Rate Shopping

G3 RMS understands that your demand is not only impacted by your pricing but also by the pricing of your competitors. Use Rate Shopping setup to control how G3 RMS uses competitive rate information. It includes steps to manage which competitors' prices impact your pricing decisions and how channels display in the system.

What Help Do You Need With Setting Up Rate Shopping?

Understand How to Set Up Rate Shopping for the Best Forecast and Decisions

Use of Competitors' Data

Using your competitors’ rate shopping data is a key part how G3 RMS improves its forecasts and decisions. Access to rate shopping data ensures that the system knows what you know.

Fair Market Value

G3 RMS uses rate shopping to understand at which price your hotel can steal demand from a competitor and at which price it might lose demand. To do that, the system uses and calculates a Fair Market Value. It considers:

  • Your historical pricing (for the market segments with the Equal to BAR attribute).
  • The lowest value of the available price range.
  • Your competitors’ historical pricing position and how that compares to their current pricing (excluding dates when current pricing greatly deviates from historical pricing).
  • Whether any competitors’ pricing is closed, indicating compression.
  • How much impact the competitor has on your demand. For example, G3 RMS found that whenever Hotel A lowered its prices in the past, there was significant negative impact on your demand. But Hotel B’s price changes in either direction had little impact.

With the Fair Market Value G3 RMS also uses price sensitivity, in other words, how much more or less demand exists if the price changes.

Example of how rate shopping data impacts G3 RMS:

G3 RMS forecasts 100 rooms of remaining demand for a certain date, based on the current rate shopping information. Next, a competitor whose pricing has historically had a big impact on your demand raises its price. With the new price difference, G3 RMS now expects 110 rooms of demand at your current price point, because it knows that you can steal demand from the competitor.

G3 RMS could also decide to raise your price to a higher level, at which it expects only 90 rooms. The system would make this choice if the optimization shows that the revenue gain from the higher price offsets the revenue loss from the lower demand.

Note that G3 RMS calculates price sensitivity and Fair Market Value also for business that is linked to BAR. That’s because the pricing for BAR is often much higher than the discounts linked to BAR. Linked demand is a large factor in pricing, see Pricing Calculation for more details.

You can also set up Competitive Market Position Constraints that force G3 RMS to maintain a specific positioning of your rates against the rates of your competitors. These constraints limit G3 RMS in finding the optimal pricing decision, so they are not enabled by default. See Competitive Market Position Constraints for more information.

View this video to learn more about how G3 RMS uses rate shopping data.

Data Not Shopped

To optimize demand, G3 RMS creates a grid of competitor prices for each arrival date and length of stay (LOS). To do that, the system needs at least LOS1 data, but it uses all available data, for any LOS and any Room Class. If needed, it completes unavailable data with approximations, see the following details:

If You Shop Only for LOS1

For properties that use BAR by Day pricing, G3 RMS uses rate shopping data for a one-night length of stay (LOS1). For properties that use BAR by LOS pricing, however, an LOS1 price is very different from a LOS3 price. For these properties, G3 RMS looks for available rate shopping data for other LOS. If the system does not find this data, it uses LOS1 for each date, and uses averages of the LOS1 data to influence the BAR by LOS decisions.

If You Shop for Only One Room Class

If you rate shop for only one Room Class, the pricing recommendations for your other Room Classes, which are not mapped to competitive room types, are influenced by the competitor rates shopped for the one mapped Room Class. G3 RMS does not rely only on the Room Classes that are shopped.

For the Room Classes that are not mapped to competitor room types, the system infers a representative value of competitor rates, based on the known price gaps between Room Classes.

For example, you shop for the Standard Room Class, but your competitors also have Deluxe and Suite Room Classes similar to yours. In this case, G3 RMS calculates your other Room Classes based on the Standard Room Class and the known gaps between it and the other Room Classes.

Your Own Rate Data

G3 RMS needs to include the rate shopping data from your property to compare to competitors' data. For this reason, the system includes your property by default in Competitor Settings. You cannot change this setup.

The system looks at your property’s historical rate shopping data (where available) against the competitors’ prices charged at the same time to estimate price sensitivity for the property. In each snapshot, G3 RMS estimates the difference between your final sale prices and the competitors’ rates in the shopped information.

G3 RMS does not use your property's rate shopping data on a forward-looking basis. Rather, the system optimization selects the optimal price and uses it for estimating future demand.

Data Requirements

G3 RMS needs to learn how much a competitor's pricing impacts your demand. If your rate shopping vendor provides 90 days of historical data, G3 RMS measures the impact right away. Without historical data, the system measures the impact 90 days after it received the first rate shopping data file (it needs at least two files).

Competitive Market Position Constraints don’t require historical data for a new competitor. If you have enabled this feature, a new competitor may impact your pricing immediately.