Setting the rates for your B&B
Why Pricing?
The price of your accommodation is very important from a marketing point of view. Your rates have a direct
influence on your profit margins. Many guest houses however experience difficulties with setting their rates.
What Does Room Rate Mean?
It means how much you will charge when renting out a room for one night. The key question however is how do you arrive at an appropriate price for your room.
What Does Occupancy Mean?
It refers to the percentage of available rooms rented. It can be divided into two namely:
Room occupancy and Bed occupancy.
Your Rates Should Be Determined By The Following:
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Try Avoid The Following Pitfalls When Setting Your Rates:
o Not setting rates that are market-related. Rates should not be set as a result of a high bond repayment or of having spent too much on the building or interior decorations. The fact that you may have expensive imported curtains does not really make any difference to the basic rate. Do not expect your guests to pay for your bad planning. First establish what the market will bear in terms of rates before deciding how much you are going to spend on decorating your guest house (rather than doing things the other way around)
o Compromising on the value of the product you offer. If you cannot afford a buffet breakfast, economise by preparing an individual meal for each guest. Organise your operations to minimise waste and guests will feel that they are getting special treatment;
o Falling into the trap of being greedy when things start going well. Everyone - including foreign visitors and large companies - is price-conscious;
o Underestimating the value of price as a marketing tool - and its potential to drive guests away. Sudden extreme raises as well as the sudden lowering of rates will make valuable guests feel exploited. Take a long-term view and be prepared to build your guest house business slowly, with gradual increases in your rates; and
o Not making sure that your normal rates allow for the payment of commission.
List Of Possible Expenses That Might Influence Your Price Structure.
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Article supplied by Andre’ Burger, Tourism Grading Assessor
Email – Burgan@mweb.co.za