The Challenge
Operating within the soft market of Burlington, VT, our hotel partner faced significant headwinds in meeting its budgetary goals. The Director of Revenue Management (DORM), Riley Rundquist, was tasked with developing and executing a pricing strategy that could not only capture existing demand but also outperform the competitive set despite the weak market conditions.
The Strategy
Riley recognized that aggressive rate defense was counterproductive in a soft market. Instead of holding rates and sacrificing occupancy, a targeted approach combining strategic rate drops, discount limitations, and value-added packages was implemented.
The core components of the strategy included:
- Strategic Rate Adjustment: The Best Available Rate (BAR) was deliberately dropped by $20. This move aimed to immediately increase the hotel’s perceived value and improve its position within search results and third-party channels, driving essential volume.
- Discount Control: To protect the rate integrity gained by the BAR drop, the hotel limited extraneous discounts. This ensured that most of the achieved occupancy was secured closer to the strategic BAR rather than through excessive, margin-eroding promotional rates.
- Value Enhancement: To appeal to guests focused on value, the hotel aggressively pushed upselling packages. This strategy focused on increasing the average transaction value (ATV) through ancillary revenue (e.g., breakfast, parking, local experiences) rather than just pushing a higher room rate.
The Results
The strategic shift from defensive pricing to aggressive value-capture proved highly successful, allowing the branded select-service hotel to outperform its budget and competitors significantly.
- Budget Performance: The hotel successfully beat budget in four out of six months, a remarkable achievement given the adverse market conditions.
- Market Share Gain (RevPAR Index): The most significant outcome was the substantial increase in market share. The strategies collectively lifted the hotel’s RevPAR-Index by 15.8 points, demonstrating a superior ability to convert demand and drive rate relative to the competitive set.
Key Takeaway
This case study demonstrates the effectiveness of precise, data-informed pricing adjustments in overcoming challenging market dynamics. By strategically lowering the base rate, controlling discount leakage, and increasing the perceived value through upsell packages, Riley successfully positioned the hotel to capture available demand, meet financial targets, and gain substantial market share, ultimately delivering exceptional results for the ownership.
Drive More Hotel Revenue
Through Untapped Strategies
