//

How 8 properties increased their revenues by 19% on average with Pricepoint

Case Study

Key Insights

Introduction

Pricepoint is an automated revenue management system that was built to solve the problem of pricing for hoteliers. It uses airline-grade, AI-based pricing intelligence to optimize prices in real-time on your website and OTAs such as Booking.com or Airbnb. Revenue management as a technique, and Pricepoint specifically, have been proven to increase occupancy and revenues, and save time for managers.

How much more extra revenue can an RMS generate?

There is no genie with a crystal ball that can say with certainty “your revenues will grow by x% in a matter of weeks” as this will depend on a wide variety of factors. However, what we can say with confidence from our observations is that all properties using Pricepoint saw a significant positive change in extra revenue generated – all while running the software completely on autopilot.

The results combined in this case study were measured before the COVID-19 pandemic. This allowed us to benchmark improvements against previous years. Our goal is to always find the most relevant KPI for comparison. Sometimes it’s a previous year, sometimes it’s a period before Pricepoint’s launch at the property. There are no two identical days in history and there are always external factors that come into play but one thing has been true to date. Hotels that had not been using dynamic pricing or a dedicated revenue manager on site saw the impact of dynamic pricing almost instantly from one week to the next. By looking at (1) the number of new bookings received daily, (2) their dollar value, and (3) ADR, managers could quickly tell that there was a positive impact on performance after implementing Pricepoint.

See below how year-on-year improvements were measured at various properties in different areas of the world.

Hotel Whiskey, USA

For sure our revenue  wouldn’t be what it was if it wasn’t for Pricepoint. That’s the super easy thing to say”

“With Pricepoint (…), we projected $17K in hotel sales and we brought in $27K.  (…) So, I think it was pretty dramatic.”

Michael, USA

Hotel Whiskey from the outside

Sampled properties: location and size

We carried a study on 8 different properties across 5 countries: Brazil, Hungary, Poland, Spain, and the USA.

• The accommodation capacity ranged from 10 – 47 rooms or 32 to 198 guests.
• The average occupancy during the measured period was 66%
• The average new booking value was 71 USD (ranging from 38 USD to 127 USD)

Far too often small accommodations forget or are left behind by the proper revenue management. This study case shows that proper revenue management with Pricepoint brings positive results to different kinds of accommodations.

Period of the case study

We started tracking the first property using Pricepoint as early as June 2019 and we concluded the case study in August 2020. Overall, we observed all properties for an average of 4.3 months or 131 days.

In a crisis like the COVID-19 pandemic, hoteliers tend to overreact with drastic price drops to compete on the remaining demand that does exist. Pricepoint is designed to price optimally, even in times of low demand, ensuring that the price selected is relative to the level of demand and customer price sensitivity and avoiding a race to the bottom (famously known as price war).

Results of revenue management with Pricepoint

All properties used real-time dynamic pricing (our auto-pilot mode) which updates prices automatically as many times per day as necessary to get the best results. While hoteliers can supervise the strategy and stay in control, they do not need to interact with this completely automated and effective process.

Pricepoint automatically detects low and high demand days and adjusts prices accordingly to either generate demand, or increase ADR by targeting guests willing to pay a higher price. It modifies prices based on occupancy, time of the day, the time before the arrival, and other factors. Since it does this automatically, it can increase revenue during busy periods when you might not react fast enough to change prices yourself.

• Properties were observed for an average of 4.3 months or 131 days, between June 2019 and March 2020.
• On average these properties noted a 19% YoY growth in revenues and a 13.4% YoY increase in occupancy during that time.
• Across all properties, we saw an average YoY increase of 3,359 USD in monthly revenues.

Average Year on Year Increase in Revenues between June 2019 and August 2020

average increase in revenues in each property chart

In conclusion

We live in a digital world and hotel guests are increasingly digital natives. The number of online reservations keeps increasing because it’s fast, easy, and natural for these customers to book online. To compete effectively, hotel prices must now adjust for demand and customer type multiple times within 24 hours. We all know this mechanism very well from buying plane tickets. Airlines have been pricing like this for years. The same ticket that costs $900 in the morning might cost 1150$ in the evening. Airlines have been doing it for one important reason – dynamic pricing increases revenues.

Nowadays, surrounded by an unprecedented quantity of data and computing power, the best way to keep pace is to have a solution in place that automates the pricing process based on relevant factors like booking trends, historical data, seasonality, geography, or competitor set. To stay in the game, hoteliers need to increase the flexibility of their pricing to sell at the optimal rate.

Making manual changes requires significant daily work and can leave you with a feeling of uncertainty -especially given the industry’s current situation.

Any company or software provider that quotes that they are able to increase revenues by a specific percent is, sadly, being dishonest. We don’t claim a specific increase, but as this case shows Pricepoint’s real customers have shown a proven benefit from their investment in a modern revenue management system. Investing in this technology today will create long-term resilience in a disrupted and fast-paced hospitality industry.

star

Start Optimizing Revenues Now