rate management

Rate management insights for independent hotels

Rate management is one of the most important tasks on independent hoteliers’ “To Do List.”  To effectively drive incremental revenue, operators must utilize a strategy that supports how their rates are managed, which includes when they are adjusted, by how much, for how long, how they are distributed, etc.  It can be complex, but our customers rely on the features of innRoad’s fully integrated, cloud-based hotel property management software, as well as tips from our blog, to simplify rate management and maximize their revenue.

Here are some insights to help you develop an effective rate management strategy:

Establish your value

A key to creating a solid rate management strategy is accurately determining the value of your various products, including room types, bed types, food and beverage, add-ons, loyalty program and special packages and how they are sold to travelers, such as via OTAs, hotel website, etc., based on seasonality, market conditions and other factors.  For example, a 2-queen bed, pool view room with a $150/night rack rate can be sold in various ways to generate incremental revenue:

  • On OTAs, selling the room at rack rate because OTA visibility will likely increase booking opportunities.

  • On a hotel’s website, increasing its rate by 5% and including free Wi-Fi as an add-on to capture additional revenue and honor OTA rate parity agreements.

  • During busy seasons and high-traffic events, align its rate with competitors, but offer tiered add-ons at additional cost, such as breakfast, Wi-Fi and airport shuttle service, to leverage high traveler demand and capture additional revenue.

  • During shoulder season and slow periods, offer promotions, such as Friday through Monday long weekends or midweek bookings, at discounted rates to drive reservations and capture revenue that is normally hard to earn during these periods.

Establishing value for your inventory of hotel products is a large undertaking, but the more variety you are able to offer travelers, the more opportunities you will have to generate incremental revenue.

Find your balance

The real challenge of rate management is positioning your hotel products against your competitors and, most importantly, aligning them with traveler expectations.  Savvy travelers compare several hotels before booking to ensure they’re getting the most value for their money.  When developing your rate management strategy, you must properly price your product offerings against your competitors so travelers quickly understand and appreciate the value your hotel provides.  In doing so, you’re more likely to maximize incremental revenue with every booking.


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