Hospitality: breaking out of pricing mimicry

Over the past decade, the hotel industry has undergone a profound transformation: de-standardisation. Gone are the days of cloned rooms, calibrated experiences and interchangeable stays from one establishment to another. The hotel industry is breaking away from its industrial heritage to offer unique, local and emotional experiences. Every hotel now wants to tell its story, assert its personality and provide a unique experience.

As early as 1998, Les Échos and KPMG foresaw this development when they referred to «  the hotel industry between standardisation and personalisation ». Nearly thirty years later, this intuition has become reality: a good dozen groups are flying the flag for this new type of hotel, often grouped under the concept of lifestyle hotels.

They include, across different ranges: Les Hôtels (très) Particuliers(interview de Matthieu Evrard), Beyond Places, Rocky Pop, HYP Hotels, Alfred Hotels, Fontenille Collection, Mama Shelter… Destandardisation is also evident in so-called « hybrid  » models, where a single establishment offers beds, rooms, apartments and co-living (Uxco, Cowool, La Folie Douce Hotels, …).

This trend is excellent news for the diversity of the offering. But it also highlights a major contradiction: while hotel marketing strives to differentiate products, part of Revenue Management continues to standardise them… through pricing.

When marketing differentiates, RM cannot copy

The role of marketing is clear: to create differentiation.
Design, identity, atmosphere, gastronomy, storytelling, customer experience… everything is designed to stand out from the crowd. But what is the point of investing in this differentiation if, in the end, Revenue Management aligns its prices with those of its competitors?

Copying your neighbour is denying the intrinsic value of your product. It implicitly says : «My offer is worth the same as theirs ».But that is precisely the opposite of marketing.

The de-standardisation of the offer calls for a singularisation of the pricing strategy. RM must once again become the value strategist, aligned with the positioning logic of the Sales & Marketing teams, not their digital counterpart.

Understanding demand, not copying the market

A competent Revenue Manager does not start by looking at the prices of their neighbours. And this is even more true for a high-performance RMS system.

Their first reflex is not to look at the « comp set », but to carefully analyse the actual demand for their establishment: Who is booking, when, why and through which channel? How are my constraints expressed? What are the consequences of each strategic or tactical decision on demand?

Competitive comparison remains useful, of course, but it is only a benchmark. A hotel with a unique design, a special location or a strong experiential promise has no objective reason to be benchmarked against a neighbour with a radically different product.

True revenue management is analytical, not mimetic. It is based on understanding segments, analysing demand profiles and identifying the link between the demand and its offer.

«Mirror pricing»: analytical laziness and strategic weakness

Let’s be clear: blindly following competitors’ prices is not revenue management. It is intellectual comfort. A convenient shortcut that often masks:

• A weakness in forecasting: we don’t have enough control over demand to anticipate our needs.
• Analytical laziness: we prefer to copy a visible indicator rather than analyse a complex signal.
• A lack of strategy: we react instead of acting.

The result is well known: an absurd price war where everyone loses value, except the opportunistic customer who is fed short-sightedly.

De-standardisation: an opportunity for intelligent RM

De-standardisation allows RM to break free from bad habits and this applies to all sectors.

Airlines and rail companies, which often have a monopoly on certain routes, have long practised sophisticated RM, proving that competition is not a prerequisite for RM, but simply a variable that influences demand. It is demand analysis that should drive RM action, not competitive comparison.

The de-standardisation of products and experiences is pushing each hotel to embrace its uniqueness and restoring revenue management to its most noble mission:

• Understanding the specific demand for the establishment,
• Measuring its variations,
• Reacting quickly and with discernment.

At Revbell, we see this every day: in highly competitive environments (Porte de Paris, ski resorts, La Défense, etc.), an RMS focused on competition would often produce recommendations that are economically inconsistent with the reality of the hotel. The risk is not only a loss of revenue, but also the discrediting of the Revenue Manager himself.

Conclusion

The trend towards hotel de-standardisation is excellent news. It benefits customers, who enjoy more human and authentic experiences. But it also benefits Revenue Management, provided it dares to break away from the Pavlovian reflex of the « comp set ».

A good relationship between Marketing and RM strategies requires shared reporting, frequent meetings and a paradigm shift on the part of RMs themselves, aided by RMS publishers providing solutions that go against bad practices.

A demand-centric RMS, equipped with advanced modelling and real-time responsiveness for last-minute bookings, is the best weapon for an RM who recognises that their product is different and therefore its price can be too.

Keywords: Hotel de-standardisation, Revenue Management, Yield Management, RMS, Revenue Management System, hotel pricing, hotel marketing, differentiation, customer experience, storytelling, design, pricing