Revenue Strategy: The High Cost of Ignoring Value
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The document discusses how hotels often ignore the value that amenities and packages provide to guests in order to reduce rates. It provides an example of an A/B test of a $189 dining package versus a $49 breakfast package that showed equivalent revenue gains to a 0.5% increase in average daily rate. The test demonstrated that addressing relative guest value through amenity packages can provide significant revenue without requiring rate reductions that may degrade the guest experience over time.
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Revenue Strategy: The High Cost of Ignoring Value
- 1. The High Cost of Ignoring Value Tim Peter President, Tim Peter & Associates
- 4. Top search term prior to booking?
- 5. So, here’s a question:
- 6. Because we’ve trained them
- 7. percent
- 8. Price really only matters for value
- 9. “...humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.” –Dan Ariely
- 10. What do guests say you do well?
- 11. Price anchoring and up-sell A/B test $189 24-Hour Dining Package • Prepaid parking • Breakfast • Dinner in restaurant Tested price anchored up-sell of amenities packages in confirmation page and pre-arrival email: $49 Morning Dining Package • Prepaid parking • Breakfast
- 12. Equivalent of extra 0.5% ADR YOY
- 13. Essentially no chance of random occurrence $25,000 in GRR for $5,000 spend
- 16. Thank You Web: timpeter.com Phone: 201-305-0055 Email: tim@timpeter.com Twitter: twitter.com/tcpeter
- 18. Soft Business Results Reduce Rates Reduce Service or Marketing to Pay for Rate Reductions Short-term Bookings Improve Competitors Respond Guest Expectations Shift Guest Experience Deteriorates
- 19. Soft Business Results Reduce Rates Reduce Service or Marketing to Pay for Rate Reductions Short-term Bookings Improve Competitors Respond Guest Expectations Shift Guest Experience Deteriorates X
Notas del editor
- File retrieved from http://commons.wikimedia.org/w/index.php?title=File:Grilled_cheese_sandwich_with_roasted_tomato_soup.jpg&redirect=no from user jeffreyw (http://www.flickr.com/people/7927684@N03). This file is licensed under the Creative Commons Attribution 2.0 Generic license. (http://creativecommons.org/licenses/by/2.0/deed.en)
- What would it have sold for if no one took a bite? What would it have sold for if it was a picture of Taylor Swift? What would it have sold for if it was a picture of Justin Bieber? They’re just lucky it wasn’t a picture of Justin Bieber Smith Travel is now adding a new cheese index Makes me wonder what kind of cheese it was? Where can I get that griddle? The baby Cheesus?
- 80% of travelers perform a travel-related search before booking The average online shopper visits 22 sites across 9 or more sessions prior to making a reservation According to Google, “price” was the leading reason consumers booked on a specific hotel website
- 80% of travelers perform a travel-related search before booking The average online shopper visits 22 sites across 9 or more sessions prior to making a reservation According to Google, “price” was the leading reason consumers booked on a specific hotel website
- Only 10% of leisure travelers always book with the first hotel brand that came to mind during their research
- File retrieved from http://commons.wikimedia.org/w/index.php?title=File:Grilled_cheese_sandwich_with_roasted_tomato_soup.jpg&redirect=no from user jeffreyw (http://www.flickr.com/people/7927684@N03). This file is licensed under the Creative Commons Attribution 2.0 Generic license. (http://creativecommons.org/licenses/by/2.0/deed.en)