Leverage Price: Hotel Pricing Strategies, Revenue Management Analysis

This assignment analyzes the pricing strategies of the fictional 'Stay the Same' Hotel, which uses a uniform pricing approach for all its rooms, regardless of factors like view, accessibility, or demand. The discussion highlights the limitations of this approach, which fails to consider key pricing elements such as demand, competition, and customer characteristics. The solution suggests a more dynamic pricing policy that accounts for room quality, seasonal variations, and consumer categories. It proposes improvements like implementing length-of-stay policies and monitoring competitor prices to optimize revenue. The references provided support the analysis by exploring determinants affecting hotel performance and demand-driven price analysis.

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.