G3 RMS Pricing Methods
During the initial implementation for your property, you select one of the following pricing types: Continuous Pricing, BAR by LOS, or BAR by Day. In each pricing method, G3 RMS optimizes the price for each Room Class. The differences are whether pricing is by occupancy date or by arrival date by length of stay, and how you set up and maintain prices.
Some pricing methods might not be supported by your selling systems, distribution systems, and connected channels. See selecting a pricing method for details.
Daily Continuous Pricing
G3 RMS creates a price for each night of stay, based on the demand and price sensitivity of each night. For each Room Class you define the price range that G3 RMS can select from. G3 RMS sends a price by arrival date for each room type.
Daily Continuous Pricing includes two options:
Per Room
By default, G3 RMS produces a price for each arrival date and room type, based on a single occupancy. The system optimizes for room revenue. This type of pricing is commonly used by hotels, which price by room
Per Person
In this option, G3 RMS optimizes not by room but by number of occupants, and for total revenue, not just room revenue. This type of pricing is commonly used by all-inclusive resorts, which provide lodging, food and beverage, entertainment, etc., for a fixed price that varies depending on the number of occupants in a room.
In this case, G3 RMS optimizes the price for each arrival date and room type, based on a two adult occupancy. The system also produces prices for additional adults and children. And it optimizes by number of occupants. For example, if G3 RMS forecasts more double occupancy demand than capacity for a Room Class, it might restrict the less valuable single occupancy demand. And LRV might increase above the single occupancy price.
Children can be priced by age group with Occupant Value Grouping setup. See an overview of all Per Person Pricing setup steps.
Contact your IDeaS representative to help you determine if Per Person Pricing is right for you. IDeaS can analyze your data to ensure that G3 RMS supports the use of Per Person Pricing.
Daily Continuous Pricing Examples
G3 RMS can select any price between the ceiling and floor values, as long as the price meets the minimum rules.
Pricing Setup
| Setup | Standard | Deluxe |
|---|---|---|
| Ceiling (Maximum Rate) | 500 | 650 |
| Floor (Minimum Rate) | 200 | 350 |
Rules
- Minimum change for standard = 3.00
- Minimum change for deluxe = 5.00
- All prices must end in XX9.99
Continuous Pricing Decisions
| Arrival Date |
Standard – Optimal | Standard –Rounded | Deluxe – Optimal | Deluxe –Rounded |
|---|---|---|---|---|
| 1 January | 433.24 | 429.99 | 548.22 | 549.99 |
| 2 January | 224.23 | 219.99 | 408.89 | 409.99 |
| 3 January | 327.07 | 329.99 | 628.87 | 629.99 |
- Standard room pricing for arrival on 1 January for three nights: 429.99+219.99+329.99=979.97
- Deluxe room pricing for arrival on 1 January for three nights: 549.99+409.99+629.99=1589.97
BAR by Day (also called Daily BAR or Daily Pricing)
G3 RMS produces a different price for each night of stay, based on the demand and price sensitivity of each night. With this approach, you set up pricing as a set of price levels with values assigned by room type and by season. G3 RMS sets a price for each arrival date, which incorporates all the demand that stays through that night. G3 RMS deploys a value by arrival date for each room type.
BAR by LOS (also called Arrival Date by Length of Stay, or Length of Stay Pricing)
G3 RMS produces a price based on the arrival date and the guest’s length of stay, offering a separate price for each LOS 1-8+. This option considers the demand and price sensitivity for each arrival date based on the selected length of stay. Like the BAR by Day approach, you set up pricing as a set of price levels with values assigned by room type and by season. G3 RMS sends rates for each rate code to each arrival date, length of stay and, where possible, room type combination.
BAR by Day or BAR by LOS Examples
The following examples show price setup and output for BAR by Day and BAR by LOS. For these pricing options, G3 RMS can select only the price points set up in Rate Plan setup as the daily BAR decision.
Rate Plan Setup
| BAR Level | Standard Room Class | Deluxe Room Class |
|---|---|---|
| Level 1 | 500 | 800 |
| Level 2 | 450 | 750 |
| Level 3 | 400 | 700 |
| Level 4 | 350 | 650 |
| Level 5 | 300 | 600 |
| Level 6 | 250 | 550 |
BAR by Day Decisions
| Arrival Date | Standard | Deluxe |
|---|---|---|
| 1 January | Level 1 | Level 2 |
| 2 January | Level 2 | Level 2 |
| 3 January | Level 3 | Level 1 |
- Standard room pricing for arrival on 1 January for three nights: 500+450+400=1350
- Deluxe room pricing for arrival on 1 January for three nights: 750+750+800=2300
BAR by LOS Decisions
Standard Room Class
| Arrival Date | LOS1 | LOS2 | LOS3 | LOS4 | LOS5 | LOS6 | LOS7 | LOS8+ |
|---|---|---|---|---|---|---|---|---|
| 1 January | Level 1 | Level 1 | Level 1 | Level 3 | Level 3 | Level 4 | Level 4 | Level 4 |
| 2 January | Level 2 | Level 2 | Level 3 | Level 3 | Level 4 | Level 4 | Level 5 | Level 5 |
| 3 January | Level 3 | Level 3 | Level 3 | Level 4 | Level 4 | Level 5 | Level 5 | Level 5 |
Deluxe Room Class
| Arrival Date | LOS1 | LOS2 | LOS3 | LOS4 | LOS5 | LOS6 | LOS7 | LOS8+ |
|---|---|---|---|---|---|---|---|---|
| 1 January | Level 2 | Level 2 | Level 1 | Level 2 | Level 2 | Level 5 | Level 5 | Level 6 |
| 2 January | Level 2 | Level 2 | Level 4 | Level 3 | Level 4 | Level 4 | Level 5 | Level 5 |
| 3 January | Level 1 | Level 2 | Level 2 | Level 3 | Level 3 | Level 4 | Level 4 | Level 4 |
- Standard room pricing for arrival on 1 January for three nights: 500+500+500=1500
- Deluxe room pricing for arrival on 1 January for three nights: 800+800+800=2400
Selecting a Pricing Method
The primary difference between Daily BAR and Daily Continuous Pricing is the constraint on the pricing decision due to the different setup. Thus, this section groups the two together when looking at business considerations.
