Hotel Rate Shopping

Hotel Yield Management Strategy: Monitoring New Room Type Offerings

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Hotel management has gotten more creative over the years and started to offer all kinds of room types. What was once a 1 King, Non-Smoking room is now an Ultra Deluxe King, Forest View (Non-Smoking). Hotels have even started to offer complex promotions within their room types. Free drinks, appetizers, show tickets or even free nights enter the picture regularly for potential guests to meander through.

Oftentimes, revenue management will take into account the average daily rate for each competitor and compare the rates to their own. This worked well in a simpler world where most hotels had three or four primary room types. A simpler time, with simpler yield management techniques. However, with hotels offering ten or even twenty different room types, ADR has become a more difficult number to understand, especially when evaluating your competition. It can be even more difficult when factoring in things like resort fees, which may be waived on certain room types that further skew the comparison.

All of this movement is difficult to track without great hotel technology to help. RateShepherd notifies its customers of any room types that have newly entered the market within the last seven days. It will even let customers know if it has not seen the room type in awhile, just in case the competitor is bringing back an old promotion that had been put to sleep.

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Hotel Yield Management Strategy: Market Monitoring & Suggested Rate Changes

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Hotel revenue managers can always use a little help when adjusting rates. Manual rate shopping can help provide a view of the competition. However, without hotel software to help, hotel management could be missing a revenue opportunity. Oftentimes a rate shopper can provide data, but that does not give much insight into what the overall market is doing. This presents a unique challenge, because one or two competitors may have fallen asleep at the wheel. If those are the only hotels in your rate shopping routine, it can put your revenue to sleep too.

Rates are constantly on the move across entire cities/markets due to events, holidays or just good weather can even turn a mediocre weekend into a sell out in 24 hours. Without a good understanding of the direction the market is moving, you will lose out on hotel revenue. This issue is compounded when you take into consideration that these market changes could be happening 90 days out in the booking window. So how do you keep track of daily market activity throughout your forecast in order to still be competitive?

It was these problems that lead the Rate Shepherd team to develop our Suggested Rate Changes report. This report gives hotel management extra support to analyze the direction their competitors are moving their rates. Yield management becomes easier because when hotel rates are too low or too high, our report will identify the room type and rate that are out of line with the market. It will even suggest what your market rate should be to put you in alignment with your competitor’s position. Hotel management can then make an intelligent decision on how high or low they want to go given this information.

When one of our major brand customers in Vegas used our Suggested Rates Report for the first time, they quickly realized that they had forgot to raise their rates for one room on New Years Eve. Our tool quickly pin pointed this error and suggested a $100 dollar increase based on the market position. They took this suggestion and still sold out the room. Given that our product costs less than $100 per month, they quickly paid for year’s worth of our monthly fees with only one rate change. This is the type of value we strive to bring to our customers every day.

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Hotel Yield Management Strategy: Price Monitoring within a 72 hour booking window

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50% of hotel revenue is booked within 72 hours of the stay date. That is why hotel management has often had full time employees act as a rate shopper to monitor the competition. Manual processes can lead to error and with hundreds of rate changes happening within 24 hours of the stay date, it is impossible to keep up with. Smart hotel management professionals enlist the help of software to solve this challenge. However, the price of this technology also leaves it out of reach for the smaller hotels.

Yield management is as much an art as a science. Without the latest hotel technology it is not possible to keep hotel revenue maximized, but many pieces of hotel software are complex and expensive. They can take days or even months to setup and configure. Oftentimes the software spends more time telling hotels about opportunities that have already been missed rather than telling them what they can do next. It is these industry issues that demand a technology solution that provides you proactive information at an affordable price.

Rate Shepherd is an automated rate shopper that takes the hassle out of manual rate shopping and helps hotel managers find their options in just a few minutes. Our latest feature RapidWatch is a critical tool for hotel management to have. RapidWatch gives hoteliers the ability to actively watch competitors during the current day’s booking window. It monitors key competitors real-time so that you don’t have to. When it sees them make a change it will notify hotel management via email so that they have the pricing information needed to make an intelligent decision. Better yet, it is affordable.

