5 Pricing Strategies for Costa Rica Boutique Hotels
Setting the right price for a product is crucial to any business success. But are you aware that you can use pricing strategies to do more than grow your Costa Rica boutique hotel’s bottom line?
How you set your room and service pricing can have a positive or negative impact in more ways than you may think. The right pricing strategy can help you increase your market share against other hotel properties in your market area, even distract new competitors from even entering your specific market, while the wrong pricing strategies do the exact opposite in the eyes of competing hotels or new boutique hotels from opening in your market. The following pricing techniques can help you book more rooms, for more money.
1. The Psychological Pricing Effect
Yes, there is a Big effect on consumers with regards to certain numbers and digits. Set your boutique hotel room rates at an off numbered price point. For example, using $99 instead of $100, or $129 vs. $131. Study after study proves this strategy is very effective for securing a purchase, whether a hotel room or a meal on a menu. The odd pricing technique is simple making it one of the most common pricing strategies used around the world because humans are all wired the same. The “Old Brain” is the most influential triggers for human beings. And it loves contrast too, and oddity. But we’re just wired to be more attracted to the odd price. It’s because of the digital places – for example, if 9 gets rounded up to 10, 10 itself has digits, therefore the amount will be psychologically perceived as a LOT higher, despite its real difference.
2. Set Around Your Competitors Pricing, Sort of.
Any good hotel market in Costa Rica has competition for guests. True for any top hotel market in the world. If you have a direct competitor or two, set a rate at the same price point as your #1 competitor, and then set another rack rate at a slightly higher price. Why? It gives you the best of both worlds. This allows your boutique hotel to win over deal hunters without losing the opportunity to make more than your competitors on people liking your hotel over another, outside of price.
3. Play and Invest Time For the Middle Market
Set the price of one of your most basic rooms to the cheapest price in the market and price your other rooms close to your competitors’ basic room prices. This essentially allows you to capture the middle market, as well as the lower tier and higher market, all in one swoop. This strategy takes little time and can pay big dividends. You, or your GM can do this easily. If you have a hotel management company, make sure they are doing this…but they probably already are.
4. Make Sure You are Better Than The Rest of The Hotels in Your Market
Place your boutique hotel’s room rates higher than your competitors…but, create some extras in products or services to justify the increase in price. Here’s why. By doing this, you’ll be setting a higher standard for your property while automatically setting a higher value on it too…giving justification for paying more and the assumption (you are hopefully backing it up) you’re a nicer Costa Rica hotel to spend your vacation at.
5. Use the Billboard Effect With OTA’s
If you offer your rooms at the lowest price possible on OTA’s and your own rack rates on your website, you’ll draw in a guest to your small hotel. Here is the reason why. Most travelers are familiar with boutique hotels running promotional discounts to fill rooms, especially in the non-peak season. This strategy is great to get the word out about your property, especially with OTA’s, it’s called the Billboard effect– as guests see it advertised on an OTA, but most of the time they end up on your hotel’s website. Your job is to offer some promotion to get them to book with you versus an OTA. But this should not be a long-term strategy, do it in short bursts and justify or regular travelers may start thinking you’re of low value…which is of course not the case.
Make it a fun chess game, and reap the rewards on the bottom line…
Boutique Hotels, and their owners, or management companies are different, so measuring your success and strategically adjusting and promoting your pricing to suit is important to your hotel’s success. As a boutique hotel or resort owner here in Costa Rica, no matter your size, you or your management company will of course have to make the final call based on goals and what you want to achieve with your pricing. You can try all 5 over time and you’ll figure out what is the strategy for you, and your business.