Skip to main content

*In this case study, Kriya RevGEN began revenue management in mid-late June 2021; all before/after comparisons are using July onward as “after” data. All data from 2021*

In this case study, we have a great example of a hotel where pricing midweek rates more realistically led to a large uptick in BAR-Based room nights and in turn, occupancy and RGI, without giving up any ARI performance!

Upon taking over this property the first thing we noticed was that despite being a very small hotel (under 75 rooms), we still weren’t consistently selling out on any particular day of week. Also, before taking over, the property had a tendency to simply roll with their price optimizer’s recommendations without questioning the underlying logic, or doing much deep analysis of the compsets rates, or monitoring segmentation. Using Spider 2.0 we quickly identified that we were hardly seeing any “BAR Based” production, or room nights that book a rate plan that is or directly derives from the BAR rate.

Example of low BAR Based Production for the hotel in the month of June that indicated that we were over-priced

This typically signals that there is high resistance to a hotel’s BAR rate, and often hotels that have this issue will book many overrides, point stays, opaque stays, or local negotiated business, as guests opt to book more unconventional channels due a public rate they are not willing to pay. This hotel exhibited a classic example of overpricing.

One of the major changes we implemented from a rate perspective was simply lowering the weekday BAR structure to a point where guests would actually consider booking the BAR rate. While it sounds obvious, it did take some time to hone in on the correct price points.

In some cases these are very large drops (for example dropping our Tuesday from $144 to $119 wasn’t uncommon at first), but it wasn’t until we got to these new, lower price points that we noticed that our “BAR Based” statistics (particularly room nights) started to improve. Take a look at this chart which shows how our Bar Based rooms (as a % of total mix) improved as weekday rates began to drop.

As we lowered our rates and saw an uptick in BAR Based stays (and occupancy) we started to see one of our most important metrics improve: RGI

Looking at the bigger picture within the STR report, we noticed that we began making huge improvements in RGI without giving up much of anything on the ARI side of the equation.

The best part about the new strategy is that we have made huge improvements on our weekdays performance, but still managed to maintain and even push rate over weekends while maintaining occupancy growth over ALL days of week:

While every hotel is unique and needs their own custom tailored strategy to maximize revenue, sometimes the needs are obvious; this hotel was a great example of an instance where lowering rate actually led to tangible improvements on RevPAR and increased overall profitability.