Price Ranking and Upgrade Path
Price Ranking and Upgrade Path ensure that G3 RMS considers your pricing hierarchy to price optimally and maximize revenue opportunities. These two separate setups are the fourth step in the Rooms setup. For a summary of all the steps in Rooms setup, see Rooms Configuration Overview.
Price Ranking
How does Price Ranking work in G3 RMS?
If G3 RMS optimized all Room Classes independently, under certain demand and price sensitivity data conditions, the system might price a Suite Room Class lower than a Standard Room Class. This data-driven optimization approach does not work for most properties because it does not consider room type positioning integrity or operational issues.
For Standard and Suite Room Classes, for example, you might rank Standard as 1, below Suite, which is 2, to tell G3 RMS how to price those Room Classes relative to each other. In the optimization, G3 RMS ensures that the lowest priced room type of the Standard Room Class is never priced higher than the lowest priced room type of the higher ranked Suite Room Class.
If you are concerned about how this approach works with your business processes, contact
Upgrade Paths
With Room Type Overbooking Option
In an ideal world, the capacity of your Room Classes matches their demand. Often, however, capacity and demand do not match. You might have more demand than you can accommodate for your Standard Room Class, and perhaps little demand for your Suites. In this case, if you want to maximize your revenue opportunities, you might decide to overbook your Standard rooms more than you would normally allow, and upgrade or upsell that demand to achieve a sellout. An upgrade path helps you do this. See Best Practices and Scenarios to learn more.
How does the Upgrade Path work?
When you enable the upgrade path between two Room Classes, the higher ranked Room Class (such as Suites) accepts upgrades from the lower ranked Room Class (such as Standard), but only on days when the Suite Room Class has less forecasted demand than capacity, and Standard has more demand than capacity. In other words, the excess Suite inventory can be added to the overbooking of the Standard Room Class, but only on days with that particular demand distribution.
For example, G3 RMS forecasts more demand for your Standard rooms than their capacity. It also forecasts no demand for your Suite rooms. If you allow upgrades from the Standard Room Class to the Suite Room Class, G3 RMS can overbook your Standard rooms by the full capacity of the Suite rooms. This overbooking is in addition to the normal overbooking that the system calculates for Standard rooms based on expected wash.
An upgrade path is necessary if you want to maximize revenue in every situation. Without it, you might be turning away demand when one Room Class has more demand than capacity, and another has less demand than capacity.
Upgrade Path and Pricing Ranking Together
The upgrade path always follows the price ranking order to ensure that G3 RMS does not plan upgrades to rooms that could potentially be priced lower. If you choose to exclude a Room Class from the upgrade path, it is still included in the price ranking. When you include a Room Class in the upgrade path, you share all rooms of all room types included in the Room Class.
With Run of House Overbooking Option
If you use Run of House Overbooking, you can't change the upgrade path page. All higher ordered Room Classes must accept upgrades from lower ordered Room Classes and Advanced Settings are not available.
Setup Steps
- Click Next after you complete Room Type setup.
- By default G3 RMS sorts your Room Classes by historical ADR, with the lowest priced Room Class in the bottom position as Room Class "1." If needed, click to move a Room Class up
or down 
in the price ranking - Click Next. The upgrade path page displays. G3 RMS uses price ranking as the order for the upgrade path.
- A solid arrow
indicates the path is both Price Rank and Upgrade. When this arrow displays, a higher ranked Room Class (such as Suites) accepts upgrades from a lower ranked Room Class (such as Standard). In other words, the excess Suite inventory can be added to the overbooking of the Standard Room Class. But only on days when the Suite Room Class has less forecasted demand than capacity, and Standard has more demand than capacity. - An outlined arrow
indicates Price Rank Only. When this arrow displays, the higher Room Class is skipped in the upgrade path. The upgrade path continues at the next higher Room Class that is above a solid arrow. However, any rooms that have no demand in the skipped Room Class remain unsold.
- A solid arrow
- Click a solid arrow
to change it to a Price Rank Only outlined arrow 
, to remove the Room Class above it from the upgrade path. Click the arrow again to restore it to a solid arrow and include the Room Class in the upgrade path. This arrow 
means you can't change the settings, see Run of House overbooking. - Click Next. Continue to complete all the steps in Rooms setup.
Best Practices for Price Ranking
Verify the Ranking by ADR Is Correct
By default, G3 RMS sorts your Room Classes by the historical ADR that is shown in the Room Class tab. Verify that the sorting accurately reflects your price ranking.
