A long time ago, I witnessed a very memorable conversation between an experienced, seasoned revenue management executive and a brand general manager. The general manager requested corporate assistance figuring out how to sell more suites, instead of constantly and only upgrading into them. At the end of the day, after digging through data and spending time with the team, we met with the GM to debrief and share our findings. We told the GM that the price needed to be lowered, and we presented data that solidly supported our recommendation. The GM listened, then pushed the stack of data back at us and snorted “I don’t care what you think I should charge for my suites. They are worth $1,200 a night and I won’t accept a penny less!” to which my mentor replied…
“With all due respect, it doesn’t really matter what you think they are worth. The only thing that matters is how much your customers think they are worth.”
Customers perceive value based on comparing the room rate versus where they believe the product ranks against the competitive set. Bottom line, if your suites aren’t selling and you believe they are at the top of the market, if you want to sell them you need to adjust the price (assuming people know they exist, and marketing is doing their job… if not, talk to them before making any price adjustment!). If you decide a price adjustment is needed, we recommend you test it… try a short-term promo (weeks, not months) to test a lower price point.
Finally, always be aware how your price positions you in the market. If you are tracking to sell out way in advance, you can price aggressively against the market… if not, and you need to move some volume, you can undercut the market and steal some share. Just make sure you keep an eye on the market!
How much are your rooms worth?
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