Hotel Revenue Management, a Method Lifted From Airline Companies
A long time ago reserving a hotel room was an easy task; at least one knew how much the price was according to high or low season and, of course, to the stars. You may have noticed it doesn't work like this anymore. Sometimes praising starry-skies hotels advertise very low prices, while rather less elitist hotels can reach highly unexpected prices.
So what is going on here? It's called marketing, in this case it's the so-called "revenue management", a method lifted from airline companies. It works exactely like the queen rule of the free market: when there is request prices raise, when request goes down prices lower. As a result of this, an empty 4-stars hotel will feature competitive prices even compared to a semi-full 2-stars one. No hotel will have the same prices from one day to another, nor in the same day. Even hotels that don't use the revenue management system must adapt, levelling themselves to market prices. This is where the question raises: when considered form the customer's point of view, is this convenient or unconvenient? I would certainly define it as an advantage. If the traveler carefully choses the right timing, a vacation in once-unreachable hotels becomes affordable, or at the usual hotel but for longer periods.
Prices can vary according to when the reservation was made; some hotels for example promote last minute reservations. Hotel Panorama of Florence promotes instead advanced booking. Best prices can be obtained by placing a reservation in advance and even better ones if paying in advance too. This is a way of sharing with the customer the advantage of a safe reservation, and the customer gets rewarded with a strong discount. In the occasion of last year's New Years Day those who had filed and payed an advance reservation could enjoy a tariff of €69,00 for a double room, while those who reserved at the last minute could spend up to €120.00.
So what is going on here? It's called marketing, in this case it's the so-called "revenue management", a method lifted from airline companies. It works exactely like the queen rule of the free market: when there is request prices raise, when request goes down prices lower. As a result of this, an empty 4-stars hotel will feature competitive prices even compared to a semi-full 2-stars one. No hotel will have the same prices from one day to another, nor in the same day. Even hotels that don't use the revenue management system must adapt, levelling themselves to market prices. This is where the question raises: when considered form the customer's point of view, is this convenient or unconvenient? I would certainly define it as an advantage. If the traveler carefully choses the right timing, a vacation in once-unreachable hotels becomes affordable, or at the usual hotel but for longer periods.
Prices can vary according to when the reservation was made; some hotels for example promote last minute reservations. Hotel Panorama of Florence promotes instead advanced booking. Best prices can be obtained by placing a reservation in advance and even better ones if paying in advance too. This is a way of sharing with the customer the advantage of a safe reservation, and the customer gets rewarded with a strong discount. In the occasion of last year's New Years Day those who had filed and payed an advance reservation could enjoy a tariff of €69,00 for a double room, while those who reserved at the last minute could spend up to €120.00.
