charge a single traveler that we are only feeding one breakfast the rate for 2.
I also mantain weekend and weekday rates and while weekday are generally business who maybe can pay more, they also have the option of staying somewhere for less so I had to weigh that in in deciding whether to align weekend and weekday rates. Some Inns may have MORE business during the week and may thus need to lower rates over the weekend to get the business in.
I stayed at an Inn on the weekend and I realized that maybe I am undercharging based on what I provide, the quality of my rooms and my breakfast - or maybe they are overcharging? So if you have some Inns around you that you can stay at then maybe you can look at how yours compare. It was a good exercise, not to mention I managed to leave the Inn for ONE WHOLE NIGHT (had no guests lol!!).
Other than the food costs, and I'd knock off less than $5 for that, and a little less water usage, most singles use the bed and all the towels and turn the heat on or A/C on as much as 2 people would. The savings for me are negligible for singles over doubles. I'll give a discount only if I think the room will be empty if I don't.
 

Don Draper

Well-known member
Joined
Aug 10, 2008
Messages
2,863
Reaction score
0
although everyone can give general advise, only you know your Inn and your area and what the market can bear. I just raised my rates $6, not enough but I don't think it can take more. I also took away the single rates however as a single traveler I have to admit I appreciate a single rate and esp at a B&B where it is really unfair to charge a single traveler that we are only feeding one breakfast the rate for 2.
I also mantain weekend and weekday rates and while weekday are generally business who maybe can pay more, they also have the option of staying somewhere for less so I had to weigh that in in deciding whether to align weekend and weekday rates. Some Inns may have MORE business during the week and may thus need to lower rates over the weekend to get the business in.
I stayed at an Inn on the weekend and I realized that maybe I am undercharging based on what I provide, the quality of my rooms and my breakfast - or maybe they are overcharging? So if you have some Inns around you that you can stay at then maybe you can look at how yours compare. It was a good exercise, not to mention I managed to leave the Inn for ONE WHOLE NIGHT (had no guests lol!!).
Other than the food costs, and I'd knock off less than $5 for that, and a little less water usage, most singles use the bed and all the towels and turn the heat on or A/C on as much as 2 people would. The savings for me are negligible for singles over doubles. I'll give a discount only if I think the room will be empty if I don't.
.
This is exactly our experience as well. If anything the singles end up using more. We still give the $10/night discount so that's enough as far as I'm concerned.
 
Top