LEVERAGE PRICE.

Discussion topic: Managing price is a critical element of revenue management. Without a solid approach to pricing, no level of occupancy will guarantee your success. For this reason, it's important to be able to recognize problems when you see them. Consider the fictional Stay the Same Hotel. This multistory waterfront hotel has 200 rooms, all available at the same rate, regardless of view, accessibility, or floor. Let's consider what's missing from their pricing approach. At Stay the Same, the pricing approach fails to address the key pricing questions, namely, which prices to charge and who should pay which price. A one-price approach does not take into account demand, load, competition, or customer expectations. It doesn't make any distinctions based on customer characteristics or product characteristics. It's very limited, and its limitations hurt the hotel's prospects for revenue. Now consider your own organization or another organization you know well. It's unlikely that you

Running head: LEVERAGE PRICE
Leverage Price
Name of the Student
Name of the University
Author Note

1LEVERAGE PRICE
Pricing Policy for Hotel Rooms
The demand for any product or service is a function of many factors. Apart from its
price, other factors like tastes and preferences of consumers, presence of competitors or
seasonal variations are also important considerations (Kim, Cho and Brymer 2013). The
inflexible pricing policy of Stay the Same hotel is neither profitable nor attractive to
consumers with different tastes.
An organization with a suitable pricing policy would look into the following aspects:
1) Quality of the rooms: Different rooms generally have different accommodation levels
and facilities. Even if all the rooms offer the same facilities, there are distinctions in
the view they provide, their accessibility and their floors. Prices should be higher for
rooms with better views and more accessible floors, so that they can be availed by
those who are willing to pay more.
2) Peak and Lean Seasons: During the holiday season, there is more demand for hotel
rooms than during the lean season. Prices are higher during the peak season because a
higher demand would drive up prices. Prices should be lowered during the lean season
in order to attract consumers (Masiero, Nicolau and Law 2015).
3) Categories of Consumers: Different groups of consumers have different room
requirements. Families with children or many members need more spacious, children-
friendly rooms. Company executives or high-end business professionals might require
an executive suite. Rooms should be charged based on their functionality.
However, the pricing policy should also include some improvements. A Length of
Stay policy may be implemented. During the peak season, a limit on the maximum
number of hotel stay dates may be imposed on consumers, and during the lean season,
consumers may be provided discounts for staying longer. Also, the hotel should keep a

2LEVERAGE PRICE
track of its competitors’ prices and the offers they are providing to attract consumers.
This would help them move ahead of their competition.

3LEVERAGE PRICE
References
Kim, W.G., Cho, M. and Brymer, R.A., 2013. Determinants affecting comprehensive
property-level hotel performance: The moderating role of hotel type. International Journal of
Hospitality Management, 34, pp.404-412.
Masiero, L., Nicolau, J.L. and Law, R., 2015. A demand-driven analysis of tourist
accommodation price: A quantile regression of room bookings. International Journal of
Hospitality Management, 50, pp.1-8.