Profitable Pricing: Your Hotel’s AI-Advantage

Humans set (and monitor) the parameters so you retain control.

Profitable Pricing: Your Hotel’s AI Advantage

Is your hotel’s pricing strategy growing your revenue? Or is it eating into your margins?

It’s never been more critical to set the right room rate at the right time in the right channels. You know travelers have more options than ever. Price too high, and potential guests scroll past; Price too low, and you risk losing money. The stakes are high, and you can no longer rely on a “set it and forget it” approach to room pricing.

Today’s profitable hotels skip the guesswork and gut instinct in favor of precision pricing. The market shifts fast these days, and hoteliers who come out on top are the ones who ask smart questions and implement AI-driven pricing.

Your questions probably include:

• How do we balance occupancy and ADR (Average Daily Rate)?
• How much should a competitor’s price guide our pricing?
• How can we forecast demand with greater accuracy?
• What role does AI play in setting room rates?

These are great questions, and we have the answers. We’ve spent two decades helping over 2500 properties grow their revenue, including data-driven, AI-backed profitable pricing.

The Problem With Instinctual Pricing

First, let’s consider the problem. Not long ago, experienced hoteliers like you could review historical data, tap into your industry knowledge, and make a well-timed rate change. This approach more or less worked.

Take this simple formula: take your monthly costs, add a profit margin, and divide by the number of available rooms. For example, if your hotel’s costs are $50,000 a month and has 100 rooms, you could slap a $100 base rate on each room and call it done, right? That’s no longer enough.

There’s more nuance in profitable pricing these days, and things change fast.

Travel patterns are more unpredictable. Travelers continue to book last minute and cancel on a dime. Unfavorable weather forecasts can destroy your bookings in an afternoon.

Manual pricing is too slow and reactive for today’s warp speed climate. By the time you notice a demand surge, it’s often too late, and you’re left with empty rooms. Static pricing no longer works.

The new standard is always on dynamic pricing.

AI-Powered Pricing Creates Profitability

A 2024 Deloitte report found that 75% of European-based hotel executives plan to invest in data analytics. One in five were piloting AI technology.

It’s not surprising.

An AI-powered revenue management system (RMS) continuously analyzes thousands of data points – including local events, booking patterns, weather forecasts etc.

The RMS has the necessary data to automatically adjust your room rates across channels and in real time. No manual input is necessary. Just profitable pricing – automated.

Today’s markets are shifting faster than humans can keep up. Plus, your RMS gets smarter the more you use it. It learns your property’s trends, guest behavior, and spots patterns. If a new convention is announced in your city, your smart RMS detects the demand shift, analyzes historical rates, and increases rates, all before your revenue manager even knows of the convention.

If the demand drops, the RMS recalibrates and lowers rates to remain competitive and keep your rooms full.

You don’t experience any delays.

The Franco Grasso team has developed an AI RMS tool called Revolution Plus. Revolution Plus combines twenty years of human revenue management experience with a “no gain, no pay” business model to help your hotel implement a winning price strategy.

This RMS helped one Italian hotel double its revenue and achieve a Top 10 TripAdvisor listing.

Double the Revenue with AI

Every hotel tries to balance direct bookings with online travel agencies (OTAs) like Booking.com and Expedia. These OTAs made pricing highly competitive because anyone can compare properties in seconds.

In recent years, hoteliers have rebuilt after COVID-19 lockdowns. Travelers are different. They’re more segmented and sensitive to potential crises and inflation. If they travel, they may stay longer, require high-speed internet for working, and want to experience hyper-local events in their downtime.

All of these changes provide the perfect environment for AI-driven pricing tools.

Take this Milan hotel. It doubled its revenue and scored a top 10 spot on TripAdvisor after implementing the AI-driven RMS tool Revolution Plus. Prior to implementing this RMS, the hotel struggled with high static rates and low online visibility.

With our help, the hotel renegotiated corporate rates and upgraded its online visibility. These changes increased bookings and revenue.

No More Pricing Errors

AI-powered revenue management provides the tools to trust and verify. AI prevents spreadsheet chaos and expensive manual pricing mistakes like overbooking, spillage, and spoilage.

Instead, you get the power to know your rates are synced across all platforms and grounded in up-to-the-minute data. Hoteliers save time and stress while maintaining control and visibility. AI does the heavy lifting.

As a result, you can focus on your guests.

You can join the ranks of thriving hotels that share these core elements:

• Dynamic pricing tailored to local events, guest segments, and market conditions.
• A strong online reputation with consistent visibility and great reviews.
• Data-driven personalized guest experiences.

Such hotels increase revenue year over year and don’t rely on guesswork.

This is How AI-Driven RMS Works

If you want to better understand how our cloud-based RMS functions behind the scenes, here’s a quick list.

• Data collection – It pulls from many online sources, including online travel agencies (OTAs), direct bookings, weather, and events.
• Pattern recognition – The RMS identifies booking trends and demand spikes.
• Real-Time adjustment – Automatically updates rates across connected channels.
• Continuous learning: The RMS constantly learns and adjusts rates as needed.

The RMS can process this data in seconds and deliver the best data-backed pricing strategies. You always have full visibility, but you don’t need to do anything.

Instead, you can focus on building guest loyalty and growing your brand.

What’s Next?

AI-driven RMS tools like Revolution Plus are more than software. It’s a strategic partner in your profitable hotel. When you say “yes” to smarter, faster, and more profitable room rates, you can enjoy more revenue.

Download your copy of 10 Things to Know About Revenue Management and discover how to incorporate revenue management principles into your hotel starting today.