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The Danger of Set & Forget Hotel Rate Management

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This recent hotel management article: Real World Tips for Driving Rate and Revenue highlights the trend in the hospitality industry towards the OTA relationship and how to drive revenue. The industry has seen tremendous growth with the transient customer and a preference towards last minute booking. Hoteliers are seeing the booking window shrink and it has become critical to closely monitor rates within the 72 hours window.

In the Las Vegas market most hoteliers change at least 10 rates per day over their 90 day forecast. That means, each day they are evaluating a change in yield for at least 10 stay dates in the future. However, many of the strongest competitors in the market make changes to all 90 days in the forecast on a daily basis. To further prove the point, many hoteliers make multiple changes per day to the rates 1, 2 and 3 days in the future.
Recently RateShepherd began tracking same day changes in the market to see how the transient customer is affecting yielding. We chose to look at two competitors with similar target demographics and price points, Hooters and Las Vegas Hotel. Hooters has had a tendency to lower their rates for the short term booking window, while LVH has tended to yield up as high as 40% for same day bookings.

Fortunately for the Las Vegas market rates changes have been trending up, suggesting that hotels are yielding up as the booking window shrinks. This is great news in response to the transient customers’ preference towards short booking windows and last minute decisions. Venetian seemed to play the game the tightest where only 19% of their changes resulted in a lower rate and 81% of their changes resulted in a higher rate. MGM properties followed with similar trends.

All of this information points towards a paradigm shift for hoteliers. In the past, occupancy ruled the roost. This is no longer the case. The new customer is driven by flexibility and short term bookings. Without a thorough understanding of the price changes in the market, hoteliers will lose revenue because their rates will not be competitive. The days of “set and forget” are over.

If you’re interested in how you can track your competitors using RateShepherd and our unique RapidWatch product check out our free trial.

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History No Longer Reflects the Future in Hotel Revenue Management

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Tnooz has a great article identifying 8 things that smart hotel revenue managers do differently.   The article can be viewed below:

Eight things smart hotel revenue managers do differently – Tnooz.

We cannot agree more with point number 8 stating that  “History is no longer a true reflection of the future“.  At, we remain dedicated to providing hotels competitive rate intelligence that allows hoteliers to more effectively manage price position in the forecast.   There are many companies out there providing historical rate analysis and trends for hotels. This article clearly points out that using history to shape the future no longer works.

In this technology age, the consumers are becoming very smart related to price. They have numerous tools to make their search for the best deal fast and easy for them, as pointed out in this article under “2. New vistas, new insights“.    For that reason, we believe that Hoteliers should be equipped with even more sophisticated technology tools to help them be competitive in their market.  After all, the consumer only has to worry about finding the best deal for their stay dates.  The hotel has to effectively manage their price position to attract the consumer for each and every day in the forecast.

If you are looking for a great competitive rate shopping tool for your hotel that will also provide you intelligence to help you quickly isolate rate position opportunities in your forecast, then please check our plans and pricing.  Please  contact us if you have any questions.



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Best Available Rates (OTAs versus Hotel Booking Site)

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Hotels have seen a steady increase of web bookings over the last ten years and it is safe to say that most hotels see between 25% and 50% of all bookings via the internet. As an ever growing medium for revenue, OTAs (online travel agencies) and home booking sites are a critical part of any hotelier’s revenue management strategy. However, hotels tend use these two channels in very different ways. We sought to find out how the different strategies were put to use.

We selected 106 hotels and 1,814 rates to find patterns in the way hotels use their Home Booking Site versus OTAs. We found that 82% of the time hotels kept the best available rate equal across all sites while the other 18% of the time OTAs were either at a premium or a discounted rate. About 1% of the time the difference was due to being sold out of the product (please note that this is different from the rate type not being offered as in the case with promotions or advance purchase incentives).

