Whether or not to increase the price of your rooms 2019 ? Several factors argue for ! Provided that an essential factor is respected : always highlight all your assets and look away from the competition caused by vacation rentals…
Setting the price of your rooms remains a science far from being exact.. Certainly, there are the fixed costs of the hotel or guest house (the staff, loan repayments, les taxes, etc …): they constitute a basis which, added to the margin and compared to a filling forecast, allow you to define a price threshold below which it is better (for your finances) not to go down. That, it's for lower prices. But for rising prices ?
Can you seriously raise your prices – and according to what criteria – without putting yourself at risk of being less competitive than your neighbors and therefore, to sell fewer nights than the previous year ? There too, how far to go and does the game (the risk) worth the effort ?
Because increasing your prices is the temptation that torments every host the most. Yes, but within what limits ? Until the advent of the internet, prices were essentially set in stone. They were defined almost once a year, distributed over 4 ou 6 seasons, from lowest to highest. Point final !
With the arrival of the internet, the practice of very short yield among airlines and in large hotel chains has become popular among all accommodation providers, small or large. With prices that fluctuate almost from day to day, no question of remaining stuck on seasonal prices, set in stone since the beginning of the year ! With internet, prices change almost all the time if you want to stay competitive; a phenomenon which has considerably accelerated with the emergence of price comparison sites like Trivago or Kayak.
Mais, settle down in a “price culture that changes all the time” does not guarantee prices that change “on the rise”. It is often even the opposite. Many hosts scrutinize the prices of their competitors to position themselves just a little cheaper and, Thus, capture their customers. Good calculation ? Not really. Here's why.
1. Tourism is growing steadily : according to the World Tourism Organization, the travel market increases every year by 5%. And we're not just talking about foreign travelers who come to visit your country. We also and above all talk about travelers “servants”. Car, don't forget it, in major tourist countries, the clientele is “domestic” à 80%. Donc, first factor, demand is growing. She should therefore, logically, cause supply prices to increase. Except that the supply is also increasing …
2. Competition has never been stronger : the arrival of thousands of new competitors to hotels and guest houses such as vacation rentals which are displayed on the “collaborative platforms” as they are still called, seems to have disrupted the beautiful prospect of benefiting from the increase in demand. In reality, this is this offer (plus visible, In fact, because it already existed) and more affordable (because carried by individuals who do not make a living from it and therefore, can charge more aggressive prices) which stimulated demand. Yes, growing like mushrooms, these offers stimulated the market more than disrupted it, In fact. And these new offers bring more customers to the traditional market.
3. Travelers aspire to “real vacation”: Yes, in some regions, rental offers hurt guest houses and hotels (see our post on the examples of Sarlat and Biarritz) but we must not forget that this offer (and the prices “lower than yours”) that it displays are an opportunity to stand out. Comment ? By clearly showing the difference between a product “sec” (an apartment, a villa, a more or less summary welcome if it is the individual who takes care of it occasionally) and a hospitality product (reception on site, associated services, table and facilities, etc …). Faced with this competition, the reaction of lowering your prices can be fatal: on the contrary, widen the gap by clearly showing what justifies such a difference (a real service, reputation and guarantees given by reviews, etc …). Remember that the traveler compares on average 38 offers during the preparation of their stay and the price factor is not the first of their choice criteria: if your establishment is more expensive than a “simple location” but that you know how to highlight all the advantages that you bring (versus housing “sec”), the traveler will end up choosing you even if your offer is more expensive … All the more reason not to lower prices. But from there to mount them ?
Ici, in a very telling way, a vision of the increase in competition in Biarritz
4. Travelers are booking later and later: you certainly noticed it again this summer, the season is getting off to a worse start (non, In fact, it’s your schedule that fills up less early in the year) and it ends pretty well, or even better. At Logis hotels, par exemple, the summer season ended with growth of +12% reserved stays. All studies (and our blog is full of dozens) demonstrate that the traveler – faced with the plethora of offers available – reserve later and later. Donc, don't panic if your schedule is very thin at the start of the season. The traveler knows more and more that prices fluctuate, even up to the last minute.. Reservations therefore always end up arriving, especially if you also distribute via OTAs. But is that a reason to cut your prices? ? Non ! Add a benefit instead – and particularly, on your own site (1 breakfast offered on 2 consumed, a type promo “children are our guests”, etc …). Without lowering your prices (nor your margins), show what advantage a traveler has in booking with you: vacation in a hotel or guest house, without the constraint of going to buy your cereals at the local supermarket, at a very affordable price, a true tradition of hospitality, a very successful experience of hospitality, etc …
5. The request “locale” will continue to grow: Even if the tourism market remains a strongly “domestic”, it is also impacted by the price of oil and therefore, plane tickets. Expensive oil – which is and will remain the case in 2019 – means a revival of domestic demand because travelers will go abroad less and will favor destinations “locales”. Faced with this expectedly greater demand for 2019, you can therefore reasonably consider an increase in your prices … which must remain reasonable.
Actually, by slightly increasing your prices (of 5 à 8%), you will certainly not see a drop in your reservations but, without fail, an increase in your income. By widening the gap with the prices charged by rental companies (individuals, not the pros who provide increasingly successful concierge services), you will clearly show that there is a gap in the quality of service and, in the end, in the quality of the experience lived by the traveler and their family. On condition that you do it well obviously and that the resulting opinions let it shine through. ! It is not enough to say “We are a hotel, we are a guest house, come, it's much better here …”. We still need to explain why and prove it with well-thought-out texts., visuals that catch, sexier photos for sure than the 5 visuals of a rental posted on LeBonCoin … Brief, you have to create desire and not compete with offers that have nothing comparable to yours. The vacation rental market is colossal because it corresponds to a very large clientele. But this clientele, like any emerging clientele, takes a liking to comfort and desires more comprehensive services; hence the success of concierge services “new generation”. This is where you must act and highlight your best assets !
Don't forget it: the customer buys a value and not a price. “If I want to enjoy my vacation, not ask me questions about the fact that I will sleep in a beautiful location and that I will benefit from real hotel service, I am ready to pay the price…” If he is willing to agree to this difference between the price of a rental “dried” and that of a hotel service, These services and this price difference must still be well justified on your site and in your booking engine.:
– Show real price variety : one price, the same day, for a given room has no attractiveness. This is often the case of a rental company which only offers one price. (with some options such as cleaning or rental of sheets). On your side, you can offer special offers with breakfasts, renting a bike, access to the spa …
– Have prices that adapt according to the “reservation window”: a customer consults your offers more than 30 days in advance ? Offer him a reduced price (but not cancelable) ! You still have rooms available at the last minute ? Show a Lastminute promo, also non-cancellable ? This type of promotion is very difficult to implement for your “competitors” who are not focused on this commercial activity (unless they have entrusted their property to a concierge service or a new generation seasonal rental agency).
There are many other methods that will allow you to add value, multiply and make your offers more attractive … while displaying an average price higher than your prices last season. It’s up to you to play and evaluate these first results with a view to next season. !
Thomas D.
Source: https://blog.elloha.com/2018/09/22/devez-vous-augmenter-vos-prix-en-2019/