Room rates – they’re your bread and butter. They’re also one of the key reasons why someone might choose to stay at your hotel versus a competitor (or stay with a competitor instead of with you!). Setting room rates is a confusing, complex process with lots of inputs, variables, and even a dash of sentiment. One way to tame that chaos is to use the right tools. When it comes to room rates, a hotel rate shopping tool is what you need. Not sure what this type of tool is, why you need it, the benefits that might be available, or how it can play into your growth strategy? In this post, we’ll dive deep into everything you need to know about a rate shopping tool.
What Is a Hotel Rate Shopping Tool?
A hotel rate shopping tool is precisely what it sounds like – a tool that allows you to “shop” different hotel rates. While there are different tools out there, the right one will offer the following capabilities:
- Rate Visualization – You’ll be able to visualize your rate versus your competitors every single day of the year. Not only will you be able to bump your current rate with theirs, but you should also be able to compare historical rates, too. This is called “rate shopping”.
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Rate Parity – A rate shopping tool should do more than just let you shop around for different rates from your competitors. It should also allow you to check rate parity. What does that mean, though?
There are a lot of things that go into what a guest pays for when they check out and it’s not all accounted for in the advertised rate. Rate parity is the process of breaking down the room rate into its constituent components and then allow you to compare rates on a component-for-component basis. For instance, one competitor might have cheaper rates than you, but checking parity would show that they were not including taxes in the advertised rate, or that they were omitting other fees that will be assessed at checkout in an effort to make themselves seem more affordable.
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Comparison – While detailed breakdowns are nice, they can be challenging to use. Sometimes you just need all the critical information to make a decision at a glance. That’s where comparison/ranking capabilities enter the picture.
With the right rate shopping tool, you can see how your online rankings compare with your competitors based on price and other factors. You can also break this down in different ways. For instance, the city-level view gives you a great overall indicator of your ranking in the wider area, but it does not tell the whole story. To really drill down into performance metrics, you’ll want to compare performance/ranking on a micro-market level.
As you can see, a hotel rate shopping tool offers quite a few benefits. However, how does it play into setting competitive strategies?
Rate Shopping and Competitive Strategies
How can you use rate shopping to devise competitive strategies? Actually, it really comes down to accessing, understanding, and then using the information surfaced through the rate shopper.
- Price Variances – By comparing room rates and their breakdowns, it is possible to uncover areas where you outperform the competition. You can then make these the foundation of your marketing efforts. For instance, transparent pricing is a big thing with consumers today, and if your competitors aren’t being transparent but you are, that can become a competitive advantage. This is just one example, but there are plenty of others.
- Room for Improvement – Compare your online rankings to your competitors. Where do they excel? Where do you fall short? Is there room for improvement there? While you might not be able to make large-scale improvements to your amenities, like adding a swimming pool if you don’t currently have one or enclosing an outdoor pool in glass, there are plenty of ways that you can use this information to identify areas where you can improve and become more competitive.
- Pricing Pattern – All hotels have a pricing pattern, although it’s recommended to move away from the BAR method and toward dynamic pricing based on occupancy, instead. With a rate shopping tool, you’re able to unearth insights into different competitors’ pricing patterns for specific days, weeks, and months, as well as how they price when they are full and when their rates tend to spike. Based on that information, you can create counter-strategies that allow you to beat the competition.
The Relationship between Rate Shopping Tools and Revenue Management
While it might seem like we’ve been talking about brand positioning and marketing, we’re also discussing critical elements to revenue management . Rate shopping provides revenue managers with vital market intelligence about specific conditions, such as competitors’ occupancy levels, online reputation and average reviews, demand for accommodations in the local area, and so much more.
All of this information can be combined to create a successful revenue management strategy. That strategy should dovetail with your competitive strategies listed above. Finally, it should also be combined with your own in-house data, such as the cost of sales, total revenue, payroll costs, and other expenses. This gives you access to the “bigger picture” and helps you make data-driven decisions that bolster profitability.
The Role of Hotelogix in Your Success
At Hotelogix, we understand that today’s hotel owners, managers, and decision-makers need advanced tools to build successful brands. The hospitality industry is more competitive than ever before and if you’re going to compete with other properties for the same guests, you need to know how you stack up to your competitors.
For that reason, we designed our hotel management software to interface with third-party tools, including rate shopping tools. We help you combine that information with in-house data to make more accurate decisions that cut costs, boost profitability and productivity, and ensure that you’re able to beat the competition.
Interested in learning more about Hotelogix and how our hotel management system compares to your current suite of tools? Sign up for your free trial today and put it to the test, no strings attached! If you’d prefer, you can also request a demo with one of our experts who will help you learn how to use our software to maximize bookings, boost revenue, simplify hotel operations, expand your market reach, and grow your brand.