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10 Pricing Strategies to Increase your Hotel Revenue in 2022



10 Pricing Strategies to Increase your Hotel Revenue in 2022

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Pricing is one of the most critical factors for any business to survive and grow. Having the right pricing strategy and a good product can help your business to skyrocket within no time.

While setting up the prices for your hotel room might seem like a simple task, it’s a part of a bigger game known as Revenue Management. Choosing the correct prices for your hotel will differentiate the success and failure of your strategy and business goals.

This article will cover some different pricing strategies used in the hotel industry.

1. Have a Dynamic Hotel Pricing

Most of the products available in the market have a season where demand rises, and supply is limited. The same thing happens with the vacancy in your hotel rooms. The need for hotel rooms is based on seasons, events, and even the time of the day.

For example, if you own a ski resort, the demand for your place will increase during winters when people want to ski, and during that time, you’ll increase your prices. On the other hand, the demand for your resort will fall in summer, and you’ll have to decrease your cost.

Hence when you price your hotel based on the supply and demand, that pricing strategy is known as Dynamic Hotel Pricing.

2. Follow a Competitor-based pricing strategy

If you have multiple hotels in your area, a competitor-based pricing strategy is best for your property. Hotels following this strategy usually aim to beat the price or give extra benefits like complimentary breakfast or dinner to beat their competitors. This gives them a better hold on the market and allows them to attract more customers.

3. Rate parity strategy

When your hotel maintains consistent pricing across all online distribution channels, that strategy is known as the Rate parity strategy. Many hotels fail to follow this and charge a little extra to pay the commission charged by OTAs.

However, instead of doing that, it is recommended that you add value to your direct booking, so customers prefer booking directly instead of booking your hotel online. The added value can be a late checkout, a complimentary drink, or a discount coupon for their next visit.

4. Hotel Distribution channels

As a part of this strategy, your choice to prioritize online or offline distribution channels becomes important. Your pricing strategy should reflect the channel costs because the commissions from Indirect bookings can eat up a lot of revenue generated from your direct bookings.

Hence, when you decide on the price for your hotel rooms, you should keep in mind that it won’t affect your revenue whether it gets booked online or directly. Many revenue management systems allow you to update your pricing with a few clicks across your hotel website, third-party booking websites and more.

5. Pricing based on BAR, Corporate and Groups.

BAR: BAR stands for best available rate, and the hotels that follow this pricing strategy change the prices for their room multiple times a day. To explain it better, let’s assume that you have 20 rooms available at your hotel in the morning. Every empty room you had is booked by the end of the day, and now your property has only two rooms remaining. Most of your competitors are also fully booked, and only you can offer accommodation to the guests who are present in that area.

Your prices go higher, but your rooms still get booked because the demand is higher than the supply. This is known as BAR or, as we discussed above, Dynamic Hotel Pricing.

Corporate: Corporate pricing stands for the prices offered to business customers. Since business customers keep visiting regularly, the prices remain stable, and some additional benefits are provided to these customers, so they keep coming back.

Groups: Group pricing stands for the prices offered to people who travel in groups. These prices are lower than the usual rates because larger groups book more rooms. In peak season, hotels can keep restrictions here since individual customers give more profit to the hotel.

6. Discount codes for direct bookings

Discount codes are a great way to invite someone for a second time. Every time a person books a room at your hotel via a third-party app or website, you can send him a discount code via email or offer it to him directly. If he has a pleasant experience during his stay, the discount code will make him visit your hotel for the second time.

7. Cancellation policy

Since travel restrictions are still in place for some countries having the right cancellation policy becomes essential. You can charge a minimal amount if the room gets cancelled 4-5 days before the booking date, or you can go for free cancellation if the booking date is far. This gives the customer more confidence to book a room at your place.

8. Psychological pricing

Psychological pricing is also referred to as unrounded pricing. Instead of pricing your rooms for $100, you should price them for $99. Multiple industries use this technique, which has been attracting an audience for a long time now.

9. Create and Offer Packages

Packages are a great way to improve your hotel revenue. You can create and offer a complete package to your customers instead of just showing them a single room. Your package can include meals, pick up and drop services, access to particular areas like the golf course and more. The package may offer the room at a lower price than the regular charge; however, it will allow you to sell multiple services at once.

10. Forecasting Strategies

Whenever you are setting up a pricing strategy for your hotel, you must think of what will happen in the future. You can look back on your pricing strategies and deals to find out what has been working for you perfectly. This will help you make a better decision in setting up your price.


Having the right pricing strategy is the key factor to your growth, and with these tips, you can create an excellent strategic plan that’ll help you move forward. So what are you waiting for? Go ahead and start working on the right pricing for your hotel rooms so it can lead to a growth in your revenue.

Karan Iyer is an end-to-end digital marketer and blogger who inherently understands the hotel industry with his hospitality background. Karan knows how to convert the pain points and challenges of the hotel industry into business opportunities, and that's what he writes about for his readers. He also shares industry trends, insights and news to help his readers stay up-to-date.

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