In Brief: Rikki Cavanagh outlines how hotels can increase total revenue by customizing pricing, inventory, and marketing tactics for each distribution channel, emphasizing the need to analyze channel-specific costs, demand patterns, and guest segments to optimize profitability.
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If your hotel operates like most, you likely have rate plans built in your PMS that are derived from your BAR. Maybe that is an OTA rate, or a AAA rate, or a corporate rate, and maybe the derivation is in percentage or dollar value. Is that rate differential set up the same throughout the year?
At Rate Yield, we have found that there are cases in which you may want a rate to fluctuate more dynamically. Here are some ways our customers are using our secondary rate plan strategy:
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OTA pricing: in certain jurisdictions, hotels are not required to offer the lowest price available to OTAs and can offer preferential pricing on their own website. Clients in these areas can use secondary rate strategies to offer more advantageous pricing to OTAs in periods where the hotel is more reliant on third parties, and maintain their strategy for high demand dates.
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Loyalty Pricing: rather than offering returning customers 10% off year round, hotels can use the secondary rate to offer deeper discounts during need periods and lower discounts when demand is higher.
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Individual override dates: If your predetermined strategy for a specific channel needs updating, the differential can be changed for a single date rather than changing it in perpetuity. For example, on low season dates with abnormally high demand, the differential for OTAs can be increased, or vice versa.
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Promotions: You can use the secondary rate plan to balance out highly discounted promotions on OTAs without having to duplicate the promotions and rate strategy on your own website.
As with every feature in Rate Yield, if and how you use it is entirely up to you. So far our Secondary Rate Plan feature is helping dozens of hotels to optimize channels and embody their hotel’s distribution strategy.
Rikki Cavanagh is the Director of Business Development at Rate Yield. Connect with Rikki on LinkedIn.
About Rate Yield
Rate Yield was created in 2019 by seasoned Revenue Management consultants with over 30 years of experience within the field. Rate Yield RMS was designed to adapt to small hotels, inns, and resorts as well as large hotels in city centers. With settings and thresholds that can be modified against a hotel’s unique market trends, Rate Yield makes it more accessible than ever to implement AI in revenue management strategies. With real-time insights, agile strategy development, modules for budgets and forecasts, as well as a tool for displacement analyses, Rate Yield provides a complete software that will help your hotel to yield more revenue, period! To learn more, visit us at www.rateyield.com.
Source: View the original article at Rate Yield.