Almost all properties can use this price ranking with a single column. But some large and complex properties have several distinct types of inventory that they price independently. If that applies to you, consider the Advanced Settings. Be sure to review the scenarios and best practices before choosing that option.
Understand the Impact on Rate Plan Setup
Price ranking directly impacts your Rate Plan Configuration. G3 RMS maintains the price ranking order using the lowest priced room types. Thus, under certain conditions, the highest-priced room type of a lower ranked Room Class might be priced higher than the lowest room type of a higher ranked Room Class. This setting provides G3 RMS with some flexibility to price optimally, while considering the integrity of room type positioning and operational issues. At first glance, this setting might not be intuitive, but consider that a room type from a higher Room Class would only be priced close to, equal to, or lower than a room type of a lower one when there is very little or no demand for it.
Properties with Master Class Pricing
If your reservation system does not support different BAR decisions by Room Class, the Master Class determines the BAR decisions of all Room Classes. In this case, optimization ignores price ranking.
However, Rate Plan Configuration still considers linear price ranking. A correct Price Ranking setup ensures that you price your lower-ordered Room Classes below your higher-ordered Room Classes. If you attempt to set up them otherwise, Rate Plan setup notifies you that your pricing must follow Price Ranking setup.
Best Practices for Upgrade Paths
All best practices apply only to Room Type overbooking, not to Run of House.
Ensure That Overbooking Setup Supports Upgrade Paths
Overbooking and upgrade paths work together and must be set up accordingly. The following examples show this relationship:
Example: Standard Room Class with No Overbooking
A property sets up the Suite Room Class to accept upgrades from the next lower Standard Room Class, but the property does not allow overbooking for any Standard room types.
In this case, the room type setup invalidates the upgrade path setup. If G3 RMS forecasts no demand for Suite but excess demand for Standard, the Standard rooms cannot upgrade to the unsold Suite inventory because excess demand is not allowed in Standard rooms. G3 RMS assumes that the hotel will turn down all the excess Standard demand.
Example: Accepting a Group Directly in the Reservation System
What if a hotel accepts a group directly in the Reservation System The primary reservation system, like a PMS or CRS, that provides data to G3 RMS. The data from that one system is used by the RMS to forecast, optimize and produce controls. The controls are sent to all selling systems, which for some integrations may exclude the reservation system. so that the Standard Room Class is overbooked by five rooms, even when overbooking is not allowed for Standard in G3 RMS?
In this case, if the hotel allows upgrades between Standard and Suite rooms, the system’s optimization assumes the five rooms will be upgraded to Suites and not walked.
Example: Deluxe and Suite with No Overbooking
A hotel has three Room Classes: Standard, Deluxe, and Suite.
| Room Class | Overbooking | Upgrade Path |
|---|---|---|
| Suite | Not allowed | None (highest) |
| Deluxe | Not allowed | Upgrades to Suite |
| Standard | Allowed – but limited to 5 rooms with an Overbooking Override | Upgrades to Deluxe |
In this case, Deluxe can receive five rooms from Standard's overbooking.
However, what if the hotel sold all Deluxe rooms, but Suite has 5 rooms of remaining capacity and remaining demand exists only for Standard. There is no wash, so the system only overbooks if there is an available upgrade path.
In this case, the upgrade path from Deluxe to Suites is disabled because overbooking for Deluxe is disabled. G3 RMS can only overbook Standard if there are available Deluxe rooms. It assumes that the hotel can't accommodate the overbooked Standard rooms in Suites and that it turns away all the excess demand for Standard.
Be Careful When You Don't Include a Room Class in the Upgrade Path
Avoid Missed Revenue Opportunities
A Room Class for which you do not accept any upgrades is like a hotel within a hotel. If there is no demand for the Room Class, it remains empty, even if there is more demand than capacity for the "main" hotel.
You can consider not including a Room Class in the upgrade path if you have a separate Room Class of very expensive suites. This option might be the right choice when you prefer letting those exclusive suites sit empty rather than upgrading lower priced demand to them for free, to preserve the image value.
For many hotels, however, the additional costs from upgrades are negligible, and they prefer to overbook their lower priced room types if there is not enough demand for the more expensive ones. To achieve that in G3 RMS, enable the upgrade path between all your Room Classes to ensure maximum revenue and profits.
Avoid Forecasting Issues
When the system forecasts demand in excess of capacity for a Room Class that you have not included in the upgrade path, the system considers the excess demand as lost.
