The webcentric world of business has brought myriad changes to hotel owners and operators in every area, department and practice. Among these changes is the fact that smaller, independent properties are competing head-to-head with larger properties, as well as with major national and international brands. While this helps level the playing field, it also requires that smaller properties “up the ante” when it comes to pricing and revenue management.

Doing business in this environment means hotel owners and operators can no longer rely solely on their own information or historical data when it comes to pricing. Instead, they must obtain a handle on marketplace pricing, keep an eye on constantly changing rate dynamics and put into place clearly defined rate optimization strategies.

How? Intelligence — specifically, pricing intelligence. Pricing intelligence today is a critical component in every hotel manager’s toolbox. Price intelligence relies on computer-based systems to identify, compare and analyze pricing and other revenue-related data for a business’s operations and its competitors — data that a hotelier uses to develop rate optimization strategy and make informed rate decisions.

Development of price intelligence systems
At one time, price intelligence focused solely on competitive rate monitoring. While this is still at the core of price intelligence for owners and operators, other components of price intelligence have been increasing in importance, including promotions, taxes, service fees, online page placement and even conversion for local currencies.

One of the key developments in the field is the availability of quality rankings — and with that availability, the need to monitor and analyze those rankings. Guest reviews and comments are figuring into consumers’ booking decisions more than ever. Educated, web-savvy consumers are making decisions based not only on rates, but also on comparisons of amenities, detailed information on individual properties and the opinions and thoughts of others.

To maintain and enhance image, brand and market share, owners and operators have no choice but to take these qualitative factors into account in developing revenue management policies and in conducting day-to-day rate management. When it comes to online marketing, search engines and online travel agencies (OTAs) rely heavily on reviews for key ranking criteria. Finally, hoteliers in today’s economic environment can use qualitative data to understand how potential guests perceive value.

Putting competitive pricing intelligence to work
The key is to gain an understanding — even if basic at first — of that consumer perception. Hoteliers then can make more intelligent decisions on pricing at a point they can command in the marketplace. They can confidently maintain a certain pricing strategy if they know their rankings support it. They also will gain insight into how and why competitive properties set their rates. Armed with this type of information, hoteliers can build an index that tracks trends in consumer perception.

For the owner or operator, the mechanics of turning rankings and reviews into an operational advantage are improving, but remain challenging. Many hoteliers still must manually track ratings sites. But as their number increase, tracking even a portion can be overwhelming. For example, consider that TripAdvisor — only one of the major ratings sites — contains more than 30 million ratings.

In turn, owners and operators today often rely on qualitative data from OTAs. Many are also already working with advanced social media-type tools, going beyond Facebook and Twitter to include wikis and their own social networks. The good news is that some of the major companies operating in the price intelligence industry — which to date have focused on larger chains — are starting to provide options designed specifically for smaller chains and some independent properties.

As these systems become more available, owners and operators can receive extracted data results online with simple browser-based access. Advanced-technology price intelligence systems can offer easy-to-read reports that support solid, time-sensitive rate decision-making. In turn, owners and operators can compete that much more effectively with any other brand and property.

Looking to the future and beyond competitive pricing intelligence, hoteliers can look forward to prescriptive pricing that offers specific recommendations based on both competitive quantitative data and qualitative information.

Conclusion
Today’s post-recession hotel guests remain price-conscious. At the same time, they are becoming more knowledgeable and confident in how they make decisions on lodging. Hotel owners and operators who want to thrive in this environment must evaluate their offerings — and their competitors’ — against the same information those guests are using to make decisions. That means they must move beyond competitive rates and incorporate qualitative rankings and reviews into their rate management policies. Those who do will see the results on the bottom line and in stronger long-term brand perception.

Christian Koestler is president and CEO of Lixto, Inc, a global leader in web data extraction and analysis for retail, hotel and consumer products industries. He can be reached at Christian.Koestler@lixto.com.