Use these key business considerations to select a pricing methodology:
Guest Pricing Presentation
How is your market accustomed to being presented with a price?
Some markets or guests prefer to be presented with a single price that applies to each night of their stay, regardless of how long they stay (BAR by LOS). Others are amenable to having a different price for each night (BAR by Day). In some markets, guests prefer to see a total price for their stay, avoiding any challenges with different rates applying to different nights of the stay.
Price Strategy and Business Need
What strategy is required to capture optimal revenues based on the business mix?
The pricing model that is most appropriate depends on your business model and the average length of stay. You need to ensure that you can capture the most appropriate demand by arrival date and LOS.
For example, a luxury property often has higher average lengths of stay and can gain additional value by charging the optimal price based on the selected stay pattern (BAR by LOS). However, if the average LOS is one night, the additional value from pricing by arrival date and LOS is likely lower (BAR by Day).
Deployment of Price Strategy
Investigate if your Selling Systems
Any distribution system, like a PMS, CRS or a Channel Manager, that is used to sell your transient guest room inventory. Ideally, G3 RMS sends all controls to your selling systems, but this may vary based on their capabilities. For some integrations, the selling systems may not include the reservation system that provides with data. and connected channels support the distribution of your pricing selection.
For example, will BAR by LOS pricing be distributed to key Online Travel Agent (OTA) channels?
Consider the following:
- If some OTA channels cannot accept pricing by LOS, how much of your production comes from these channels?
- If most of your production comes from OTA channels that can accept this pricing approach (like Expedia and Booking.com), are they sufficient?
If you also require price parity, consider if it can be achieved with your selected pricing method and deployment systems.
Pros and Cons of Each Pricing Approach
The following tables list reasons for and against each pricing method:
Continuous Pricing
| For | Against |
|---|---|
| Allows G3 RMS analytics to determine the most optimal price while adjusting minimum differentials and pricing outputs. | May result in G3 RMS making more frequent pricing changes. However, this outcome could also be a benefit. |
| Reduces price setup elements and makes changes to setup simpler. | Less specific control over each price that could be made available for sale. |
| Overrides pricing at the room type level and tests the impact using a What If scenario. | G3 RMS does not fully optimize around a pricing override due to the granularity of the pricing decisions and overrides. Impacted Last Room Values might not be adjusted by arrival date and LOS as expected. |
BAR by Day
| For | Against |
|---|---|
| Transparent rates for guests. Changes to the offered price based on changes to the arrival date and stay pattern are transparent and simple to explain. | If rates have to be communicated by stay night rather than the total stay, and the average LOS is not one night, this method might become difficult to communicate. |
| Nightly presentation of rates can encourage guests to book additional nights or modify their requirements to suit their budget. | May create a negative guest perception when a guest stays more than one night and wants to extend into an expensive night. For example, a guest arriving on a Thursday for a 3-night stay extends into the peak night (Saturday), resulting in a price increase for Saturday night. |
| Properties can choose the specific price points to sell in their marketplace. | Properties must set up and maintain the range of rates and the seasonal and day of week pricing applied to those rates. |
| Simplest to implement across all selling systems and channels. | May not provide the ability to capture optimal revenues based on the demand by arrival date and LOS. Since only one price can be produced for each arrival date, G3 RMS sets a price for each arrival date that incorporates all the demand that stays through that night. This can lead to high prices for individual dates, even where one night LOS demand for that date is low. |
| Any forecast (demand or wash) or decision (overbooking or price) override can be tested using a What If scenario. The What If optimization adjusts other decisions that might be affected by the change, with a goal of ensuring that all decisions remain coordinated and optimal for driving revenue performance. | User overrides are at the Room Class level and not room type. |
BAR by LOS
| For | Against |
|---|---|
| Transparent rates for guests. A single price is offered based on their arrival date and how long they are staying. | Can create a negative guest perception when the longer LOS price is not lower than the shorter LOS rate, due to demand patterns and price sensitivity. For example, the per night price for four nights might be higher than for three nights. |
| Supports optimal revenue performance based on the specific demand and price sensitivity patterns by arrival date and LOS. | If a guest departs early, and the price cannot be re-queried for the new length of stay, the property might lose revenue. |
| Any forecast (demand or wash) or decision (overbooking or price) override can be tested using a What If scenario. The What If optimization adjusts other decisions that might be affected by the change, with a goal of ensuring that all decisions remain coordinated and optimal for driving revenue performance. | May not be supported in all selling or distribution systems and channels. This limitation might result in this pricing method being unsuitable, or some systems or channels must receive the LOS1 price only, resulting in price parity issues. Room type level pricing by LOS might not be supported and might have to be implemented at the hotel level. |
| Price levels can be controlled specifically based on price strategy. | Properties must set up and maintain the range of rates and the seasonal and day of week pricing applied to those rates. |
