Back to Fundamentals: Revenue Strategy

About the Property:

Upscale extended stay branded hotel located near an airport in the Midwest region. The property offered 75-100 guest rooms with fitness facilities, pool, and business center. The property’s current revenue strategy lacked resources and focus, and as a result, was delivering poor results. The property was in need of a more disciplined approach to revenue management.

Our Work:

We went back to the fundamentals: why do we charge the rates we charge? The property’s best available rate (BAR) pricing ended in 2’s and 4’s (for example, $104 or $102 BAR rates). Upon discussion with the team, there was no real reason behind this philosophy. We also did a competitor review of their rates which all ended in 9’s. Our first step was to realign the properties pricing to end in 9’s and better align with its competitive set. Additionally, the hotel was set up with different rates for weekends versus weekdays, which limited the rates on peak weekends. We furthered reviewed and aligned all rate categories to make rational sense and studied the seasonality of the property.

Our Impact:

We adjusted rates to be aligned to a cohesive rate strategy that would be competitive in the marketplace. As a result, the property became the rate leader, as the other branded hotels increased or decreased rates based on the property’s performance. This realignment in rates also helped to increase occupancy. At the time, ARI was up 4% for the month end and up 0.9% for the last three months of the year. RGI was up 19.5% for the year, with an index of 132.