Pricing is the only marketing mix that can generate revenue. Hospitality businesses aim to optimize their revenue and maximize profitability by applying appropriate pricing strategies.
What factors should be considered prior to implementing a pricing strategy?
What types of dynamic pricing strategy would you consider for your establishment if it was in a prime location like the Las Vegas Strip?
Mini case: As Las Vegas is anticipating the 2nd annual Formula 1 event to take place later this week, hotels around the Strip are ready to welcome an estimated 100,000 daily event attendees. As the hotel occupancy rate is increasing and inventory is becoming limited, prices have doubled, even tripled from their standard rate.
Earlier in the year, a lawsuit was brought against multiple operators in Las Vegas, claiming the practice of data-sharing and pricing algorithms to maximize room rates. The argument is that such practices presented overinflated room pricing that did not reflect consumer demand. Although this case does not tie the F1 event to its filing, post-event data showed that guests spent more than $4,000 for their stay in 2023, not including event tickets.
Considering the news of this lawsuit and the reality that this event comes with an astronomical price tag for the consumers, would lowering the room rates during F1 week be beneficial in creating and maintaining repeat customers for the remaining 8 years of the event deal? What effects can this have on the company brand’s image.
