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The importance of pricing strategies in the hospitality industry
The hospitality industry is a highly competitive industry where pricing strategies play a crucial role in determining the success of a business. The price of a product is one of the major factors influencing its sales. However, the pricing strategy in the hospitality industry is not as simple as just setting a price. Many factors need to be considered, such as unique selling proposition (USP), cost per available room (CPAR), competitor pricing, and market segmentation.
In the hospitality industry, hotel rooms are considered perishable items, which means that if the product is not sold before the night audit, it results in lost revenue. An empty room in a hotel is lost revenue as maintaining an empty room incurs a running cost. One of the prime principles of revenue management is selling at the right price, but how do you know if you are selling at the right price?
The first factor to consider when setting a price is the unique selling proposition (USP). A strong unique selling proposition must correlate with the right price. USP does not necessarily have to be an inbuilt product in the room; it can be service-related or facilities-related. Value-added benefits will also add value to your product and demand a higher price.
The cost per available room (CPAR) is another important factor to consider when creating price points for a hotel room. CPAR is one of the metrics used in the hospitality industry to calculate the total cost of an unoccupied room at a given time. Understanding the CPAR is important to avoid any loss, and factoring in the CPAR will help generate profit.
The cost-plus pricing method is used during extremely low demand. During the pandemic, many hospitality establishments used this method to sustain their business. The hotel rooms were sold at a lower price, keeping the cost of operating plus a profit markup. Group pricing, especially tour series, can be locked profitably by calculating the rate based on the cost-plus pricing method during low-demand periods.
Refurbishment and renovation of hotel rooms are essential to maintain brand quality and offer quality products. A well-maintained room product often fetches a good price, as the quality of the product still has value. When a hotel room is refurbished, it can be positioned back into the market at a slightly higher price point.
Competitor pricing is another factor that should be considered when setting prices. When your room’s price points are in line with or below the price of your competitors, you may be trying to capture a larger fair share of the market. The method of competitive pricing involves analyzing prices and setting prices based on your competitor set. This technique is very widely used in the hospitality industry.
Pricing strategies in the hospitality industry are a critical component of revenue management. Pricing strategies must be carefully considered and analyzed based on various factors, such as unique selling proposition, cost per available room, competitor pricing, and market segmentation. A well-planned pricing strategy can increase revenue and maintain the hotel’s competitive edge.
Editors Note: The article above is based on a publication by OARS Consultancy, a hospitality consultancy firm located in Dubai. OARS, which stands for OCCUPANCY.ADR.REVPAR.SOLUTION, is dedicated to the hospitality sector with a strong emphasis on revenue management consultation and hotel and resort-related projects. The company comprises a team of professionals from around the world who bring their expertise together with the common goal of providing solutions to optimize revenue growth for hotels and resorts. For more information about OARS visit https://oarsolution.com/
Link to the original publication: Pricing Strateigies
Milaidhoo Maldives will mark International Men’s Day with a cocktail-making competition for male guests, as the resort celebrates its tenth anniversary this November.
The occasion will also recognise the contributions of the men involved in the resort’s development and operations over the past decade. Since its establishment, Milaidhoo has maintained a focus on Maldivian hospitality and cultural traditions, with its original vision continuing to influence the guest experience.
As part of the celebrations, the resort will host Gentlemen & Cocktails, an interactive cocktail-making challenge at Compass Pool Bar.
The event will begin with a workshop led by the bar’s bartenders, who will introduce participants to the fundamentals of cocktail preparation. Following the workshop, participants will compete to create their own signature cocktails using a selection of ingredients.
Each participant will receive a black box containing secret ingredients, which must be incorporated into their creation. They will also be required to select an additional herb, vegetable or aromatic ingredient from the resort’s Chef’s Garden.
Participants will have a limited amount of time to prepare their cocktails, with their partners serving as judges. The creations will be assessed based on flavour, presentation and originality.
The winning cocktail will be featured as the Cocktail of the Day at Compass Pool Bar for one week. The winning couple will also be entitled to unlimited servings of their creation for the remainder of their stay.
The International Men’s Day celebrations form part of Milaidhoo Maldives’ tenth anniversary year, recognising the people who have contributed to the resort’s development and its approach to hospitality.
Through the cocktail-making competition, the resort aims to provide guests with an interactive experience while commemorating International Men’s Day.
Angsana Velavaru has announced its festive programme for Christmas and New Year, featuring seasonal celebrations, family activities, dining experiences, cultural performances and marine excursions in the Maldives.
The celebrations will begin with a Christmas tree lighting ceremony, bringing guests together to mark the start of the festive season. On Christmas Eve, the resort will host traditional Christmas carols at sunset, while younger guests can look forward to a visit from Santa Claus.
Throughout the festive period, families will be able to participate in activities such as gingerbread cookie decorating and bracelet making. The programme will also include outdoor games and beach activities, including football matches and traditional tug-of-war competitions.
Traditional Bodu Beru performances will form part of the celebrations, introducing guests to Maldivian music and cultural traditions.
Dining will be a central part of the festive programme, with the resort hosting a Christmas Eve dinner and Christmas brunch. New Year’s Eve celebrations will feature a New Year Garden Soirée Dinner, followed by a New Year brunch on 1 January. The resort will also organise dedicated celebrations for guests observing Orthodox Christmas.
In addition to the seasonal activities, guests will have opportunities to explore the surrounding marine environment through excursions such as manta ray and turtle safaris. The resort will also offer wellness experiences for those seeking relaxation during their stay.
The festive programme is designed to accommodate couples, families and groups of friends, combining traditional Christmas and New Year celebrations with recreational activities, cultural experiences and the resort’s existing leisure offerings.
Through its programme of dining, entertainment, outdoor activities and marine excursions, Angsana Velavaru aims to provide guests with a range of experiences throughout the festive season.
Kandooma Maldives has introduced a new pickleball court, expanding its recreational facilities as the paddle sport continues to gain popularity worldwide.
Combining elements of tennis, badminton and table tennis, pickleball is a sport that is relatively easy to learn and suitable for players of different ages and abilities. The new facility allows guests to participate in singles or doubles matches, offering an additional recreational activity for families, couples and groups staying at the resort.
The pickleball court is open daily from 6am to 6pm, with paddles and balls available for guests to borrow from Reception.
Court reservations can be made through the resort’s Recreation or Front Office team. Each villa is entitled to one complimentary hour of court use per day.
The introduction of pickleball forms part of Kandooma Maldives’ efforts to expand its recreational offerings and provide guests with more opportunities to participate in sports and group activities during their stay.
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