Hospitality Pricing Differentiators: How to Determine Hotel Room Prices

Author: Avanti Joglekar

In the hospitality realm, pricing is the revenue manager’s tool for exerting control over how and when rooms are sold to consumers. Every room on every booking date is an opportunity for managers to set unique prices that will maximize net revenue. Pricing should be holistic, comprising not only room pricing but the potential total spend of the visit.


Once a pricing strategy is in place, managers should stick to their strategy, and conduct regular reviews to refine it. Paying attention and making weekly or daily adjustments based on current data and analysis is a must. Avoid making last-minute changes based on fear or intuition.

Revenue managers must be in tune with the differentiators that affect pricing. For example, pricing channels, such as the hotel website and the OTAs, are not the same and should not be treated the same. Key differentiators include loyalty, affinity group discount pricing, and room type.

Offering special loyalty pricing to repeat guests may be an important part of the revenue management strategy, especially if guests are expected to spend on other activities and amenities during their stay. Loyalty pricing, when coupled with good communication and service, is a great way to encourage guests to keep coming back. The amount they spend on gambling, restaurants, or other amenities can far exceed the room discount provided.

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It is important to provide loyalty rates and other discount pricing for affinity groups like veterans, seniors, or AAA members. Managers can also push out special offers to specific groups, such as in-state residents who are driving to the property, military/government employees, or any other desired group.

Rooms need to be priced based on their real and perceived value to the consumer. Prices for rooms should be tiered based on their size, amenities, and location in order to maximize profits and capture a wider range of potential guests with varying budgets. Focus on value, both within the marketplace and within the property.

In addition to key pricing differentiators, there exist numerous pricing pitfalls that revenue managers can slip into, losing gains that should be had from an optimal pricing strategy. For a full, detailed list of these pricing pitfalls, download the Rainmaker Guide to Revenue Management.

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