Proven Hotel Pricing Strategies in 2022

There are a variety of effective hotel pricing strategies you may employ to boost sales. The capacity to generate income, enhance occupancy, and raise profit is possible by having reasonable room prices. The ideal pricing should enable you to sell as many rooms as possible.

Since increasing revenue is the primary aim for every hotel, hotels can achieve that goal by using the dynamic pricing strategy, keeping in mind demand, customer segmentation, and other elements that we will cover in this article. This post will also discuss the definition of a hotel room pricing strategy, its significance, and the best methods for raising income.

What is Hotel Room Pricing Strategy?

Pricing strategy is essentially a balancing act between pricing your hotel room rates high enough to maximize profits while being low enough to attract guests to book. A good hotel room pricing strategy should put into consideration as many external and internal factors as possible.

Internally, your pricing strategy should consider your short and long-term business goals, the costs you incur in your operations, and other expenses you want to settle during a particular period or season. Externally, you will want to consider the demand for accommodations, guest segments and travel patterns, type of season, even the weather! All of these affect how profitable your room rates are and how attractive they will be to potential guests.

Having the right plan on how you charge for your hotel rooms is crucial to the overall success of your business. If your hotel has an improper price plan, it won't be able to increase income since it won't be able to attract customers. It is thus necessary to correctly price your rooms at the appropriate moment. You might improve your room sales and occupancy as a result. This ultimately results in higher profitability.

What is the importance of a hotel room pricing strategy?

The answer to this issue is straightforward: if you charge too much, you will lose business to your neighbors, who charge fair prices for the same lodging and services. Additionally, you'll lose money if you charge less because your room rates aren't competitive enough. Although you may have more visitors in this situation, paying your operating expenses would be too challenging.

Finding the ideal hotel room pricing is a complex undertaking. It gets incredibly complicated to use hotel room pricing strategies to increase income since there are so many variables to consider. Some of them include:

  • Room types you use

  • Cost of the services you provide

  • Your residence

  • Guests segments

  • Market supply and demand in the local neighborhood

  • Price comparison

  • Seasonality

  • Including the weekday as well.

Developing Your Hotel's Pricing Strategy: What To Consider

  1. Property Location

  2. Target Market

  3. Level of competition

  4. Property Size

  5. Services offered

  6. Upsell opportunities

Understanding the market and satisfying its wants is the first step in developing the most effective and most common pricing strategies for the hotel sector. Additionally, you must be aware of your visitors' demographics, requirements, and expectations.

You must be thoroughly aware of your visitor demographic's guest demographic's demand sources and the unique aspects that affect your hotel's seasonal demand. Do you observe, for instance, that during the winter, you have more business visitors asking for single rooms, and during the summer, you get more families asking for suites? To get a fuller picture of your client demographics data, you might consult your PMS, or OTA reports. Another strategy is using Google Analytics or other BI tools to monitor the traffic going to your domain.

Best Hotel Pricing Strategies To Boost Profits

Let's look at the most effective hotel pricing strategies used in the hotel sector now that you are aware of the essential components of a hotel pricing strategy.

Occupancy-based Dynamic Pricing

Demand-based pricing is the practice of determining hotel prices based on demand for travel. Using historical data, demand-based hotel pricing techniques analyze prior occupancy, revenue, room rates, average visitor spend, and other vital indicators. Hotel revenue managers monitor historical trends, predict future booking patterns, and adjust hotel room prices following these predictions.

What occurrences, booking trends, or demand peaks can you anticipate repeating? For example, does travel in your area increase or decrease over the holidays? Are there any prestigious institutions or colleges nearby? Do movers' arrival dates, sports events, summer vacations, or visitor weekends affect local travel demand?

Pricing at rate parity

A hotel pricing approach known as "rate parity" entails maintaining constant hotel room prices across all platforms and distribution channels. The hotel's website, OTAs, and other outlets for booking show the exact hotel room pricing. A rate parity strategy's openness may help companies establish confidence with their audience. Customers may think more favorably of your establishment if they find the same hotel prices posted elsewhere.

