When you buy a ticket to the movies, you expect that a ticket for a Saturday evening show is more expensive than a Tuesday matinee. At a restaurant featuring an all-you-can-eat buffet, you wouldn't be surprised if they had one price for children and another for adults. And even a train service adjusts their rates for seniors, adults and kids.
It comes down to supply and demand, market conditions and simply the freedom for a revenue manager to make decisions based on their revenue strategy.
In hospitality, age-based pricing is probably the most common attribute used to make hotels more attractive to families with children, which translates into a significant boost in their marketability and therefore their revenue.
At Mews, we see opportunities to take attribute-based pricing even further. Dynamic product pricing gives revenue managers even more control to match market conditions, industry norms and their pricing strategy. Whether it’s age, day of the week, seasonality or several other attributes, the flexibility afforded by dynamic product pricing opens doors to new ways to meet revenue goals and attract more guests.
Since launching these capabilities earlier this year, we’ve witnessed three significant benefits, which are inspiring us to expand the functionality even more.
Benefit #1: Incremental revenue drivers
In just a few months since we launched child-pricing for room nights, the benefits have become abundantly clear. For one, we’re excited to see that many of our customers are taking advantage of two and even three age categories to optimize the pricing structure for their target groups. On top of that, we’ve also seen a correlation between the number of age categories and a longer length of stay, which, in turn, leads to additional revenue.
Dynamic product pricing, another revenue management-related capability that we’re excited about, builds on this growth in incremental value.
Since launching the capability in May, a growing number of Mews properties are making use of dynamic pricing for products and together have generated an additional €12,000 in revenue.
The most common use case has been related to adjusting price for meals based on the day of the week or special occasions like holidays to account for special (and more expensive) menu items. The use cases are limitless, but here are few ways our customers are already using this functionality:
- Increased price for brunch on weekends compared to weekdays
- A three-course dinner may be less expensive on Tuesday than Friday or Saturday
- Lunch the week of Christmas could be adjusted to include special items and holiday treats
In just three months of dynamically pricing their breakfast offering, a Paris-based hostel was able to generate an additional revenue of more than €6000.
But dynamic product pricing can also extend beyond meals to other products and services. For example, other customers have used the feature to adjust pricing for products like:
- Newspapers
- Bikes
- Ski passes
- Early check-in or late check-out
Whether the difference is a few cents or a few euros, over time the impact of this revenue strategy can be significant in profitability and meeting revenue goals.
Benefit #2: Show the world you’re family-friendly
Child pricing is a quick win for properties looking to attract or retain more families as their loyal guests.
On top of the cost benefit to guests with children, the embedded functionality significantly improves the experience and communication for both guests and staff.
To begin with, both sides start off with clear visibility and their expectations aligned so there’s little risk of surprises on arrival and no need for potentially uncomfortable conversations asking about the age of the guests, the accuracy of the rate, the needs for the room, etc.
After introducing age-based pricing, we were able to unlock a new TG of families that we previously did not get bookings from, and we are now actively targeting more of such travelers.
Boutique Staats
The functionality also allows you to create unique age categories, different from those associated with the stay, for bookable services like daycare as a way to improve both the guest experience and your revenue management.
We also made sure that the interface is intuitive so it’s easy to activate, assign and implement rates to match your pricing strategy so that you can quickly start marketing your child-rates and bring more of that key target group to your property.
Benefit #3: Time savings
We all know time is a premium these days. Between high demands, the fast-paced world we live in and staff shortages, we could all use a few extra ways to be more efficient with the hours in our day.
While clearly the main goals of child-pricing and dynamic product pricing are revenue related, the automation aspects also have the added bonus of saving staff time.
With the ability to automate manual pricing tasks, revenue managers and staff can update pricing for rooms and bookable products in minutes – the same tasks that would have previously taken hours of painstaking manual effort.
Customers who have implemented automated dynamic pricing tell us they’re saving up to 4 hours per product per property – time that can be spent focusing on guests and other revenue-generating opportunities.
Coming later this year: Age-based product pricing
With age-based room rate pricing and dynamic product pricing in place, the next step is to combine the two: age-based product pricing.
In the second half of 2022, we plan to start rolling out the functionality allowing revenue managers to adjust the pricing for bookable products by age category. Whether it’s breakfast, bike rental, or boat trip, ski passes or excursions, you’ll have even more ways to create and meet your revenue strategies for one of the most important target groups: families.
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