Setting Room Rates

[gillumhouse]

Raising rates during this economic disaster would be truly detrimental. We keep fixing our bottom line by cutting back on unnecessary items. The first thing we changed was cutting nearly 50% of our costs by changing our suppliers – we had a linen company that kept adding surcharges for gas, surcharges for just about everything, while maintaining his base price – he was a small regional linen company – we finally gave in to something we swore we would not do and went to a national linen company. We literally saved over 50% - now many local B&B’s have done the same thing – Linen is just a sample of our changes, too many to list here.
You mention revenue increasing solutions, all of which are great, and we do them, but since we have cut back on salaries, we now do most of the housekeeping ourselves – since this cuts into our mid-day time, we now charge $25 for early check-in requests(1 pm) and $45 for late check-out requests(2pm). We are surprised by how many opt-in for this feature – and wish we had implemented this sooner –sort of a pseudo rate increase, but one the guest voluntarily agrees too
You mentioned that guests know that prices have gone up on just about everything, of course they do, but they have also changed the buying habits in order to offset they expenses. We are what I term a “left over business” whatever is left over after everything is paid – this does not mean we are any less of an important part of their life, we are, they all need time away – but if we keep raising our prices, they will do as many are doing now, buying store brands Vs. quality brands
My favorite quote -
Business Acumen: “linking an insightful assessment of the external business landscape with the keen awareness of how money can be made — and then executing the strategy to deliver the desired results” – a quote from one of my old business professors..

Raising rates during this economic disaster would be truly detrimental.

I raised rates this year ($10.00-$15.00) per night....not detrimental at all.
.

Raising rates during this economic disaster would be truly detrimental.

I raised rates this year ($10.00-$15.00) per night....not detrimental at all.

Great !!!............and your rates still appear reasonable, may have room for an additional $5 - $10 next year.
It's the fear of the economy that causes many to huncker down, don't rock the boat......
Only repeat guests may notice a rate increase...........new guests, they accept the current pricing, what ever it is.................it's much easier for me to quote work to new prospects at higher rates than it is to raise rates for existing customers.......
If one needs to raise rates.....don't fear it.....yes, people will complain....so what?.......you're in business to make a profit.........upon raising rates, you just may experience a dip in occupancy.........so?......the increase per room kinda offsets that.........along with a dip in occupancy comes less supplies....that also helps offset the occupancy dip..........at some point the normal occupany rate will be achieved.
We mentioned value......in other threads it was discussed that a well under priced room presents the image of what is wrong with the room, or with the establishment.....granted this can be an location specific problem......regardless........percpetion is everything........most of us know that if a deal appears to be to good a deal, there's something wrong........many people see value as a price point......
lets take the automobile for example.......you can buy a buick or you can buy a mercedes..........both are basicaly the same......both provide transportation.......the higher cost of a mercedes is a perceived value....costs more, it's better
LCD Tv's.......26 inch Sony is $300.........26 inch Colby is $187.........many folks prefer the Sony.........name recognition and perceived value.
Groceries.........Store Brand or Name brand............most products are actualy the same exact thing.......only diffrence is the packaging...........many people go for the name brand cause of the perceived value..................Kirkland macaroni and cheese......the same as Kraft....tastes the same......looks the same.......many people buy the higher priced Kraft due to perceived value......it's a name product.......has to be better.
Naturaly what ever product we are talking about......the perceived value has to be there to command it's price
.

Store Brand or Name brand............most products are actualy the same exact thing.......only diffrence is the packaging...........many people go for the name brand cause of the perceived value..................
I once worked for a lingerie company. They did "private label" for many different retail chains and the military plus of course their own label. Same item - different labels - different prices for things like slips, etc.
Then I worked for a food company. Same thing - different packages with same contents.
Edited to add: BUT you have to watch because some will put the culls in the generic or "store brands" with foods.

