‘Tis the season to be jolly, deck the halls, and reconsider your pricing strategy for the upcoming spike in holiday-related travel. In the coming weeks, people will be crisscrossing the country and the globe on planes, trains, and automobiles. And whether they’re traveling to spend the holidays with family or to get away from the hustle and bustle of the merrymaking crowds, you can bet many of them are looking for hotels. Actually, we know for sure they are—we see it in trivago’s search volume data.
This increased demand for accommodation can mean a boost in revenue for you—if you play your cards right. There are tricks to setting competitive prices that compel travelers to book and still maximise your profit margin, and that’s really the goal. You want to ensure the greatest possible profit for your business, without having to cut financial corners and risk jeopardizing the experience you offer your guests.
Luckily, this can be easier than it sounds. Here are 5 tips for optimizing your room rates based on demand. They’ll help you get competitive for the holidays, and stay competitive long after the sleigh bells have stopped jingling.
1. Know the exact demand for hotels in your area
To set your prices based on market demand, you of course need a way to monitor demand.
The search volume functionality available with the rate shopper Rate Insights enables you to follow demand on a major global hotel metasearch—one that gets 1.4 billion visits per year, in fact. It’ll show you how many people are searching for hotels in your area at any given time.
You’ll also be able to see upcoming local events with an events calendar. Even better: you’ll see their exact impact on the number of searches generated by people looking for hotels near you.
It’s a good idea to keep an eye on search volume when a big holiday is approaching, too. Because while it’s probably safe to assume that people would rather sleep in a hotel than their in-laws’ living room, it’s better to know for sure.
2. Stay on top when you’re in demand
When demand is high, prices are high. People expect it, so they accept that they’ll probably have to pay more. Getting to spend the holidays with loved ones can also be a reason why people are willing to spend more.
Others prefer to take advantage of the days off to skip town on a vacation. Those cozy remote mountain cabins and exotic beach resorts are perfect getaway accommodations and can book up fast this time of year. As long as the rates are competitive for the season and the guest experience, there will be people happy to pay the cost of a coveted hotel room in the high season.
No matter your location or why people have made it their travel destination, when you see the search volume go up, you can consider raising your rates along with it.
3. Set minimum-night requirements
If you notice a high demand for hotels in your area consistently and for an extended length of time, there’s another tactic you can try: setting a minimum-night requirement.
Why? Because when demand is high, you can be more demanding. Some guests want to book a single night—and that’s fine, except when they take your last room that night and then someone else wants to book a full week. If you have no availability one night during their projected stay, those potential long-staying guests will go with a competitor. Having minimum-night requirements—say, three nights during a holiday weekend—can prevent this.
4. Address dips in demand
There will always be people in need of hotels—every day, 365 days a year. Even when demand dips, there are still business travelers, jet-setters, and the people who just can’t afford high-season prices. But because these low-season guests are fewer in number, hotels have to really compete to win their business. By adjusting your rates when the search volume for your area decreases, you can become more competitive in the market and more likely to land bookings.
When comparing two competitor hotels with similar offerings and trivago profiles, data shows that if one hotel has rates a mere 5 percent lower, on average its profile attracts 15 percent more viewers and increases its ranking on trivago by 37 percent—and its booking conversion skyrockets to 50 percent.
5. Offer special deals to encourage off-season bookings
If you’re looking for another way to encourage bookings during the low season, consider offering special deals. They could be complimentary wine, a spa package, or a free room upgrade. It’ll help you welcome more guests when demand is low without having to further lower your room rates.
Just make sure potential guests know about any special deals you run — check out this post for tips on how to use the Special Offer button on trivago for just this purpose.
Bonus tip: take cues from the competition
To keep your competitive edge razor sharp all year round, look at what the competition is doing—something else you can do with Rate Insights. See how your top five competitors respond to the changes in demand with their own pricing strategies and react accordingly. When they raise their prices, you might want to rethink yours. If they lower theirs, you’ll know what prices you’ve got to beat.
Get more from your rate shopper and entire PRO account
The more comprehensive your rate shopper, the greater your competitive edge. Take advantage of everything you get from Rate Insights: notifications about rate changes; price forecasting on multiple OTAs. . . . And let’s not forget all that data about hotel search volume and pricing that only a leading global hotel metasearch has access to.
As you’re optimising your pricing strategy, why not go ahead and put all the trivago Hotel Manager PRO features to good use as well? Use the Visitors’ Profile to discover your global audience and the exclusive Special Offer button to target them. And just like you do with Rate Insights, monitor your main competitors to see what types of travelers their trivago profiles are attracting—because the better you know your competition, the better prepared you are to surpass them.