How is the profitability of your hostel?
Do you see positive results at the end of the month? Or are you having any financial loss? If the answer to the last question is yes, you should review your pricing!
You need to take the time to understand the costs of your hostel and reach a competitive and interesting value for business growth. To do this, you must maintain a competitive price, but considering all aspects that influence it.
Today we are going to bring you some tips for you to analyze if your daily rate is within the market value.
Stand out in the market
Do you know your guest’s profile well? What about your business’ uniqueness? These factors are essential to know how much the customer is willing to pay to stay on your property.
The value of your daily rate is directly linked to the value perceived by the guest. However, it is no use just getting attached to your business and finding it worth a lot. For sure, our work and effort are worth it! But that must be clear to the guest. They will be more willing to pay more and enjoy better conditions, amenities, differentials, etc. So make your singularities very clear in your communication with the guest. The guest nowadays seeks experiences more than anything.
Research your competitors
Your hostel can have many singularities. But you cannot be totally out of market value, especially during low season. So to check how the market value is going, list your direct competitors, who are located in the same city or region.
Take a note of the strong points of each property and the value of their daily rate. Then make an analysis of your property to see if you are not out of the market value of your destination.
Use Automatic Pricing
There are tools on the market today that help managers do automatic pricing. It automates its pricing strategy, aiming to maximize its revenue and occupation, taking into account the available offer and demand.
At hqbeds you will find the Precificier tool, where you can do this management in an easy way.
Make use of the psychology of numbers
Even though it seems silly, there are studies that prove that the psychology of numbers is effective. Use some tactics:
The power of number 9
People read numbers from left to right and usually memorize the first number. So a rate of 199 is better than a rate of 200, although the difference is almost none.
Why is that? In people’s minds, the number 199 is closer to 100 than 200! In addition, consumers are conditioned to associate prices ending in 9 with a better average value.
Rate differences between rooms
A common mistake is to create very similar prices to different types of accommodation. This confuses the consumer’s mind, as they may not realize the added value or savings they get from one to another. Clear pricing is able to better represent the difference of each room choice.
We know that numbers are important when pricing (fixed and variable expenses), but you should always consider these other external factors. By doing a thorough analysis and changing the way you price your property, you can have more efficient management and better results at the end of the month.