Are your prices consistent?

20 April 2006
Are your prices consistent?

Pricing parity is one of the key challenges facing today's hoteliers. While having different prices for different market segments, or through different channels, is nothing new, the internet has made it all much more transparent.

In the big chains there are specialists employed at both unit and head office levels, and still differences appear. For the independent hotelier the challenge is greater, as they must remain competitive and consistent without the benefit of such centralised resources.

My recent experience suggests that some properties have pricing differentials of 30% or more available on the internet. Even then, the cheapest prices that they have on offer are sometimes via third-party sites, where they typically incur significant costs through commissions or fees, rather than through their own websites, which are less costly.

One would think it would not be difficult to achieve pricing parity, so why are so many discrepancies apparent?

There are a multitude of reasons. Sometimes it can be deliberate and strategic, for example, to appeal to different market segments with different prices through specialist sites or with particular packages.

At other times, late-booking offers are placed on some sites while original pricing remains on other sites.

Then there are pricing differentials that are caused by contracting net rates with some sites and channels but gross commissionable rates with others.

Of course, there is also just plain old "human error", where someone has just changed rates on one site but forgotten about another.

I don't pretend that this is an easy area for hoteliers, but unplanned or inconsistent pricing differentials do little for customer perception of the market. As long as customers can find price differences, they will continue to look around and continue to negotiate.

The best practical advice I can offer is to be aware of every channel that you are working through and regularly review the prices on offer. Set out a rate strategy, including flexibility for late deals, and be consistent with that policy, changing the strategy as required to maximise revenue.

This seems to be a common-sense approach, but unfortunately it's not the one that's out there right now.

How important is price consistency?

Gerard Greene, chief executive officer, Yotel One of the big, big things that we want to be clear on is pricing. We're not using any third-party operators to sell. Every room will be sold directly on our website. Everyone staying in the hotel on the same night will be paying the same price. However, that's not to say the price will be the same on a Sunday as it would be on a Wednesday. Much of the success of budget hotels has been due to consistent pricing.

Jonathan Langston, managing director, TRI Hospitality Consultancy I think there's more to be said about what the internet has done for pricing. If you phone up for a room today, the first question you will be asked is: "When do you want to come?" The price varies depending on the date you want to stay. It's more important for the price to be flexible according to demand [than to be consistent], and consumers understand this.

Richard Candey, director of hotels, Cushman & Wakefield Hotels My view is that the more routes there are for the public to book bedrooms, the better. What's important to us is that a greater number of people use hotels, so price differences due to the internet aren't an unwanted phenomenon - just a matter of life. From a real estate perspective, if pricing differentials lead to a greater level of performance from hotels, great!

Anthony Thwaites, general manager, Malmaison, London As a group, we price to sell, not to discount. If you look at our prices, you'll see a consistency throughout the group with our pricing. What's recognised by our customers is that there's a value-added experience contained within the price.

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