OTAs vs Home Booking Website
Total %
Rates 1,813 100%
Equal 1,481 82%
Not Equal 332 18%

We see three basic strategies employed:

  • OTAs and Home Booking Sites are normally Equal
  • OTAs are normally a Discounted rate
  • OTAs are normally a Premium rate

To further dissect the way in which hoteliers use the two channels we analyzed the number of times that OTAs were at a discounted or premium rate.

OTA Premium vs Discount
Rates % Avg Difference
OTA Premium 123 37% $16.41
OTA Discount 184 55.4% $(10.51)
Inventory Sold Out 25 7.5%

Some sites normally had equivalent rates between the two channels, however in some instances limited time promotions were run on Expedia or the Home Booking Site that created a price difference.

Limited Time Promotions
Rates % Promo Rates %
OTA Premium 123 37% 14 4%
OTA Discount 184 55.4% 8 2%

Best Rate Guarantees are very common among the major brands and we consistently found that hotels with a Best Rate Guarantee kept the two channels equal across their minimum rates. However, when the Home Booking Site was higher than the OTA, 21% of the time the hotel had a Best Rate Guarantee on their website.

With this in mind it is interesting that OTA rates are at a premium 37% of the time. This would seem to be a way in which to offset the 18% to 80% cost associated with booking through an OTA, but could make a hotel less competitive in the heavily marketed online channels and lead to less volume. On the other hand, we were very surprised to see the OTA at a discounted rate almost 56% of the time. With OTAs available to the majority of travelers via phone, tablet or laptop, guests are likely aware of the lowest available rate across multiple websites even as they are waiting in the lobby. With the added overhead associated with OTAs it seems very odd that hoteliers would train loyal guests to book their rooms through OTAs in this manner.

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How Often do Hotels Change Rates?

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Hotel Rates are constantly on the move. We sought to analyze just how active rates are by looking at how many rates changed in a 90 day forecast over an 18 day period of time. Each change is associated with a distinct date and room type so that we can show exactly how often hotels change their pricing.

We selected 124 hotels from 7 different cities and looked at the following characteristics:

  • Hotel ADR
  • Total Rate Changes
  • Total Rate Increases
  • Total Rate Decreases
  • Average Rate Changes Per Day

As seen in the table below the average hotel changes about 1/3 of their rates every day.

Rate Changes to 90 day Hotel Forecast during 18 Day Window
ADR Total Changes Rate Increases Rate Decreases Changes per Day
AVERAGE $157.61 507 240 267 28
MEDIAN $131.60 131 59 49 7
MIN $39.79 0 0 0 0
MAX $635.33 5506 2739 2767 306
Hotels w/ No Changes 15 27 21

Six out of seven cities had at least one hotel without any rate changes during the range of our analysis, with fifteen hotels never increasing or decreasing their rates. Reno was the only city where every hotel made changes during our analysis period.

The most active mover was the Regency Hotel in Miami which changed nearly all of their rates within the 90 day forecast on a daily basis with an average of 306 rate changes per day and an ADR of $124.

Gold Spike, Las Vegas had the lowest ADR at $39.78, but still changed around 10 rates per day.

Las Vegas and Miami had the largest average change of rates per day, with an average of 49 and 45 changes respectively. However, Miami also had 5 hotels with no rate changes and a 6th hotel with only 6 rate changes. Las Vegas only had one hotel with no rate changes during the period, Flamingo Las Vegas.

Hotel brands varied greatly in each market likely due to different owners and operators. However, hospitality operators did show consistency in their changes. MGM Resorts changed frequently with Circus Circus and Monte Carlo’s average change rates per day at 198 and 168 respectively. Conversely, Kimpton Hotels seemed to have little if any changes to their rates in the hotels we surveyed.

Our analysis has shown that every market consistently changes rates within a 90 day forecast window. We have also seen that there are a number of laggards in each market that do not respond to competitive pricing changes.

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