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I want to sell at higher prices. What influences prices?  How do I keep increasing prices? How can I get to the highest rate possible? What is BAR and what is the optimal price?

What is BAR?


If you are looking at a hotel's web page right now the Best Available Rate is the lowest room rate available for your booking. This rate can be 100 Euros today and 122 or 88 Euros a week from today. For revenue managers, BAR you are looking at, is one of many price levels used to easier manage selling different rooms at various occupancy levels. The goal of all revenue managers is to sell rooms at optimal prices.


What are optimal price levels?


Optimal price levels are those price levels that bring maximum revenues and highest possible occupancy levels. To observe only prices without their correlation to revenues and occupancy makes no sense. Often amateurs get caught up in pointless ADR discussions while pros know that selling a few rooms at very high rates does not necessarily equal success. Adjusting prices to optimal levels and achieving top revenues and occupancy levels is a real achievement.


What influences price changes?


Every time I start listing all the things that influence rate changes (like brand, service type, destination, micro location, additional features, categorization, market changes, competition, daily online hotel reputation perception in shape of guest comments and grades…), I realize that it is easier to list ALL the factors that do not influence rate changes. I will step out on a limb and say that EVERYTHING influences prices from the weather forecast to whatever widget you might be using to make your booking. Rate formation already starts at the investment level when the owner decides on the type of property. Of course, premium properties have higher prices than the average properties. But achieving highest revenues is based on efficient revenue management and therefore crucial for both property types.


Wait, so only the revenue managers can set prices?

OMG, no. Everyone should be included in the pricing process. Hotel’s positioning on the market is set together with marketing and sales. Just setting the rates three times higher than the first competitor and seeing if the guests will book is probably not the best approach. The operations team must set and maintain high service and quality standards. It’s not only wrong to sell bad service at high prices, but also viral, because customers are just as quick to reward bad service with “worst stay I ever had” as they are to brag with “the best stay ever”.


How can I get higher rates?

Yes, you should consider and monitor your competitive set but only adjust when you really must, in other words, adjust only when there is no other option available. It's far more important to monitor market changes, recognize them on time and be the first to adjust course in order to arrive first at the finish line.

Then the fail fast method kicks in. As you gradually increase prices with the increase of reservations you reach a level when the reservation slow down or come to a stop. Then you decrease rates to the next level that encourages


How can I get even higher rates?

Ideally, revenue management team combines experience of human RM professionals in addition to an automated revenue management system like Edmond. Edmond makes automated changes to prices and availability all day every day therefore making continuous changes and bringing better overall results. Time saved allows revenue mangers to focus on critical thinking and to find new revenue streams. Superior analytic mode enables easy reporting and evaluation of key performance indicators. Knowing what worked, and what didn’t work in the past, along with recognizing booking patterns guides our pricing activities.


I don’t want to bother with rate changes. Can’t I just set one highest rate possible and be done with it?


No, you can't.

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