Featured
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
Featured
Worldwide Kids accreditation highlights Dhigali Maldives’ commitment to exceptional childcare
Dhigali Maldives has announced that its “Play” Kids Club has been accredited by Worldwide Kids, becoming one of only nine such facilities in the Maldives. This recognition underscores Dhigali’s commitment to providing high-quality and inclusive childcare services.
Christian Szabo, the General Manager of Dhigali Maldives, described the accreditation as a significant milestone, emphasising that it affirms the resort’s dedication to offering exceptional and inclusive childcare programs. He expressed pride in joining a network that shares the vision of nurturing young minds.
The “Play” Kids Club caters to children aged 4-12, providing a vibrant array of activities facilitated by certified childcare professionals. This accreditation further solidifies Dhigali’s focus on delivering exceptional family experiences in a safe and stimulating environment.
With this accomplishment, Dhigali Maldives continues to set a high standard for family-friendly luxury, ensuring parents can relax with the confidence that their children are engaged in fun and enriching activities during their stay.
Celebration
VARU by Atmosphere marks five years of unmatched hospitality
VARU by Atmosphere, an iconic private island resort in the Maldives, celebrated its five-year anniversary this week, marking five years of hospitality, culture, and luxury inspired by the core philosophy of the Joy of Giving. The Naturally Maldivian resort hosted key stakeholders, including the island’s owners, corporate leadership, and colleagues, for an evening of grand celebrations featuring cultural performances, awards, and diverse culinary experiences.
Since its opening in 2019, VARU by Atmosphere has established itself as a sanctuary for travellers seeking to explore the Maldives’ rich cultural heritage while enjoying heartfelt hospitality. Guests at the resort experience the beauty of the turquoise lagoon and immerse themselves in the relaxed island lifestyle of this picturesque Indian Ocean destination. A standout feature of the resort is the award-winning Kaagé restaurant, which highlights authentic Maldivian cuisine, celebrating local ingredients, flavors, and culinary traditions.
Reflecting on the milestone, Mei P. Pun, General Manager of VARU by Atmosphere, noted the significance of the resort’s name, saying, “In Dhivehi, the Maldivian dialect, VARU translates to living life in abundance, strength, resilience, and above all, authenticity. For us, hospitality is about sharing the soul of the Maldives with every visitor, a mission made possible by the dedicated team. Their passion, warm smiles, and unwavering energy resonate with guests, many of whom return time and again.”
Part of the Atmosphere Hotels & Resorts brand, VARU by Atmosphere is a contemporary 5-star resort offering a luxurious island experience with 108 villas situated along white sandy beaches, crystal-clear turquoise lagoons, and three jetties featuring spacious over-water accommodations. Guests benefit from the exclusive VARU Plan™, a comprehensive holiday package that includes diverse dining options, spa experiences, daily activities, and excursions designed to enrich their stay.
Situated on the North-West edge of Malé Atoll, the resort is easily accessible via a 40-minute speedboat ride from Velana International Airport. It boasts four restaurants and two bars, ensuring a wide range of culinary options, alongside premium facilities such as a dive school, water sports centre, overwater ELE|NA spa complex, gym, kids’ club, ocean excursions, and daily complimentary snorkelling trips to explore the vibrant underwater world.
Celebration
JOALI Maldives celebrates six years of art and luxury with Maison Ruinart
JOALI Maldives, the first and only art-immersive resort in the Maldives, will commemorate its sixth anniversary on November 15, 2024, with a special event that highlights its dedication to art, sustainability, and nature. For this milestone celebration, the resort is collaborating with Ruinart, the world’s oldest Champagne house. Founded in 1729 in Reims, France, and currently owned by LVMH Moët Hennessy, Ruinart has a long-standing connection to art, dating back to 1895 when Andre Ruinart commissioned Czech artist Alphonse Mucha to design a poster for the brand. Similarly, since its launch in 2018, JOALI has redefined the role of art in luxury hospitality by showcasing works from international artists. Renowned for its vibrant joie de vivre lifestyle, JOALI aligns with Maison Ruinart’s savoir-vivre philosophy, sharing values rooted in art and luxury.
As part of the celebration, British-French artist Sophie Kitching will present an ethereal art display during a cocktail event at Mura Bar, the heart of the resort. A graduate of the École nationale supérieure des Arts Décoratifs in Paris and the School of Visual Arts in New York, Kitching is acclaimed for her installations, paintings, sculptures, and works on paper. She frequently employs oils, watercolours, and gold leaves on natural materials. Having collaborated with Maison Ruinart for events such as Frieze NY 2022 and the “Maison 1729” exhibition, Kitching will create bespoke eco-designed second skins and coasters for JOALI’s sixth anniversary. Drawing inspiration from the island’s native flora and fauna, including grey herons, sea birds, vibrant corals, and marine life, her creations incorporate vivid colours and copper-zinc leaves to adorn Ruinart bottles. These pieces reflect both JOALI’s and Ruinart’s shared commitment to art and sustainability.
During the event, guests will savour Ruinart Blanc de Blancs Cuvées while admiring Kitching’s ‘Invisible Green Art XXX, 2024’, an abstract masterpiece featuring a distinctive green tone originally developed during England’s Georgian and Regency eras. Transported from Ruinart’s archives in Reims, this artwork will remain on display at JOALI Maldives for over six months. Art and wine enthusiasts will also have the opportunity to purchase limited-edition hand-painted second skins by Kitching during the cocktail event or until the pieces are sold out.
On November 16, 2024, guests can further indulge in an exclusive champagne-pairing dinner hosted by Fabien Vallérian, International Director of Arts & Culture at Ruinart. This gastronomic experience will pair Maison Ruinart’s champagnes with a meticulously curated menu, with each plate and glass weaving a narrative of art and flavour.
Fabien Vallérian praised the partnership, stating: “At Maison Ruinart, the protection of nature is central to our values. We are dedicated to supporting artists who foster a dialogue between humanity and nature through their creativity and craftsmanship. Since 2022, we have collaborated with Sophie Kitching on various artistic commissions, and this project with JOALI provides an incredible opportunity for her to explore and celebrate the ecosystems of the Maldives.”
These celebratory events mark the beginning of a promising partnership, with future activations planned both in the Maldives and globally.
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