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NOORANI: Guests were not created equal so a one-size-fits-all pricing strategy won’t work

Friday November 08 2019
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Clients are increasingly expecting perks and promotions based on their personal profiles. SHUTTERSTOCK

By HASNAIN NOORANI

If there’s one lesson that hoteliers can learn is that personalisation truly pays off—both figuratively and in a more tangible, financial way.

Hospitality is now more diverse than ever, due to a large offering in terms of accommodation, outside catering services and, more recently, even pricing.

Personalisation methods have evolved over the years, and it seems that we are now approaching a new type: The one of hotel pricing.

A number of hotels, are currently testing an algorithmic pricing system based on customer profiles, history, spending habits and even social media following and habits.

PrideInn Hotels for instance are quick to acknowledge that not all guests are equal, and their profiles can differ significantly, meaning that a “one-size-fits-all” approach might prove to be ineffective.

It’s true that we are already used to personalised experiences and services, and clients are increasingly expecting perks and promotions based on their personal profiles.

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However, this does raise a few questions: Should personalisation be extended to pricing? And how would this innovative approach affect rate parity?

Also, is it ethical to use a guest's social media following as an incentive to promote a hotel, in exchange for lower rates?

From a personal point of view, I would associate the act of establishing pricing based on past spending and the guests’ loyalty, which is not a new concept, but one that is known to draw quite a few benefits, both for hotels and for travellers.

A large number of loyalty programmes (if not all of them) are based on rewarding recurring guests with points or perks. This new approach focuses on rewarding customers with hard dollars, which enables more freedom in regard to their spending.

This could prove to be a beneficial strategy in the long run, since guests get the feeling of actually saving money when booking a hotel and purchasing its services, instead of only receiving extra perks that might sometimes go unused.

On another note, when discussing the importance of price parity, it’s important to keep in mind that price is only one of the key factors in a booking decision.

Experience has shown that travellers are willing to spend more on a hotel with better reviews. I would however, not advise adopting the influencer approach of rewarding them with discounted rates in order to access their followers and influence the booking decision of future travellers through the influencer’s positive feedback.

I would suggest taking a more organic path towards the same outcome.

Investing additional finances in improving the actual accommodation and services leads to better guest reviews and overall feedback. This comes naturally.

A quality product will receive more positive reviews from a larger number of travellers instead of just a few influencers who were financially motivated to express a certain opinion.

The very concept of social proof shows that consumers are more likely to relate to people similar to themselves, so organic feedback might prove to have a higher impact on a traveller’s booking decision.

At the end of the day, it’s important to always remember that any new strategy, whether it’s service or pricing related, is ultimately directed towards the guests. Keeping their needs and feedback in mind is crucial in order to determine the best and most efficient action plans.

Hasnain Noorani is the managing director of PrideInn Group of Hotels.

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