Revenue Experts: 'Don't Be Afraid To Take Risk' on Hotel Rates
Customers Will Tell You How Much They'll Pay
Hotel revenue management experts are coping with increased prices for goods and labor by adjusting strategies to balance costs, demand and profitability.
Many U.S. hotel owners and operators are raising average daily rates as one way to relieve pressure. U.S. hotel industry data from STR, CoStar's hospitality analytics firm, shows record-high monthly room rates on a nominal basis for July.
Speaking during a panel at the recent Hotel Data Conference titled "Exchanging occupancy for ADR? Understanding cost and profitability," McKibbon Hospitality Vice President of Revenue Management Jihad Lotfi said at the end of the day, operators must let the customer decide what they are willing to pay.
"None of us can decide what the customer will pay. It's kind of like the car industry right now. You're seeing cars being marked up $10,000-$15,000 and people are still buying them," he said. "You don't know what the ceiling is. I tell my team, 'If it's not broken, don't fix it.' Don't be afraid to take a risk."