29NL 3.1 Decisions on prices
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Decision on prices
Situation
In the history you can seethe prices used by the management until you took over. Now you have to decide on prices yourself; prices which match the new strategy your team has set.
Goal
Make decisions on the prices for rooms during weekdays and weekends, starting from the systems of rack rates and last minutes prices. You need to stick to this system. Next to this the average prices for banqueting has to be set. All of this for the next four years as a plan. Including predicted occupancy rates and predicted revenues. So you need to prepare:
- new prices of the rooms and banqueting
- explain why you chose these prices, backed by sources
- and predict occupancy rate and calculate predicted revenues in the new situation.
Task, deliverable
Use the space in your Team File. You can do the calculations and all in the document or make a spreadsheet in the cloud and share the link in your Team File.
Price systems
You can use psychological pricing, flex prices, dynamic pricing, revenue management or whatever system you want to use in your decisions. The better your explanations and especially your calculations are, the better your company's results will be, In hospitality, we see the concept 'rates' more frequently then prices.
- 1. Weekend last-minute room-price (rate) per night
In the past, the average price was € 80. The last-minute price is the minimum price you will accept to fill up the empty rooms, the gaps in your occupancy.
- 2. Weekend rack rate room-price (rate) per night
In the past the average price was € 100. The rack rate price is the highest price you will ask.
- 3. Weekdays last-minute room-price (rate) per night
In the past the average price was € 100. The last-minute price is the minimum price you will accept.
- 4. Weekdays rack rate room-price (rate) per night
In the past the average price was € 140. The rack rate price is the highest price you will get.
- 5. Banqueting and other activities price (rate) per person per day
In the past the average price was € 28. You can not skip this activity totally, so price 0 is not allowed. The occupancy rate of the rooms also has impact on the numbers of booked banqueting arrangements and other activities.
- Other ideas
You can do more with the prices, then just last minutes and rack rates. But you need those for sure.
Assessed elements
- Are the prices realistic? Do they match the strategy?
- Are the calculations okay
- Are the arguments well funded?
- Are there enough sources used.
Additional information
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