10 Hotel Pricing Strategies for Revenue Boosts & Bookings

To become profitable, hoteliers optimize their pricing strategies in a way that maximizes both occupancy and revenue. It consists of various factors, such as sell-on demand, seasonality, competition, and market trends to determine the optimal rate of a room to maximize profit and occupancy rates. A hotel pricing strategy is a way to boost revenue without even losing guests. These strategies will depend on the type of location, facilities offered, and target market. Hotel pricing requires a refine approach, blending strategy, market analysis, and guest preferences to achieve the ideal balance of occupancy and revenue. Modern advancements in automation and technology have led many hotels to adopt revenue management software. These tools utilize algorithms to dynamically adjust room rates, thereby optimizing revenue potential in real-time.

Best 10 Hotel Pricing Strategies

Here are ten hotel pricing strategies that will help you maximize your revenue from every guest at your hotel. 

1. Know Your Competitors

Every hotel is different, but they all have one thing in common: they have competitors. In order to set your hotel apart from the competition, you need to know where your competition is coming from. 

Read the reviews on various websites like, TripAdvisor, Google etc. and try booking a room with your competitors. You’ll be able to better identify what sets them apart from you. 

For example, if you’re a 4-star hotel with a pool while the competitor is a 3-star hotel without one – this will give you an idea of how you can differentiate yourself in customers’ minds. 

2. Analyze Your Existing Average Daily Rate (ADR)

Your hotel’s average daily rate (ADR) is the amount you charge per night for a room. It’s important to understand that there are many different factors that can determine your ADR, such as location, amenities, etc. One key factor to keep in mind when determining your ADR is whether or not you’re trying to compete with other hotels in the area. 

If your goal is to increase bookings, it might be worth considering lowering your rates so you’re more competitive with others in the area. But if booking rates are low for everyone in the area – it might be beneficial for you to raise them instead so that people will remember you as the hotel with higher rates. 

3. Adjust Room Rates Based on Occupancy

This is one of the most used hotel pricing strategies. According to this strategy, when hotel has the low occupancy, the room price should be comparatively low and when most of the rooms are booked, the pricing should be high. 

Seasonal pricing can help hotels make up for low occupancy during off-peak seasons, while also attracting more guests during busier periods. If you’re not sure when your hotel’s peak season will be, consider looking at similar hotels in your area to see when they’re most booke. Hotel occupancy decides the present as well as the future of the hotel business to a large extent. It has a huge impact on hotel finances/revenue and thus, administration and operations.

If you know that your hotel is going to have a particularly busy weekend, then it might be worth raising prices accordingly. For example, if Memorial Day Weekend has been booked solid for months in advance, then it might be worth raising rates or upgrading rooms for standard rooms with two double beds to premium suites with king beds and kitchenette. 

Learn How to Fix Revenue Leakage in Hotels!

4. Ask Guests What They Want and Charge for It

The first thing you should do when considering your pricing strategy is identify your target guests. You can find out what these guests want by looking at the reviews on your website and reading articles about similar hotels. Once you have an idea of the type of guest you’re marketing to, it becomes easier to figure out what they want in a hotel. 

One way you can charge for this is by providing amenities that are not normally offered by other hotels in the area. For example, if many of your visitors are business travelers who need high-speed internet access, then it would be a good idea for you to offer free or discounted Wi-Fi. 

5. Cancellation Policy-Based Pricing

A well-thought-out non-refundable cancellation policy is one of the best methods for pricing hotel rooms. You can lessen the loss and sell rooms at a profit by using a pricing strategy depending on the cancellation policy. 

For example, you can offer a lengthy stay at lower rates with a condition of no refund on the booking cancellation. This will help you sell the same room again if canceled by the guest. 

6. Discount Vouchers to Increase Direct Bookings

Offering a discount voucher for direct bookings is a great way to increase direct bookings by incentivizing potential guests. This works particularly well for hotels that have local competition. 

For example, if you’re a hotel in Chicago with many other great hotels nearby, this would be an excellent way to encourage people from the area to stay at your property without having to go out of their way. 

You can also offer a discount voucher as an incentive for referrals. An example of this strategy would be offering $50 off or even free nights when someone refers 10 friends who then stay at your hotel. The best part is that this strategy will cost you nothing because it’s all in the promotion!

7. Length of Stay-Based Pricing

This strategy is used during festivals and vacations. The length of your guests’ stays can affect pricing in this hotel pricing strategy. The amount of night packages you’re offering to your guests should determine the optimal length of stay. 

The main purpose of using this strategy is to let the guest stay at your hotel for a minimum few days so that even if you have less bookings, it won’t matter much as current guests are staying for more nights. 

8. Upselling Based Pricing 

This strategy is one of the most frequent strategies that every hotelier does when a guest is booking or reserving a room, whether online or directly from the front desk of a hotel. The hoteliers encourage guests to upgrade their room amenities or upgrade their room to suites or pay more for a king-sized bed. In this manner, hoteliers upsell their room to guests, by spending more on the current purchase or booking.

For example - Hoteliers encourage guests to take spa service, valet laundry, or any additional entertainment or dining services.

They advise clients to choose a suite over a standard room or to request a king-sized bed for added comfort.

Also promotes extra packages such as the anniversary and bachelorette packages.

Learn more: 10 Best Hotel Upselling Techniques to Maximize Hotel Revenue

9. Cross-Selling Based Pricing

When customers pay for existing or current purchases for booking, this strategy works as an offer like "if you are buying one thing, you can also add another thing and both in a great offer". This appears to be the same as upselling, but it is not. In cross-selling, hoteliers encourage guests for additional purchases of their existing or current purchase items.

For example, hoteliers typically refer guests to include extra services such as massages, gym, local tours, therapy sessions, and some extra entertainment.

It can be applied when guests are about to start purchasing online or offline and before their arrival by sending promotional emails of discounts and offers or additional services.

10. Hotel Package Pricing

This hotel package pricing strategy allows hoteliers to earn more on a single booking by selling extra items than just a hotel room.

By creating stunning offers that guests can't refuse like high-quality products and services, which include welcome baskets, chocolates, snacks, extra space or meeting rooms, spa packages, classic packages, event packages, exclusive dinners, or other appealing hotel packages, etc.

They do this because selling a room with extra items or offers is more expensive rather than selling a room with no extra services.

The Bottom Line

Analyze in real-time which strategy is best for you to upscale your hotel growth and get your target audience.

After applying these hotel pricing strategies, you will see growth in your direct bookings and hotel revenue as well. We hope, you got value from this article. We recommend you to visit botshot.ai to check hotel automation systems.