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Adding value to the hospitality experience - Pricing

Q: In the process of revenue management what does the element organisation require?

The element organisation requires companies to make choices about the position of the revenue manager in the organisation's hierarchy, as well as his/her responsibility and autonomy in the decision-making process.

29 important questions on Adding value to the hospitality experience - Pricing

What allows an organisation with those strategies? (Michael Porter)

The 3 generic strategies allow an organisation to create both competitive advantage and an above-average performance in relation to its competitors.

(1) What does the strategy cost leadership entail?(3 strategies)

The organisation aims to produce and deliver its products, in a standardised market, as cheaply and efficiently as possible, below the cost price of its rivals.

(2) What does the strategy differentiation entail? (3 strategies)

The organisation pursues uniqueness by developing and positioning the product favourably against the competition on attributes that customers perceive as important.

(3) what does the strategy focus entail? (3 strategies)

Companies that follow this strategy first decide which niche market segment to focus on. They than decide how they can best serve this group of customers, either with a differentiated product or through low-cost production or a combination of both.

What is cost-based pricing?

Cost-based pricing uses the total fixed and variable costs connected to the base of product production a delivery, adding profit margin on top to generate a positive financial return.

What is competitive pricing?

Competitive pricing used to protect or grow a companies' market share. Price is based on what the competition is charging.

What is customer-driven pricing? (value based pricing)

Customer-driven pricing uses a measure of the customers' willingness to pay to establish the price charged for a product.

What is revenue management? (yield management)

The price charged for the product is not always the same, and can vary per day, and for some industries even change multiple times in one day this process is revenue management.

What elements set the stage for any revenue management process?

Organisation, people and technology.

In the process of revenue management what does the element organisation require?

The element organisation requires companies to make choices about the position of the revenue manager in the organisation's hierarchy, as well as his/her responsibility and autonomy in the decision-making process.

The process of revenue management covers different stages and can be divides as ...?

1. Strategic
2. Tactical
3. Operational
4. Data

In the process of revenue management what does the stage strategic cover?

The type of customers the hotel wants to attract, the (online) distribution partners that are used to reach the customers, the type of rates and products that are going to be sold.

In the process of revenue management what does the stage tactical cover?

Hotels forecast future demand, which serves as the basis for the pricing approach that is going to be used.

In the process of revenue management what does the stage operational cover?

Revenue managers often need to respond to dynamic and volatile (vluchtig) market conditions.

What is the decision-making process that makes variable prices available under variable conditions based on?

It is based on extensive analysis of past and expected future demand including seasonality paterns, events, and macro-economic trends.

What can you achieve revenue maximisation if there is a high demand for you rooms?

You should use price optimisation to ensure the right rates and booking conditions are available.

How are customers segmented?

Customers are segmented according to their price sensitivity and/or other buying behaviour traits.

What is price sensitivity?

Price sensitivity is the degree to which the price of a product affects consumers' purchasing behaviours.

What is a trait of a price sensitive customer?

Price-sensitive customers generally buy well in advance, so you can link booking restrictions to the time of purchase.

Why are there different prices for different people, different prices on different days etc. on what do you base that on? (slechte zin)

1. Booking behaviour
2. Price sensitivity
3. Varying number of customers wanting to purchase the product per pay. (different rates on different days)

What is price-elasticity of demand?

This ratio expresses a change in demand, because of a change in price.

What forms the deciding criteria for guests?

Price, location, past experience and online customer reviews.

What includes a competitive set?

This includes organisations that compete for the same customer, and offer products of similar quality and in the same price range.

What is skimming? (pricing approach)

The organisation outranks its entire competitive set, with a superior product that allows them to attract higher rate business by restricting availability at low rate levels, thus increasing the average spend per customer.

What is penetration? (pricing approach)

Customers' perceive the product as inferior (minderwaardig) to the competitive set, forcing the organisation to make lower rate levels available to gain market share.

What is surrounding? (pricing approach)

If the hotel suites are rated significantly higher than the competition, the organisation can communicate higher price levels to the market. If the standard product is considered inferior, the organisation can make discounted rates available to drive volume.

What is a hidden pricing approach?

When an organisation lacks a clear vision (according to Porter, they are 'stuck in the middle) and simply follows its competitors' pricing approach.

What is a matching pricing approach?

A competitor's rating matches your own organisation's rating and jointly you outrank the competition. This allows you to follow them in your aim to attract higher spending guests.

What is an undercutting pricing approach?

A competitors demands your full attention because it has superior customer reviews and ratings. You want to gain market share and offer slightly lower rates.

The question on the page originate from the summary of the following study material:

Hospitality Experience An Introduction to Hospitality Management | 9789001885786 | Jeroen Bosman, et al

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