Pricing & performance
A higher room rate can look attractive in the forecast, but it needs to be supported by demand and a credible offer. A lower rate may attract bookings while producing disappointing net revenue and additional operating pressure.
A sound hotel pricing strategy connects commercial ambition with the value guests experience and the capacity the hotel has available.
At a glance
- Bring sales, revenue and operations together.
- Assess the total value to the hotel.
- Include F&B in pricing and capacity decisions.
Understand the demand behind the booking
Review booking pace, stay dates, segments, length of stay and relevant local demand. Compare your performance with equivalent earlier periods and, where useful, appropriate market information.
A busy arrival date needs a different assessment from a weak Sunday. Use those differences to make decisions by date. A general price reduction can shift demand without resolving the original issue.
Assess the complete offer
Guests compare a combination of price, conditions, location, quality and inclusions. A flexible rate and a non-refundable rate are different offers. A breakfast package requires a different calculation from a room-only booking.
Make the differences understandable and ensure that promised benefits remain deliverable. Involve Operations in packages requiring additional capacity or preparation.
Look beyond ADR and occupancy
ADR is average room revenue per room sold. RevPAR is room revenue per available room. For the same period and room inventory basis, RevPAR equals ADR multiplied by occupancy expressed as a decimal.
These measures do not provide a complete view of profitability. Include acquisition costs, relevant variable costs and additional spending. Keep definitions consistent so that higher figures are genuinely comparable.
Align the price with the guest promise
When the hotel charges a higher rate, guests may also bring higher expectations. Discuss whether room quality, response times and staffing capacity support them. Commercial decisions should therefore inform operational preparation.
From my own practice
sales and revenue at Mövenpick Amsterdam
During my commercial career, including as Director of Sales & Marketing for the pre-opening of Mövenpick Hotel Amsterdam, I worked closely with the revenue manager. At the time, the relationship between sales and revenue was still evolving. Where sales had previously enjoyed considerable freedom to negotiate rates, revenue increasingly defined the room for negotiation.
That could create tension. Personally, I have always embraced revenue management. Sales contributes client relationships, market knowledge and commercial opportunities; revenue helps evaluate those opportunities against demand, capacity and yield. For pricing and capacity decisions, I regard revenue as the more strategic of those two roles because it needs to consider the overall demand picture.
My reservation is that this perspective too often stopped at Rooms. F&B deserves a place in the discussion too. A group booking may create value for the restaurant, breakfast or events, while also requiring resources and incurring costs. Collaboration becomes stronger when sales, revenue and operations assess the total hotel value rather than room rate alone.
Establish a weekly pricing decision
The revenue lead should review forthcoming demand and capacity weekly with the GM, commercial lead and relevant operations manager. Record rate changes and the reasoning behind them. Track pickup, ADR, RevPAR, net revenue and guest feedback over equivalent periods.
Introduce this shared rhythm within two weeks. Its first benefit is a better-supported decision; the financial effect should subsequently be assessed through actual results.
