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2 Revenue Management: Setting up a successful rate structure 2

3 Housekeeping Everyone muted Green Box for control panel Questions via operator Attendees using VOIP (computer audio) Q&A Duration 40 minutes plus time for questions Post Webinar Survey 3

4 Revenue Management: Setting up a successful rate structure 4

5 Agenda Principles of pricing What defines a Rate Structure? Steps for setting up a Rate Structure Other considerations Conclusion 5

6 Principles of pricing 6

7 Definition of Price The amount of money expected, required, or given in payment for something 7

8 Pricing Ensure that prices cover ALL costs Ensure that prices result in sales Ensure that prices achieve objectives Ensure that prices are manageable 8

9 What defines a Rate Structure 9

10 Rate Structure Rates are all about Price Different Rates are needed All Rates should be set using the same principles 10

11 Rate Structure Segment your rates: Unfenced Public Rates Fenced Public Rates Contracted Rates Group Rates Other Rates 11

12 Rate Structure All Rate segments require the same set of steps 12

13 Steps for setting up a Rate Structure 13

14 Steps for setting up a Rate Structure Selecting a pricing objective Determine demand Estimate Costs Assess external factors Select pricing requirements Select final price 14

15 Selecting a pricing objective 15

16 What should a price/rate achieve? Meet the financial goals of the company Fit the realities of the marketplace Support a product's positioning Stimulate the sale 16

17 Selecting a pricing objective For each of your price groups Return Positioning Sales Growth Change in business mix Etc. 17

18 Determine demand What motivates people to purchase? 18

19 What motivates people to purchase? 19

20 What motivates people to purchase? True needs Perceived needs Pure wants and desires 20

21 What motivates people to purchase hotel rooms? True needs Perceived needs Pure wants and desires 21

22 What drives people to book a hotel room? Need for accommodation/shelter Location Budget/Price Prestige Personal gain (Loyalty scheme) Impression/experience 22

23 What drives people to book a hotel room? 23

24 Determine Demand Demand by Rate Segment Total Demand Define maximum potential based on willingness to pay Generate scenarios and emulate results Consider: Price changes in one segment can impact demand and pricing for another 24

25 Estimate Costs 25

26 Estimate Costs Variable costs Amenities Staff Utilities F&B Fixed costs Building & Facilities Staff Amortisation and interest 26

27 Assess external factors 27

28 Assess external factors Demand Seasons Events Economy Travel restrictions 28

29 Assess external factors Competition: Rates Costs Special Offers Strategy 29

30 Selecting a pricing method 30

31 Selecting a pricing method Examples: Mark-up pricing Target Return Pricing Value Pricing Competitor Indexing Penetration Pricing Real Time Pricing Ensuring a positive return Targeting set return Value perception Following competition Capturing market share True demand based pricing 31

32 Select final price 32

33 Select final price Psychological Pricing Influence of other segments on the price Company policies Impact on customers Impact on other parties 33

34 Other considerations 34

35 Defining dynamic public rates Define Rate demand periods or seasons Define number of rate levels required Ensure that levels are set for extreme periods Ensure that price increments increase with rate level Ensure that price levels achieve the intended goal Review price level structure at least once a month 35

36 Defining Room Type Supplements 36

37 Defining Room Type Supplements Key questions: What would my guests pay for the upgrade? Are all the elements of the upgrade right? Can I force my guests to upgrade? Do I want to stimulate upgrade sales? Do I have the right amount of room types? 37

38 In Summary Principles of pricing What defines a Rate Structure? Steps for setting up a Rate Structure Other considerations Conclusion 38

39 Infor EzPLUS Full range of Revenue Management consulting services including: Revenue Management Audit Revenue Management restructuring and optimization Training 39

40 Further information

41 Questions 41

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