Leverage Occupancy Based Pricing (OBP) To Improve Hotel Business Performance

In the modern business landscape, hotels need not only to offer quality services but also to adopt flexible pricing strategies to attract a diverse range of guests. One of the strategies gaining significant attention and widespread adoption is Occupancy-Based Pricing (OBP). This pricing method, which adjusts rates based on the number of occupants in a room, helps optimize revenue and better meet guest needs. Let’s explore with Hotel Link how to utilize this strategy to enhance your hotel’s business efficiency!

What is Occupancy-Based Pricing?

Occupancy-Based Pricing is a method where room rates are adjusted based on the number of occupants in the room. Instead of applying a fixed rate for a room regardless of the number of guests, this approach allows hotels to flexibly charge based on how many people are staying. This means that the rate for a single guest will differ from the rate for two or three guests in the same room.

For example, if a couple books a room, they might pay a higher rate compared to a solo traveler. Conversely, a family could benefit from a discounted rate by sharing a single room rather than booking multiple separate rooms.

Benefits of Occupancy-Based Pricing

1. Revenue Optimization

One of the biggest benefits of Occupancy-Based Pricing is the ability to optimize revenue. By adjusting room rates based on the number of occupants, hotels can maximize profits per booking. If a room is designed for three people, the hotel can set a base rate for one guest and charge an additional fee for each extra guest. This ensures that the hotel receives fair value for the level of service used while also helping to avoid resource wastage.

2. Enhancing Guest Satisfaction

Occupancy-Based Pricing also helps increase customer satisfaction. When guests feel they are only paying for the services they actually use, they are likely to perceive the pricing as more fair. This is particularly important for solo travelers or small groups who may not want to pay a high price for a room designed for more people.

3. Meeting Diverse Guest Needs

Every guest has unique needs and desires when they choose your hotel. Occupancy-Based Pricing allows you to be flexible in offering service packages that cater to different types of guests, from business travelers to families or groups of friends. This not only attracts a broader range of customers but also creates personalized experiences, increasing the likelihood that they will return in the future.

How to Apply Occupancy-Based Pricing in Hotel Business

1. Analyze Your Target Customers

To successfully apply Occupancy-Based Pricing, the first step is to thoroughly understand your target guests. This involves analyzing data from your Property Management System (PMS), such as the Market Insight available in Hotel Link's Channel Manager, to identify booking trends and behaviors. You need to clearly know who your main audience is: business travelers, families, couples, or groups of friends. From there, you can create pricing packages that meet their needs.

Learn More: Understanding about Channel Manager

2. Create Flexible Pricing Packages

Once you understand your guests, the next step is to build flexible pricing packages. For instance, you could offer different packages for single rooms, double rooms, and family rooms. Each package could come with additional amenities such as breakfast, free Wi-Fi, or access to hotel services. This not only makes it easier for guests to choose the package that suits them but also creates opportunities for the hotel to increase revenue through the sale of additional services.

Read More: Occupancy Based Pricing | Hotel Link System

3. Use Technology to Support Pricing

Technology plays a crucial role in implementing Occupancy-Based Pricing. Hotel Link’s Channel Manager system can automatically adjust room rates based on the number of occupants. This ensures that room rates are always updated promptly and accurately, while also minimizing errors during the booking process.

Additionally, using data analysis tools helps you track the effectiveness of your pricing strategy, allowing you to adjust and optimize it over time. You can monitor which pricing packages are most popular, which guest groups frequently use special packages, and adjust your strategy based on this information.

Read More: Yield Management - Optimizing Room Sales On Distribution Channels

4. Effectively Communicate Your Pricing Strategy

An important part of applying Occupancy-Based Pricing is ensuring that guests clearly understand and feel comfortable with this strategy. This requires a clear and effective communication plan. The hotel should clearly explain the pricing policy on its website, during the booking process, and at the front desk. This helps avoid misunderstandings and ensures that guests know in advance how much they will pay based on the number of people staying in the room.

You can also leverage email marketing or loyalty programs to introduce new pricing packages and special offers related to the number of guests. This not only informs customers about new options but also encourages them to book directly through your channels instead of through Online Travel Agents (OTAs).

Challenges in Implementing Occupancy-Based Pricing

1. Guest Response

While Occupancy-Based Pricing has many benefits, it may also encounter some negative responses from guests if not implemented carefully. Some guests may find it inconvenient to pay extra fees for additional guests, especially in cases involving large groups or families. Therefore, it is important to communicate this policy clearly and ensure that customers understand the benefits they receive when choosing the appropriate pricing package.

2. Managing Pricing Updates and Changes

Another challenge when implementing Occupancy-Based Pricing is the continuous management and updating of prices. Hotels need to have a flexible and efficient management system to ensure that all price changes are made in a timely and accurate manner. This requires close coordination between relevant departments, from the reservations department to marketing and finance.

3. Interaction with OTA Partners

When applying Occupancy-Based Pricing, another important factor is collaborating with OTA partners. Currently, this pricing method does not apply across all OTAs but is only active on a few channels like Booking.com, Expedia, and Agoda.

You need to ensure that your pricing policies are accurately reflected on OTA platforms while maintaining consistency across all sales channels. This can be complex and requires high precision in managing information. To address this issue, Hotel Link’s Channel Manager tool will help you easily ensure price consistency across online distribution channels. Hotels can flexibly adjust pricing for different OTAs according to their business strategy.

Conclusion

Occupancy-Based Pricing is an effective strategy that helps hotels optimize revenue and enhance guest experience. However, it’s also important for hoteliers to be aware of potential challenges and be ready to adjust to best meet guest needs.

If you are looking for ways to optimize your pricing strategy and hotel management, contact Hotel Link for support today. We are always ready to assist you with the most effective solutions, helping you not only meet but exceed customer expectations. Let us accompany you on your journey to enhance your hotel’s business efficiency!

You can learn more about OBP here: How occupancy based pricing works?