What is hotel rate shopping?
Rate shopping is popular among hoteliers who want to check competitors' room rates and benchmark them against their own to maximize revenue and profitability. Regular rate checks help find patterns in competitor pricing and drive informed decisions when setting rates.
Some hotels use this tactic sporadically to compare their rates during a given period or as part of a broader revenue management strategy. With rate shopping, hotels can set pricing based on market conditions and their comp set.
Why rate shopping matters for hotels
Rate shopping maximizes revenue by boosting the average daily rate and occupancy levels. It lets you adjust pricing across distribution channels based on real-time data. After tracking availability in your surroundings, you can use this data as a benchmark to determine your hotel's performance.
Rate shopping also helps keep rate parity across channels. Staying on top of competitors' prices, availability in your area, and occupancy rates is a complex task. With rate shopping, you can easily stay on top of yield management and ensure your hotel lives up to its key performance metrics.
What are the benefits of a rate shopper software?
Automating rate shopping lets you reap all the benefits with minimal effort, as the software will watch competitor rates and availability for you. Next, we'll look at the benefits – using real-time data, maintaining rate parity, increasing profitability, and the ability to capitalize on dynamic prices.
You can also read about different rate types and how they can help you maximize your property's revenue.
Automation and efficiency
Automation is one of the central advantages of using software for rate shopping. Revenue managers are already busy forecasting and choosing the best pricing strategies. Instead of checking competitors one at a time, they can rely on software to do it automatically. Manual rate shopping is also more time-consuming and prone to human error.
Automating the process helps you save time and resources, focusing on other operational tasks that can boost customer satisfaction. Revenue managers also report greater job satisfaction when they don't have to deal with manual tasks and can apply their expertise to make strategic, data-informed pricing decisions.
The advantage of real-time data
Prices in the hospitality industry are very volatile, depending on market conditions and factors like seasonality. Rate shopper software lets you use real-time market data across distribution channels, which means you can create the best yield management strategies for your hotel. Say hello to more dynamic pricing strategies that reflect real-time market conditions.
Maintain rate parity
Rate shopping helps hotels maintain rate parity, offering consistent rates across distribution channels and reducing the risks of undercutting your rates. Rate parity also affects your hotel's reputation and trustworthiness, as pricing stays consistent wherever guests book. Tracking your competitors' prices helps you avoid undercutting or overselling on different distribution channels.
Capitalize on dynamic pricing
Lost revenue occurs when a room is unsold, either because of a sub-par pricing strategy or because your hotel inaccurately predicted demand. The perishable nature of hotel rooms makes dynamic pricing the best strategy. Rather than only forecasting based on seasonal fluctuations, you should be able to set ad-hoc pricing decisions.
With the help of software, you can better understand the current market trends and reduce the risk of losing a night’s sale by offering dynamic prices.
Identify booking patterns and make data-driven decisions
Using software, your hotel can better identify booking patterns, demand fluctuations and seasonal trends – all valuable information for long-term pricing strategies. Since rate shopper software collects and analyzes large data sets, hotels can gain valuable insights into their competition and booking patterns.
Increased profitability
When a hotel relies on software and current market trends to make decisions, it will most likely experience improved profitability. Revenue managers can make dynamic rate adjustments, thus increasing occupancy rates and revenue.
Better forecasting
Hotels can better prepare for future demand by using software. You can find the best time to change room rates – increasing them based on an upcoming event or reducing them based on a predicted lull in demand. You can also adjust booking conditions to reflect demand. This way, you're prepared for any event that may influence occupancy rates.
Conclusion
Rate shopping has a strategic role in hotel revenue management. Consistent monitoring of room rates allows hotels to stay competitive by comparing their prices against those in their comp set. You can easily optimize revenue by adjusting rates based on demand fluctuations, market trends and competitor pricing strategies. Rate shopping also ensures rate parity by keeping prices consistent across distribution channels.
The goal of this practice is to maximize occupancy, revenue and profitability. As competition will only grow fiercer, now's a good time to start practicing rate shopping.
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