Setting the Right Leisure Pricing Strategy for Hotels and Resorts
Table of Contents
- Overview
- Objective
- Frequency
- Resources & Tools
- Recommendations</ li>
- Process
- Special Notes & Strategies
- Wholesaler Considerations
- Ramp-Up Phase for New Hotels
Overview
Each hotel has a primary segment that purchases retail, nonqualified rates. In a business hotel this segment is called corporate; in a resort, it's leisure.
The name of the segment describes the main type of customer base, not necessarily the purpose of travel. The leisure segment represents guests paying the hotel’s rational, properly positioned retail rate. This price is critical because it sets the standard for guarantees and discount structures like Wholesaler, group, corporate, and other discounts are often based on this rate. Therefore, the leisure retail rate is one of the most important prices to set correctly.
Objective
Leisure travelers behave differently than business travelers. They consider many factors when planning a trip, which makes pricing for this segment more complex. This guide provides best practices for setting and maintaining a fair retail rate aimed at leisure guests.
Even if wholesalers make up a big part of your business, understanding fair market value for leisure guests is essential before applying discounts.
Frequency
Review market positioning, seasonality, and historical performance annually at minimum. Monitor demand and competitors weekly, adjusting rates as market conditions change.
Resources & Tools
- Resort Demand Strategy Tool (with Room Pools)
- Seasonality Tool
- Total Hotel Competitive Assessment Tool
- DaySTAR and DaySTAR Plus Reports
- Group Convention Forecasts
- Revenue Opportunity Model
- Booking Pace Tools
- Hotel Pricing
Recommendations
When pricing for leisure guests, look beyond your immediate market. Consider competing destinations, conduct seasonal rate shops, and monitor demand and competitor pricing weekly. Adjust when needed to stay competitive.
Process
Step 1: Analyze Hotel & Market Positioning
Know your source markets—where guests come from, how they travel, language, and currency issues. Identify seasonal changes in customer .
Define your competitive set wisely—include hotels in your market and in competing destinations. Ask guests about competitors via surveys. Assess your destination’s value compared to others (costs, activities, perception).
Evaluate your hotel’s value proposition: location, amenities, service, brand strength. Price premium rooms thoughtfully, using room pool guidelines.
Step 2: Understand Seasonality
Seasonality impacts who stays at your hotel and what they’re willing to pay. Identify peak, shoulder, and low seasons. Adjust rates for each. Stay informed of shifting patterns and demographics. Follow your brand’s seasonality guidelines.
Step 3: Conduct Rate Shops
Retail rate shops only show part of the story. Some competitors might discount heavily elsewhere. Shop all major booking channels—brand sites, wholesalers, OTAs. Understand wholesaler markups. Repeat shops for each season and room type to stay competitive.
Step 4: Assess Historical Market Performance
Analyze market share and ADR/ Occupancy Index by season. Compare ADR Index to competitor rates. A competitor may list higher retail prices but sell heavily discounted inventory. Use data trends to guide pricing decisions.
Step 5: Align Information & Pick Price Points
Combine insights to set seasonal price points. Choose one rate for standard rooms each season, then set premiums for upgraded rooms. Adjust inventory to maximize revenue—sell premium rooms when standard rooms run out.
Step 6: Monitor Your Price Points
Watch demand and competitor moves weekly. Adjust strategy based on trends. Don’t assume old rules always apply—revalidate as markets change.
Special Notes & Strategies
Avoid confusing or opportunistic pricing. Don’t raise rates just because bookings rise—it might just be your booking window. Instead, increase projections and adjust if true demand grows. Avoid sudden hikes near sell-out; instead, sell premium rooms first so customers understand the higher price. Monitor airline capacity—air seats impact hotel access and demand.
Wholesaler Considerations
Even if wholesalers are significant, price for the retail leisure guest first. Use this to guide wholesaler discounts. Evaluate partners by booking pace, marketing reach, reliability, and loyalty. Use brand tools and worksheets to manage these relationships.
Ramp-Up Phase for New Hotels
For new openings, decide if your market is established or emerging. Consider introductory rates but clearly label them as temporary, showing the normal price alongside. This helps avoid long-term price perception issues.