HT Talks Tech: Karl DeHaven, VP of Revenue, Charlestowne Hotels
As the hospitality landscape evolves, so does the concept of dynamic pricing. Understanding and implementing dynamic pricing strategies has become paramount for hoteliers seeking to maximize revenue while ensuring guest satisfaction. To learn more about the dos and dont's of dynamic pricing, HT spoke with Karl DeHaven, VP of Revenue at Charlestowne Hotels. During our discussion, he offered valuable perspectives on leveraging dynamic pricing tools effectively, optimizing rates based on demand fluctuations, market trends, guest preferences, and much more.
What are three best practices for updating room rates to reflect real-time market conditions?
- Knowing The Competition: Understand your competitors' pricing strategies by tracking their rate fluctuations and observing patterns. Identify if they utilize Revenue Management Systems and analyze how they price to their market positioning. Are they maintaining consistent rates or making sudden price drops? Knowing how your competitors adjust their pricing can help provide insights into your pricing strategy.
- Internal Segmentation Insights: Gain insights into your internal pace by segment and room type. Understand which segments are booking steadily and which ones might be lagging behind. Understanding your internal segmentation dynamics allows you to tailor pricing strategies to maximize revenue potential across different market segments.
- Stay Up-to-Date with Bookings: Monitor your reservation system closely to spot trends or patterns. Whether it's certain days of the week or seasonal shifts, staying vigilant helps you adjust your rates in real time.
In your opinion, what are the top software tools or other technologies hoteliers should consider to manage their dynamic pricing?
To start, if the property isn't leveraging a dedicated revenue management system, opting for a Property Management System (PMS) equipped with a revenue management-friendly rates module is essential. The days of rate buckets or seasonal rate levels are long gone. Instead, the PMS rate module should provide user-friendly functionality, enabling revenue managers to efficiently manage rates, room type differentials, and restrictions.
Secondly, if the property uses a revenue management system (RMS), it's crucial that the system isn't overly technical. Users should have a basic understanding of why certain decisions are made by the RMS. Building trust in the system is key; once users feel confident in its capabilities, revenue managers can gradually automate pricing decisions to enhance dynamic pricing management further.
What’s something hoteliers should avoid (or not do) when it comes to managing room rates and dynamic pricing?
Hoteliers should steer clear of rigid rate caps at the bottom or top of their pricing strategy. Fixed pricing strategies rooted in pre-COVID statistics can be detrimental when market conditions evolve.
What should independent hoteliers focus on when it comes to RevPAR? How does this differ from a branded property?
Unlike branded hotels, independent hotels don't have the advantage of established distribution networks or the benefit of lower commission rates offered by Online Travel Agencies (OTAs). Hence, their revenue team needs to monitor their customer base and channel mix to optimize customer acquisition costs. Their sales team must focus on effectively targeting group and corporate segments without the advantage of brand loyalty programs. Meanwhile, the operations team must ensure that every guest touchpoint delivers an unforgettable experience, which becomes a significant competitive advantage for independent hotels.
How can hotels improve revenue and ensure maximum occupancy based on supply and demand?
- Dynamic Pricing: During periods of low demand, focus on offering enticing promotions and packages to attract guests. Additionally, consider incentivizing group bookings during these off-peak times or exploring new distribution channels to capture additional business.
- Strategic Demand Management: Strategically manage demand by shifting groups to periods of need or encouraging advantageous stay patterns for the property. This can help balance occupancy levels throughout the year and capitalize on periods of high demand.
- Rate Optimization: When demand is high, make sure that rates are adjusted accordingly to maximize revenue potential. Proactively raise rates to capitalize on increased demand while also implementing measures to limit deep discounts or costly distribution channels.
Besides improving revenue and managing occupancy, does dynamic pricing provide hoteliers with any other benefits?
Since dynamic pricing is aligning price with demand, periods of low demand can actually benefit guests. These times offer better value for money, whether through reduced pricing or enhanced promotions. This can increase guest satisfaction and loyalty as guests recognize the added value they receive during their stay.