You would think that setting a price for a hotel is a quick easy process and it is. The problem that RM's face every day is that everyone has a different idea of what a room price should be. From the guy who designed the hotel, to the banker who gave you the loan, to the housekeeper, and everyone in between, everyone has an opinion on pricing and of course they are all experts in pricing. In addition, you have blogs, websites, news outlets, and etc. all telling your customers "Never pay the rate the hotel gives you, ask to talk to the GM or DOSM, they will give you a discount". Then, you have hotel operators establishing SOP's for reservations and front office that they can quote a customer the Best Available Rate, but if the customer asks for a discount you can give them from 15% to 40% off the BAR. This is called the fade and good hoteliers (like Dave Roberts ) know that it "faded away" back in the 1980's along with leg warmers, big hair, & "Superfreak" by Rick James. The fade however, is still happening and it's not just independent hotels, I know some mid-sized and large-size chains based in Asia that authorize this internally at the GM & DOSM level to their internal reservations staff but would never tell their corporate office, or owners. They are hurting themselves and they are hurting everyone else.
This fade rate type of strategy hurts long term prospects for growth for everyone. Hotels need to police themselves and should stop implementing this corrosive strategy. By the way, your competitors know if you practice a fade rate policy, and they use it against you in the sales process. I always used it against my competitors when they had a fade rate policy.
Can you imagine how difficult pricing can a hotel room is in this atmosphere? There are allot of people in the industry who do this every day and not only are they hurting their own businesses but they are hurting the entire industry. Wake up people and smell the coffee. Speaking of coffee, imagine if Starbucks® applied this same business model?.
To the "hospitality professionals" who continue to use fade tactics, if you are willing to fade 15% off of your Best Available Rate, then your BAR rate is 15% too high! Reduce your BAR rate to the rate that is correct and sell the features of your hotel that meet the objectives of your customers. Invest your time and effort into training your staff to be sales people.
Training your staff to sell your service, and facilities, adds value to your property and to your staff. Revenue Science Corporation training development courses are designed to develop your people and enhance your sales processes. Pricing your product is vital to your success, that is why we use Rate Gain's® Price Gain-Hotels® rate shopping solution in our RMS to check against the competition. I have always known that I could always rely on their data to be up to date and accurate which is why I am happy to announce that all of PRIMES® customers will have access to Price Gain-Hotels® data when you sign up for PRIMES® No other Revenue Management System gives you this included in the cost! Reliable data on competitor pricing with no additional cost! This is one of the many ways that Revenue Science Corporation is redefining the industry, one customer at a time.
How do you know if your team is selling your product or just discounting, call your staff, pretend to be a customer and see if your staff is practicing old bad habits. If your staff needs trained, let me know. I want to hear back from you, do you practice the fade, or do you sell? How does that work for you and why?
PRIMES Revenue Management System is the great equalizer. It is a next generation RMS that has many industry firsts from our Wholesale functionality to our patented forecasting algorithms, & fully programmable, language and support. Revenue Science Corporation based in Hong Kong & in partnership with Hong Kong Polytechnic University School of Hospitality & Tourism Management also has an office in Bangkok Thailand. Our professional services boast more than 60 years of experience in hospitality leadership. Contact us at [email protected] for a presentation.
Chris Snyder is the Director, Professional Services for Revenue Science Corporation's Bangkok Thailand office. Chris leverages more than 27 years of experience in the development and implementation of sales and revenue growth strategies for hotels & resorts. Chris's strategies have grown market share in hotels & resorts around the globe.
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