Techniques and Strategies for Better Hotel Pricing

When it comes to prices for hotels, the pressure is always on to get your room rates- be it from the revenue perspective, the guest perspective, or even both.

Pricing plays a vital role in any consumer business, especially in those businesses like hotels and travel that hold a seat in hyper-competitive industries. It is indeed a complex task to provide guests with value for money while maintaining a stable bottom line and avoiding being undercut by competitors. This task requires constant attention and an effective hotel management system if your business is to succeed.

A deep base of planning and strategy for your dynamic pricing hotel can save it from falling. As a hotelier, you must always stay proactive when it comes to pricing your hotel rooms. It is also vital for you to capture real-time data and follow the current market trends. It will help in keep maintaining an optimal pricing model for your hotel.

This blog will prove handy for you if you wish to know about hotel pricing. This blog will also include helpful information on practical techniques and strategies you can implement in your hotel property and hotel booking channels. But before we get there, let’s first understand what a hotel pricing strategy is and its importance. Let’s also understand in brief why you need to have one in the first place.

What do you mean by Hotel Room Pricing Strategy?

The room rent you charge for your hotel rooms has a crucial role in your business. And when you plan to sell more rooms, it becomes more crucial. But if you implement the wrong hotel room pricing strategy for your hotel rooms, it will not help boost your hotel revenue. Further, it won’t be able to attract guests to book with you. That’s why it is always essential to rightly price your rooms. Rightly pricing your hotel rooms through price optimizing systems will help you sell more rooms and boost your occupancy. It will ultimately lead to increased profitability.

Why is a hotel room pricing strategy important?

When you charge too high, you end up losing customers to the local competitors that offer rooms at reasonable rates. The rooms and facilities are more or less the same types you offer. And, in any case, if your rates are not competitive enough and you charge less, then also you will end up losing money. In such a case, you might be able to generate more guests, but it might also be challenging to cover your operational costs. However, deciding on the correct hotel room rate and fixing it with the help of revenue management software is not an easy task. It is quite a difficult one. Several factors impact your room pricing, such as

1. Your room types
2. Value of services you offer
3. Your occupancy
4. Your guest segments
5. Demand and supply in the local market
6. Competition pricing
7. Seasonality
8. The day of the week

Here are some of the techniques and strategies for better hotel pricing

Competitor-based Pricing

Competitor price matching is one of the most classic approaches to pricing in the hotel industry. Matching the prices of competitors is a good and ideal approach for some accommodation owners. The hotel pricing strategy and hotel revenue management are considered most effective on occasions where your hotel property offers perfectly aligned differentiators to the competitors you compete with.

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Psychological Hotel Pricing

One of the most practiced classical psychological pricing strategies is none other than the “only $99.99” method. So what happens here is that this method instills a concept of affordability in a guest’s mind. By pricing the room as $99.99, the guest is paying $100. But their automatic response is that it’s available for a cheaper rate. The method is applicable across a wide variety of industries all around the world. This method is an example of triggering a sale. Although primarily used for sales in the supermarket or sale of garments and different products and commodities, it is equally effective for hotel rooms.


Exclusivity is eye-catching. And especially in the case of hotel pricing strategies, exclusivity works. But exclusivity depends on the type of property you own. In the case of hotels, luxury lodges, and resorts, it puts your property in the maximum range when you increase your price through hotel revenue management. So when the target market can afford it, you can consider raising the price. So the focus should be on portraying your hotel as the best in the market and exclusive.

In that way, you will rein in the guests who will spend to book with your hotel. When you decide how to price hotel rooms, exclusivity is most effective for properties with a strong brand presence and reputation. When you have impressed your guests and have good word of mouth in the market, in that way, you can raise the prices in the market, yet people will still be coming to book a hotel room with you.


Yet another strategy is of utmost priority. When it comes to hotel pricing strategies through revenue management systems, lowering your prices and being affordable is a quality. While traveling and tossing up between hotel options, many travelers’ first choice is often the cheapest one. However, while executing this strategy, be cautious because, even though filling your rooms is essential, breaking even and generating profits is more important.

Forecasting Strategies

Forecasting is an effective strategy that the hotelier should consider while pricing strategies in the hotel industry. As a pricing strategy, forecasting, like any other pricing strategy for your hotel (consisting of the overall cost of revenue, and occupancy.), is quite effective. The strategy will enable you to reflect on past hotel performances- if they lived up to your expectations and make predictions for the future. So when you look back to maybe a few weeks, months, or even years, you will be able to compare prices (and deals) that have been most attractive, and therefore, undoubtedly, will be most effective in the long run.

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Length of Stay Pricing

Yet another hotel pricing strategy method that is very productive in gaining profit is aligning the hotel rooms’ prices to the duration of stay. It is also referred to as the ‘best available rate by length of stay.’ When you optimize this strategy for your hotel, it will encourage guests to stay longer and provide more revenue opportunities. In this strategy, the common theme here is to ‘offer a much cheaper rate for several nights stay, and a higher booking rate for single overnight stays.’

The strategy sure generates less revenue per individual room night, but it provides more revenue overall. Simultaneously, it also increases the opportunities for guest spending. So, when a guest stays for multiple nights, they may take services that will cost extra like dine-in, ordering room service, or booking a spa treatment. The technique for dynamic pricing hotels is highly impactful. The longer a guest stays at your hotel, the more opportunities you have to cross-sell and up=sell.

Packages and other Value-added Pricings

Yet another technique used in most hotels for pricing in the hotel industry is to offer bundled packages. Offers attract people, especially travelers who are tempted by offers and deals that provide them with various elements “for the price of one”. Deals and offers like travel agents package activities, complimentary breakfast, complimentary hair spa, transport, and accommodation are some of the many strategies adopted by hoteliers. This method is also known as value-added pricing. This method significantly impacts travelers because the modern traveler is always looking for a good deal and exciting offers.

Dynamic Hotel Pricing

The vacancy of your hotel room depends on the difference between supply and demand. The supply and demand fluctuate by season, situational factors (like events), and even time of day for the hotel industry. For example, the demand for your hotel will be high during winter if yours is in a ski resort. During this time of the year, the supply is low, meaning you can increase your prices. And, similarly, you have to do the opposite during summer.

So, altering your prices to match the difference between supply and demand is an impactful strategy. It might mean changing your room prices multiple times in a day, but still an effective strategy. This strategy is known as dynamic pricing hotel.


In modern times, the hotel industry is constantly changing. Therefore, trying and testing new hotel pricing strategies and implementing a new hotel management system will be impactful. It will help your business remain competitive, fresh, and clean in the market. Although every accommodation property is different, yet each shares a niche target market. So if you want your guests to choose your hotel over competitors, you have to know how the hotel works and live up to their expectations.

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The prices of your hotel, whether exclusive or budget, depending on your target market. However, there are some situational factors and the difference between supply and demand which too plays an important role in hotel pricing. Therefore, try to consider every element and try and test various hotel pricing strategies to be on the safe side. See for yourself what works best and always use the forecasting strategy and look back to compare stats.

You can also read – Analytics and Automation to Simplify Your Revenue Management Strategy

Techniques and Strategies for Better Hotel Pricing
Article Name
Techniques and Strategies for Better Hotel Pricing
Prices of rooms and services of a hotel play an important role in building the reputation. Utilize the hotel pricing strategy and tactics for better pricing.
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Revnomix Solutions
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