RoomPriceGenie Knowledge Base

Pricing Strategy

Occupancy Strategy

Occupancy Strategy

Learn all about the 'Occupancy Strategy' tab in RoomPriceGenie.

Product Plan
Advanced
Professional

Different hotels have different needs and strategies. In order to allow for this, we have built a lot of flexibility into the RoomPriceGenie algorithm. With the Flexible plan of RoomPriceGenie, you now have access to more of this flexibility:

Target Occupancy
Median Booking window
Aggressiveness
Close-Out Sales (Last Day)

Tip: These settings describe a) how many people you expect to come, b) how early you expect them to book and c) what you want to do about it.

We’ll explain each of these individually and we’ll explain how they combine to affect your price recommendations and your Occupancy Calendar.

1. Target Occupancy

The Target Occupancy is where you would set the expected occupancy in the different months of the year. This setting says how many people you expect to come.

By default, the Target Occupancy at RoomPriceGenie is set to 80% which is generally a reasonable compromise between ADR and occupancy rate. However, we are aware that your Target Occupancy may differ from month to month; so here is where you can change it:

You find the "Target Occupancy" under "Pricing Strategy" and "Occupancy Strategy"

When setting up your monthly target occupancy bear in mind the following:

The more realistic expectations the better price recommendations! For example, if you normally get 40% occupancy in January, set the Target Occupancy in January at 40-50%. There is no harm in aiming a little higher than you usually get if your occupancy is low.

Remember: Even if you have set a lower monthly target occupancy that does not mean that you will not be able to reach a higher one... You will still be able to do so but at a higher ADR.

If your target is too high, the price recommendations will be lower in order to try to reach that target. If your target expectations are unfeasible then you may be sacrificing the average daily rate, without getting the occupancy pick-up you need to make it worthwhile.

Caution: We don’t recommend setting Target Occupancy to 90% or above, because this will usually lower your prices too much.

2. Median Booking Window

A lead time (booking window) is the period of time between when a reservation is made by the guest and their check-in date. This setting indicates to the algorithm how early you expect them to book.

We look at the ‘Median’ booking window. What does this mean? It means the number of days before, that, on average, half your bookings have come in. In RoomPriceGenie we differentiate between:

Short	Half your bookings come less than 14 days before arrival.	Typical for city hotels.
Standard	Half your bookings are made more than 14 but less than 30 days.	This is the default setting.
Long	Your average booking is made more than 30 days before arrival.	This may be the case for ski resorts or other destination hotels.

Actually, it’s a bit more complicated, if we are being precise. We want to know the lead-time median for your market as a whole rather than your hotel. This should be available on booking.com analytics.

One thing to note, with the covid situation, the lead time has significantly reduced, and you may want to set a shorter lead-time median for the current time and increase again as the situation improves.

Tip: If you need a custom option, please let your customer service executive know.

You find the "Median Booking Window" under "Pricing Strategy" and "Occupancy Strategy"

Target Occupancy & Lead Time Median – How do they work together?

Target Occupancy and Lead time Median – together give ‘Expected Occupancy’ for future dates!

The Lead-Time Median and Target Occupancy work together to estimate how full you should be on any given day. The ‘Lead-Time Median’ determines how many days before arrival the system expects half your bookings to have come in. The target occupancy says how many bookings you expect altogether. So, with these two settings we ‘decide’ whether you are above or below expectations.

Example: Imagine that your lead-time median is 14 days and your Target Occupancy is 80%. If we were to look at 14 days in the future, then we would expect half the bookings to have already come in. This means that we would expect 40% occupancy with 14 days to go.

Target Occupancy & Lead Time Median - How will they affect the price recommendations?

If you are on target with your expected occupancy (in the example given, meaning you have above 40% occupancy 14 days before), the price recommendations will be higher. On the other hand, if you are below target with the expected occupancy, the price recommendations will decrease to reach more occupancy in the period of the lead-time median (14 days).

Be aware of:

Option 1 - Higher target and longer lead time would both increase the expected occupancy; which would mean lower prices!
Option 2 - Lower target and a shorter lead time would both decrease the expected occupancy; which would mean higher prices!

occupancy strategy_expected occ

How to read the Occupancy Calendar?

The actual vs the expected occupancy is shown in the Occupancy Calendar. The Occupancy Calendar is colour coded and tells you if you are above or below where you would expect to be. Purple shading means you are above the expected target occupancy and orange shading means you are below your expectations (left corner of the cell).

How exactly does this affect pricing?

The ‘full-month-adjustment’ setting fixes the pricing for a whole month and is determined by whether you are above or below expectations. It is a setting implemented in RoomPriceGenie’s algorithm automatically. The system itself is already set to reflect your Monthly Target Occupancy and Lead-time Median.

The pricing for each day is affected both by the availability on that day (optimising your prices for the rooms you have left) and also by the 'full-month adjustment' which looks at the whole month.

What should I do about it?

Because of the ‘full-month-adjustment’ we take care of whether you are above or below target for the month, and you don’t need to worry. If you are getting too full too soon, the prices will automatically rise. If the bookings are not coming in then the whole month of prices will be adjusted lower to compensate.

You need to react only if you don’t agree with it or if things have changed for your business.

What if I have a few very busy days in a quiet month?

When we see a very quiet month then the whole month will be adjusted down. If you have a few busy days, e.g. for a concert or a holiday, you may find that these prices are a little low. To deal with this you can add a positive adjustment to the price on the busy days, using the price pop-up or adjustment calendar.

3. Aggressiveness

So, we know your expected occupancy target [because you can enter monthly target occupancy yourself], your current occupancy [we receive that data from your PMS/Channel Manager], and the lead-time median. What do we do if we’re ahead or behind targets?

This is where Aggressiveness comes in. Aggressiveness means how much we change prices based on occupancy. As a rule, the higher the aggressiveness, the higher the prices go as you get fuller. Very low or no aggressiveness means that we follow the market and pay less attention to the number of rooms you have left to sell. If you set it to zero, then how many rooms you have sold so far will have no effect at all on the prices.

We generally recommend leaving this on Standard. For some very small hotels, we would suggest Low or Very Low. Learn more about it here: Aggressiveness.

Variable Costs

How much the price recommendations change, shall also depend upon the variable costs involved, especially when it comes to maintaining a profit margin. The variable costs are the extra costs associated with having a client in the room.

When RoomPriceGenie is optimising your revenue, we want to make sure that these costs are taken into account and that you make enough profit on each room sold. Learn more about it here: Variable Costs.

Aggressiveness & Variable Costs – How do they work together?

Standard aggressiveness (recommended) and lower variable costs could bring your prices more towards the minimum prices. The low variable costs mean that the system recognises that you are making mostly profit when you get a booking.

We would recommend Standard aggressiveness with variable costs to at least half of your minimum price to give a good balance between profit margin and price flexibility.

If your variable costs are high, then the algorithm will be a lot more careful in reducing your prices in order to keep your margins higher.

Another way to counteract lower price recommendations is by raising variable costs instead of changing the aggressiveness level.

4. Close out Sales (Last Day)

If you close out sales on the last day(s) after a certain time, please update the same in RoomPriceGenie. Otherwise, we might fetch the wrong availabilities.

Setting up the correct time for closing out sales for the day.