Worst Decisions Ever
A client recently asked us what were the worst decisions ever we observed over the years. Revenue managers make a lot of decisions daily… everyone makes mistakes. The important thing is to learn from your mistakes, and not repeat. The next few posts present some lessons our clients have learned.
Blindly following the leader and dropping rates.
Don’t blindly match the new lowest rate in the market. This race to the bottom is a dangerous game, and not a sound hotel pricing strategy. First and foremost, you should always price your property based on its needs, its own supply and demand. If you are high on supply and short on demand and a competitor drops rate below your own, we recommend a couple things. First, run the numbers to see how many lower priced bookings you could take and still make forecast and budget… know the numbers. Second is there a way to drive demand without a ‘public’ rate drop? Can you run a package sale, drive opaque bookings, etc.? Do you really need to match that new low rate, or maybe just fine tuning your price by dropping it a small $10 will win?
If you run a package sale, or a room upgrade promotion, it will give you something to talk about (marketing!).
Where is your inventory need? If not in your lowest room category, and you drop your lead rate, you just diluted that demand and failed to target the actual need.
Tomorrow we will present another lesson learned and observed!
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