For example, you have 50 Standard rooms and 20 Suites, and you do not enable upgrades from Standard to Suite. G3 RMS forecasts demand for 100 Standard rooms, but none for Suites. To make this example simpler, there is no wash.
In this scenario, G3 RMS assumes that after the 50 Standard rooms are sold, each guest wanting to book a Standard room will be told that there are no available rooms. If that is not the truth, because in reality you do overbook your Standard rooms and upgrade them to Suites, you should enable upgrades from the Standard Room Class to the Suites. Otherwise, the excess Standard demand is missing from occupancy forecasts, which means the system is under-forecasting compared to your expectations.
When you do not include one Room Class in the upgrade path, the resulting forecasting issues apply to any Room Class. However, the impact is likely more apparent and more frequent when you do not share a lower priced Room Class, because demand in excess of capacity usually occurs more often and to a stronger degree for lower priced Room Classes than higher priced Room Classes. Therefore, we strongly recommend always including lower priced Room Classes.
Remember that upgrades only occur if G3 RMS does not forecast enough demand for the higher Room Class. For example, if you enabled upgrades from Standard to Deluxe and there is enough demand to fill the Deluxe rooms, the system does not share Deluxe inventory with Standard rooms, even if the demand for Standard rooms exceeds capacity. You can review the demand by Room Class in Demand and Wash Management.
Understand If You Need Advanced Settings
Use Advanced Settings if your property contains two or more distinct types of inventory that each need their own upgrade path, independent pricing or both. See Advanced Pricing Ranking and Upgrade to learn more.
Scenarios
All scenarios are for Room Type, not Run of House, overbooking. Remember that upgrades only happen on days when the higher ranked Room Class has less forecasted demand than capacity and the lower ranked Room Class has more demand than capacity.
Example 1
In this example, the hotel has three Room Classes. The setup below indicates the following:
- Standard is priced less than or equal to Deluxe. Deluxe is priced less than or equal to Suites.
- Upgrades can occur between all Room Classes under appropriate demand conditions.
| Price Rank | ADR | Upgrade Path |
|---|---|---|
| 3 | 200 | Suites |
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| 2 | 150 | Deluxe |
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| 1 | 100 | Standard |
Example 2
In this example, the hotel has four Room Classes. The setup shown below indicates the following:
- Standard is priced less than or equal to Deluxe. Deluxe is priced less than or equal to Suites. Signature Suites are priced equal to or greater than Suites.
- Upgrades can occur between Standard, Deluxe, and Suites Room Classes. Upgrades cannot occur from Suites to Signature Suites.
| Price Rank | ADR | Upgrade Path |
|---|---|---|
| 4 | 275 | Signature Suites |
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| 3 | 200 | Suites |
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| 2 | 150 | Deluxe |
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| 1 | 100 | Standard |
This setting is correct if the property decides to fill the Signature Suites only if there is demand for them. If there is no demand for them but excess demand for the lower Room Classes, the property prefers to leave the Signature Suites empty rather than accept upgrades.
Example 3
In this example, the hotel has four Room Classes. The setup shown below indicates the following:
- The price ranking works the same as in the above examples.
- The Two Twins are higher than the One Double because there is strong demand for two separate beds, which is expressed in the higher ADR.
- The One Double Room Class cannot be upgraded to any other Room Class. Upgrades can occur only from Two Twins upwards.
| Price Rank | ADR | Upgrade Path |
|---|---|---|
| 4 | 200 | Suites |
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| 3 | 150 | Family Room |
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| 2 | 125 | Two Twins |
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| 1 | 100 | One Double |
Consider the following with this setup:
- Whenever there is excess demand for the One Double Room Class, G3 RMS considers the excess demand as turned away and lost. In a worst case scenario, when there is no demand for the top three Room Classes but more demand than capacity for the One Double Room Class, the upper three Room Classes would remain unsold.
- We do not recommend such a setup where a low-priced Room Class is not included in the Upgrade Path. See Impact of Not Including a Room Class in the Upgrade Path above.
- What if the intent of the property is to allow upgrades from One Double to Family, but not from One Double to Two Twins? This might be the case if the property always experiences guest complaints when upgrading overbooked demand from the One Double to the Two Twins Room Class, because guests perceive the Two Twins as a downgrade from the One Double due to the smaller bed size. In that case, the property needs two separate upgrade paths and could achieve this with the use of an Advanced Price Ranking and Upgrade Path.
