The Importance of Developing a Pricing Strategy for Your Hotel


The word hotel has many historical roots. The term originates from the French word hotel, meaning “a townhouse or a house of frequent guests.” It was first used by the fifth Duke of Devonshire in the mid-18th century. The word has a more modern connotation, but the original meaning remains the same today: a place for travelers to rest and recuperate.

After World War II, the American hotel industry expanded at a previously unprecedented rate. The industrial revolution transformed the country’s transportation network and encouraged long-distance travel. As a result, hotel incomes skyrocketed. The rise of organized labor brought more equality of incomes and made paid vacations a reality for millions of workers. The construction of interstate highways and reliable passenger aircraft also made travel easier. With the increasing number of people traveling by automobile, the hotel industry was transformed into a major battleground in conflictual domestic politics.

A good pricing strategy helps hoteliers to make a profit. It enables them to adjust their rates based on the demand for their services. By offering lower rates during off-peak times, hotels can make more money. However, it is crucial to understand market trends and competitors in order to maximize profits. Developing a strategy that will benefit the hotel and its guests is essential.

The purchasing department of a hotel is responsible for the procurement of all the hotel’s departmental inventories. This department reports to the financial controller. It is also responsible for ratifying inventory items in all operational departments and finalizing the budgets prepared by other departments. The controls department is also responsible for maintaining the hotel’s accounts and financial records. This includes making payments against invoices, processing bank transactions, and processing employee payroll data.

Modern hotels offer basic room amenities such as cable TV, broadband internet connectivity, and direct dial telephone. Some even have minibars with snacks and drinks that can be purchased with your hotel bill. Moreover, modern hotels often have bathrooms that feature toiletries and are equipped with telephones. Many of them even offer business facilities for their guests.

During slow times, hotels can increase room rates to increase occupancy. They can also offer extra amenities in the basic package to attract more guests. While this approach is advantageous, many hotel owners mistakenly think that dynamic pricing means offering lower rates in order to attract more customers. But in fact, dynamic pricing refers to agile pricing, in which the hotel owner constantly monitors competitors’ prices and upcoming events. In order to make the best decisions, hoteliers should invest in a software tool that gathers market intelligence and recommends the best prices for their rooms. This software will also take into account the supply and demand.

In the early nineteenth century, hotels became important centers of local community life, often continuing the function of taverns. Their central location and large interiors made them ideal for social and business functions. In some cases, they even hosted the U.S. Congress in 1814-1815.