Establishing Room Rates

Braidwood Hospitality Management work with our clients, small and medium sized hotels & resorts, to source and analyse the data collected from a hotel’s identified competitive set, removing the guesswork and assisting each Owner/Operator with establishing room rates with confidence. In follow up, we routinely ‘shop’ our client’s competitive sets to ensure our clients remain competitively priced.

Everything starts with Rack Rate! Establishing seasonally adjusted competitive room rates along with relevant discounts applicable to each transient & group market segment is critical to growing market share, revenue, average rate and RevPar.

Two of the most common approaches to pricing your hotel rooms are as follows. In both examples seasonal pricing will also play a factor.

Market Based Pricing - The assumption behind this approach is that a hotel can only charge what the market will bear; therefore, price is dictated by the competition and is an approach that allows the local market to determine the rate. This approach fails to take into account what a determined sales effort can accomplish.

Top-Down Pricing - This approach is often used by hotels entering a new market or trying to identify a gap which is unfilled and still requires an element of cost-based pricing in order to ensure that the prices being charged are realistic and will result in an overall return on investment.