Occupancy Based Pricing

If reading something dull and dry for 10 minutes had the chance to lift your revenue by 5% would you do it?

If the answer is yes then read on.......If a 4 seater taxi was driving down the road and was hailed by just 1 person do you think they would pick up that fare? Likewise if you only had triple rooms left and a single customer was looking for a room would you give it to them?. The answer is either 'hell yes' or 'yes under certain circumstances' ie someone at the reception or on the phone would make a quick judgement call..'I probably wont sell all the rooms tonight so i will let them go to this 1 person'....etc. Makes sense does it not? except most people are NOT doing this in their primary sales channel ie online. They throw up on to their Channel Manager 6 Doubles, and 3 Double + Single and 1 Family Room and hope for the best.

The answer really is to set the rooms up using Occupancy Based Pricing (OBP). Lets take an example.... a Double and Single Room...this could be either sold as a Double + Single, a Double , a Twin or a Single. In fact you wil sell it like this over the phone but online its listed as a Double Single for 3 people only ie You are losing the chance to sell it to 1 person or 2.

Ah says you, but you already do that,....manually.....by ignoring what rooms you REALLY have in your hotel and manually telling the Channel Manager that you have more Singles or Doubles than you really do. The problem here is 2 fold: Firstly the word 'manually' means you either need to be, or have, a really focused Revenue Manager to do this manual massaging, which doesnt exist everywhere. Secondly if you are using a solidly connected Channel Manager then the PMS is controlling the availability with True/Actual room availability and you cannot override it

The answer of course is to use OBP, which is now available with Expedia/Booking.com and of course the GuestDiary. Essentially the rooms are setup to sell to different amount of occupants giving you multiple bites at the sales apple.

Is there any down side. Yes, some properties do not always want to sell their larger rooms to reduced amounts of guests, ie on a busy weekend they may prefer to sell their Double and Singles to 3 guests only to maximise their revenue. The answer is of course to close out the 'occupancies' they dont want to sell on those dates.

In practise many properties will take the middle ground here, ie set up OBP but then close out for the Single occupancies of the Double/Twins at weekends in advance, or keep permanently closed their Quad Bed Rooms for 1 adult etc etc.

Hope that helps.