While maintaining tariff parity might help a hotel's image with guests, improper parity management can be detrimental over time. Hotels participating in rate parity forfeit money to OTAs since they impose fees and commissions when customers book via them as opposed to the hotel directly. Since many well-known OTAs demand that partner hotels participate in a rate parity campaign, hotels should establish strong direct bookings tactics to mitigate losses.

Forecasting-Based Pricing

The key is to adjust your hotel room rate while estimating how many rooms will be available on future days. For this, you need to have a thorough grasp of the historical data for your hotel, namely the occupancy statistics for the most recent few months and last year. You would therefore have a general notion of how the occupancy would seem on a particular day.

That is how accurate forecasting would enable you to adjust your hotel prices as needed, depending on demand and anticipated occupancy. It should be emphasized that your projection would also rely on whether there were more or fewer tourists visiting your area or if there were more or fewer businesses in your sector.

Competitor-Based Pricing

Only until you know, the different prices your rivals are selling their rooms for will you be able to develop a pricing strategy based on hotel room rates. Discuss the hotels in your sector and star category while discussing the competition. Examine their prices for each kind of accommodation and determine how visitors would respond to the same. Then, check whether they can entice customers with improved prices and promotions. By carefully studying its pricing strategy, find out when the hotel is raising or lowering its room prices and how often it launches offers and discounts.

You must compare your charges to theirs to determine if you value your visitors. This can assist you in understanding what consumers are now paying and how much they are prepared to pay when done and monitored appropriately. Then, with this information at your disposal, adjust the pricing of your hotel rooms so that you may sell them at a profit.

Length-of-stay strategy

This kind of pricing is efficient since it enables you to charge a flat amount for the duration of a guest's stay regardless of how long they stay and when they arrive. However, to employ this method, you must first determine the optimal pricing by using your current reservations and estimates to gauge demand.

For instance, you may establish a minimum length of stay for the time of a festival or other special event to lock in certain reservations and guarantee an increased number of nights' stay. To boost occupancy and, ideally, encourage longer stays, pricing will be altered depending on the minimum and maximum duration of stay.


For various visitor segments, in this case, you may alter the pricing of the same room. Selling the same accommodation to different categories of customers at multiple rates is the main goal here. For instance, you may charge more for a sea-facing suite room on any given day and a little less for a standard suite.

Visitors won't care about your prices if they see the worth of your products and services. You may benefit significantly from having a strong internet reputation in this situation. An excellent internet reputation might be quite beneficial in this. This specific hotel room pricing approach will help you increase earnings and improve client happiness if you can execute it properly.

What Are the Fundamental Steps to Implement a Hotel Pricing Strategy?

If you don't understand how to determine hotel room prices, then beginning with a pricing plan won't work. However, the measures you must take into account while developing a suitable pricing plan for your hotel are listed below:

  • Recognize your target market - You can't just price your rooms without first understanding who your audience is. Consider the type of customer you want to attract and what they would be willing to pay.

  • Evaluate your visitors' needs - Not all guests are created equal, and their needs will differ. You should pay attention to the facilities they want and the things they value most.

  • Analyze the information to create a plan - Use market research and competitor analysis to help develop a pricing strategy that will work for your hotel. Once you have this information, choosing your hotel room price models will be simple.

Choosing your hotel room price models will be simple once you have this information.


As you can see, there are several methods for optimizing rates and maximizing hotel income. Numerous elements, including those we've covered in this piece, including supply and demand, the season, the various market sectors, and competitors, must be considered to do this.

The various pricing strategies may be utilized concurrently and at other periods during the year. However, without question, one of the most crucial things you can do to boost income in the hotel sector is to adopt the best rates properly.

This is easier said than done because gathering data, calculating the best rates, and publishing rates on all your channels takes a lot of time. And the longer it takes you to adopt the best rates, the more added revenue you potentially lose out on.

To do this more efficiently,  you can make use of our Revenue Management System  to automatically generate the best prices using an AI-powered system. You will also enjoy the services of a dedicated Pricing Expert to help you create a customized hotel pricing strategy that could increase your revenue by 30%.

Talk to us to learn more about how you can automate your entire pricing strategy and watch your revenue soar.