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How hyper-personalised pricing strategies and AI-driven optimisation can maximise hotel profits
Targeted and personalised promotion increases sales per customer.

How hyper-personalised pricing strategies and AI-driven optimisation can maximise hotel profits

Advanced techniques for hoteliers

Revenue management is evolving rapidly due to technological advances and changing guest expectations. Traditional methods fall short of maintaining a sustainable competitive advantage in this dynamic environment. Hotels striving to optimise their profit potential cannot ignore hyper-personalised pricing strategies and AI-driven optimisation. This article explores the latest techniques that can help your hotel maximise profits.

Segmenting guests based on general characteristics, such as business or leisure, is a thing of the past. The future lies in hyper-personalised pricing strategies where each guest is treated as a unique segment. This allows you to tailor prices to the specific behaviours and preferences of individual guests.

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Traditional methods fall short of keeping competitive advantage.

Machine-learning algorithms

With machine-learning algorithms and big data analytics, you gain insight into your guests' behaviour. This goes beyond adjusting prices based on supply and demand; it also includes personal factors such as previous booking patterns, preferences during the stay and external influences such as events, weather conditions and travel time.

An example: by analysing a guest's average spend per stay, the number of stays per year and the duration of the customer relationship, you can predict the Lifetime Value (LTV):

LTV = (Average expenditure per stay × Number of stays per year) × Length of stay (in years)

A guest who spends an average of €300 per stay, comes three times a year and remains a customer for five years has an LTV of €4500. With this data, you can develop dynamic discounts or personalised offers aimed at maximising both current and future sales.

AI-driven optimisation

AI offers the opportunity to fundamentally transform revenue management by making real-time data-driven decisions. AI systems can process millions of data points and instantly make the most profitable choices, without human intervention. This leads to continuous optimisation of prices and availability based on current market conditions, competitive behaviour and individual guest profiles.

Strategic advantage

AI models calculate price elasticity by room type, guest segment and time period and instantly determine the optimal price. These systems continuously learn and improve their predictions as more data becomes available. This means the systems become increasingly accurate over time, which strengthens the hotel's competitive position and makes it more responsive to guests' needs.

A practical example: an AI system may discover that a certain room type is often not fully booked on Tuesday nights, while there is high demand on Thursdays. The system may then decide to introduce a promotion on Tuesdays and apply a premium price on Thursdays. These price adjustments are monitored and adjusted in real time, leading to revenue optimisation.

Non-room revenue

While the focus is often on room revenue, there is also significant profit potential in non-room revenue such as spending in restaurants, spas and event facilities. AI can optimise these revenue streams by predicting guest spending and tailoring offerings accordingly.

Predictive analytics provide insight into guests' spending patterns, enabling targeted offers. For instance, guests with a high LTV and a history of frequent spa visits can be offered personalised spa packages. This not only boosts current spending but also increases overall guest satisfaction and loyalty.

As an example, if an AI system predicts that a targeted promotion in your restaurant can increase the average spend per visit by 20%, this could lead to a substantial increase in total sales for hundreds of guests per month.

The future is data-driven

The shift to a data-driven, AI-optimised approach to revenue management offers unprecedented opportunities to take your hotel to higher profit levels. Hyper-personalised pricing strategies and AI-driven optimisation are already practical tools that can have an immediate impact. By embracing these technologies, you can not only increase revenue but also strengthen value perception and customer loyalty, leaving your competitors far behind.  

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