The rise of OTA’s and online distribution channels over the past years has meant that our travellers have more opportunities than ever to research, compare and find the best available rates at any given time. Boutique properties need to adopt flexibility within their rate structures to compete on these global digital channels.

So where do you start? Successful room occupation relies upon, amongst other things, the balance between RATE FLEXIBILITY and YIELD MANAGEMENT. Yield Management is the technique used to achieve the highest occupancies at the best rates to increase the revenue also known as Revenue Management. Rate Flexibility in part means the same, but if used in isolation can mean selling at the lowest rate to close a deal – not ideal when used alone. For many years it was believed that the Airlines’ policy of reducing rates far in advance and then upping them the closer you get to guest arrival was the answer. However, this may not be the best solution for smaller, boutique properties where the benefits of selling one room may far outweigh those of selling two or three at a discounted rate given the operational costs.

Both best rate AND available occupancy need to be considered for each reservation. And, as owners and managers, it’s vital to understand:

  • The cost of a room for a night
  • Your base price for a room for a night

Once you have a clear understanding of your costs and base price, and you can start to look at flexibility. Start adding in variables like seasons, school holidays, weekdays versus weekends, the number of people you already have booked, the number of staff on duty, etc. and then implement flexibility pricing which most closely addresses your needs AND keeps you competitive versus OTA’s and booking platforms.

With many last minute bookings, and the attraction of online booking portals, guests are price sensitive and shop accordingly, but they also have the luxury of effortlessly comparing properties. A well-placed special offer could see you filling beds as could a last minute price slash, but given apples and apples; you’ll want to be the shinier of the lot, and ensure you’re covering your costs and still making a profit, even with flexible pricing.