 

[Joey Camb]

Plus I find if you are too cheap then people think there is something wrong with you. For example I had done this chap a good deal as he was booking 7 rooms for 2 nights. He rang this week to say he needed another 2 rooms so I said I would fix him up with my neighbour. I rang to check her avaliability and she said I normally do my double rooms for X which was $25 cheaper than I had done him as a good deal. I said don't do it cheaper as he will think there is something wrong with yours as he already thinks he is getting a good deal with me! plus it is a busy weekend she is doing herself out of money. There is a balance to be struck in everything to cheap is a problem as much as too expensive!

 

[wendydk]

As far as rates go, I do notice an interesting trend here among my three in-town competitors. All are larger than I am, and have a wider range of rooms & rates, starting at around $100.00 on the low end (or less) and going up to $240.00 on the high end.
At any given time in the past, the largest and most luxurious rooms went first every weekend. For the last few months, those highest priced rooms (stuffed with romantic amenities) are always the last to go, and just sit there empty right up to the weekend, even this holiday weekend.

 

[Proud Texan]

Raising rates during this economic disaster would be truly detrimental. We keep fixing our bottom line by cutting back on unnecessary items. The first thing we changed was cutting nearly 50% of our costs by changing our suppliers – we had a linen company that kept adding surcharges for gas, surcharges for just about everything, while maintaining his base price – he was a small regional linen company – we finally gave in to something we swore we would not do and went to a national linen company. We literally saved over 50% - now many local B&B’s have done the same thing – Linen is just a sample of our changes, too many to list here.
You mention revenue increasing solutions, all of which are great, and we do them, but since we have cut back on salaries, we now do most of the housekeeping ourselves – since this cuts into our mid-day time, we now charge $25 for early check-in requests(1 pm) and $45 for late check-out requests(2pm). We are surprised by how many opt-in for this feature – and wish we had implemented this sooner –sort of a pseudo rate increase, but one the guest voluntarily agrees too
You mentioned that guests know that prices have gone up on just about everything, of course they do, but they have also changed the buying habits in order to offset they expenses. We are what I term a “left over business” whatever is left over after everything is paid – this does not mean we are any less of an important part of their life, we are, they all need time away – but if we keep raising our prices, they will do as many are doing now, buying store brands Vs. quality brands
My favorite quote -
Business Acumen: “linking an insightful assessment of the external business landscape with the keen awareness of how money can be made — and then executing the strategy to deliver the desired results” – a quote from one of my old business professors..

... We keep fixing our bottom line by cutting back on unnecessary items. The first thing we changed was cutting nearly 50% of our costs by changing our suppliers ... We literally saved over 50% - now many local B&B’s have done the same thing...

My grandpa always told me "It's not what you make, it's what you keep" He was encouraging me to be a good steward with the income I had at any particular time by cutting waste and unnecessary expenditures. That advise holds true in business too.

 

[Samster]

As far as rates go, I do notice an interesting trend here among my three in-town competitors. All are larger than I am, and have a wider range of rooms & rates, starting at around $100.00 on the low end (or less) and going up to $240.00 on the high end.
At any given time in the past, the largest and most luxurious rooms went first every weekend. For the last few months, those highest priced rooms (stuffed with romantic amenities) are always the last to go, and just sit there empty right up to the weekend, even this holiday weekend..

With the one B&B left here in town, I have noticed that their occupancy is waaaaaaaaaaaay down this year and if they do have bookings, it's their least expensive rooms. They also will rent their largest rooms for a huge discount. But imvvho with what is happening here in our city with the opening of large suite-type rooms in new hotels that are very reasonably priced, they missed the boat by not offering discounts if they didn't want to lower their rates. Their rates range from $165-$345/night. They do not offer the same amenities or service that we did either. It is largely unattended and operated by a very small staff for the size of the property.
If we were still open, I would have been offering different kinds of discounts vs. lowering our rates. It's what I feel would have been necessary to compete as an urban B&B inn here.