May 12th, 2016
Direct online room sales are a major part of a hotel’s revenue; so getting the perfect balance of rates, offers and packages is vital.
Whilst every hotel is unique, our 2015/16 benchmarking activity shows the best performing luxury 4 and 5 star hotels have some things in common.
What are website users purchasing?
A typical luxury hotel can expect its direct website purchases to breakdown as follows:
- Best Available Rates (BAR) – 32%
- Advance Purchase Rates – 29%
- Packages – 20%
- Multi-night Stays: 13%
- Seasonal Rates: 6%
What contributes most to revenue?
Our benchmarking indicates that revenue contribution for BAR, packages and seasonal rates closely match purchase percentages.
However, advance purchase rates drop to from 29% to 20% contribution, whilst multi-night stays increase from 13% to 20%.
As you would expect, higher value products will generate more revenue per transaction. On average a suite will generate 5 times more than a last minute deal, which is worth noting before putting effort into marketing activity
It’s not just about the money
When you take a closer look at the best performing rates it’s fascinating to see that the highest performers are not always those that offer the biggest savings. Of course, great discounts stimulate sales, but factors such as convenience and added value often have greater impact.
Simple is best
One thing that is common to all hotels is simplicity sells.
Complex offers, lengthy terms and conditions, unnecessarily ‘clever’ offer titles and lengthy descriptive copy all massively impact the online performance negatively.
A perfect example of this is the sale of breakfast. Hotels that perform best are those that simply provided a ‘Bed & Breakfast’ rate. The premium is on average around 10% of the room rate, but when it comes to effectiveness, what is most important is the simplicity and convenience being offered.
Do PR based rates work?
From association with West End shows to the ultimate themed weekend breaks, most hotels use PR based rates.
But do they work?
In terms of directly measurable revenue, the answer is normally ‘no’.
However, when you take a closer look you can see that when supported by a strong marketing campaign, they can stimulate the sale of other rates. Temporary increases in revenue of more than 100% following the push of a PR rate are not unusual.
What does this all mean?
As we say earlier in the article, every hotel is unique and it is fundamental that your rates and offers are relevant to your hotel. However, by using these sorts of statistics as your foundations from which to build, you will be able to ensure you can maximise the opportunities available.
If you would like to find out more about benchmarking your business or to discuss your rates and offers strategy call us on +44 (0) 131 225 5555.