With a highly competitive hospitality market, price is a major factor in getting guests, maximizing room occupancy, and generating revenue. A Hotels Competitive Pricing Analysis is used by hotels to determine how their pricing methods compare to competitors, ensuring the best value without sacrificing profitability. This guide outlines how hotels can perform an extensive pricing analysis and apply data-based strategies to maintain competitiveness in the market.
What is Competitive Pricing Analysis
Competitive pricing analysis consists of tracking, analyzing, and making adjustments in room rates from industry trends, competitor prices, and customer needs. With data and analytics, hotels are able to refine their pricing models, find the best balance between cost and profitability, and target the right audience.
Most Important Steps in Carrying Out a Competitive Pricing Analysis
1. Direct Competitors Identifying
The first step is identifying your direct competitors. These are hotels offering similar services, star ratings, locations, and target audiences. Factors to consider include:
Proximity: Hotels in the same area or neighborhood
Star Rating & Amenities: Hotels with similar offerings (e.g., free breakfast, pools, conference rooms)
Customer Demographics: Competitors targeting the same type of guests (business travelers, families, luxury seekers)
2. Monitor Competitor Pricing Strategies
Monitoring competitors' rate movements offers a wealth of information on market behavior. Consider:
Base Room Rates: Compare seasonal and special occasion standard rates
Dynamic Pricing: See how they change rates with demand shifts
Promotional Offers: See what discounts, packages, and promotions they offer
OTA Pricing: Compare prices on Online Travel Agencies (OTAs) such as Booking.com, Expedia, and Agoda
3. Leverage Pricing Intelligence Tools
Manual tracking may take time, but investing in hotel pricing software allows data collection to be automated. Some of the most popular ones are:
RateShopper – Tracks real-time competitor rates across multiple platforms
STR Reports – Offers market trends and performance benchmarks
Google Hotel Ads – Enables tracking of competitor prices on Google search results
4. Evaluate Seasonal & Event-Based Price Trends
Hotel prices vary seasonally, for events, and according to local demand. Have a historical view of price trends during:
Peak Seasons (summer vacation, holiday seasons, large conventions)
Off-Peak Seasons (off-travel seasons)
Special Events (music concerts, sports events, corporate events)
Tuning price strategies in reaction to these shifts ensures maximum revenue collection.
5. Use a Dynamic Pricing Model
A dynamic pricing model enables hotels to change prices in reaction to demand and competitor action. Tactics are:
Real-Time Adjustments: Make price changes dynamically according to booking patterns
Last-Minute Discounts: Provide lower rates to sell empty rooms
Advance Booking Offers: Offer early-bird discounts for advance bookings
Loyalty & Member Pricing: Give loyalty program members or repeat guests special rates
6. Track Customer Perceptions and Reviews
Price competitiveness isn't merely about providing the lowest prices—it's about value perception. Guests consider:
Service Quality vs. Price
Online Ratings & Reviews (TripAdvisor, Google Reviews, OTA feedback)
Added Benefits (free breakfast, complimentary shuttle service, flexible cancellations)
Hotels with improved customer experiences can sustain modestly premium prices while preserving competitive positioning.
7. Constantly Review and Adjust Pricing Approaches
Competitive pricing isn't a once-off activity; it involves constant monitoring and readjustment. Establish:
Weekly or Monthly Price Audits
Competitor Benchmark Reports
Performance Analysis of Historic Pricing Approaches
By continuously optimizing pricing methods, hotels will remain market leaders while remaining profitable.
Conclusion
Competitive Pricing Analysis is a crucial strategy for hotels that want to achieve maximum revenue and welcome more visitors. By tracking competitor pricing, applying smart pricing software, and dynamically changing rates, hotels can stay ahead of the competition. Data-driven pricing is the recipe for long-term success in the fast-paced hospitality sector.
