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The B&B Team
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R is for Rates – To raise or not to raise, that is the question

The Gower Memorial - Hamlet Statue in Stratford upon Avon

Prince Hamlet

When it comes to rates, to increase or not has always been a brooding question for innkeepers and a subject of much discussion, especially in tough economic times. In a recent PAII Forum thread the subject of raising rates was introduced and many innkeepers took the time to give their opinions and express their own dilemmas when making this tough decision.

“Travelers don’t buy rate; they buy value.” Neil Salerno – Hotel Marketing Coach

Think about this statement…value over price. Let’s look at what value is and put aside the number crunching for now. There are three key components to consider when looking at your property and determining value. In analyzing your Inn and determining its value, you should include your bed and breakfast location (which cannot be changed), your facility inside and out (which can be changed and will lose value if not maintained) and your competition (which can also change and must never be ignored). All of these components should be honestly scrutinized when making the decision whether to raise your rates or not.

Location – A popular tourist destination will command higher rates. This is a given. A great location needs great marketing to keep its competitive edge. Participating in your Chamber of Commerce, local, state and national (PAII) innkeeper associations and tourist bureau can keep you informed as well as give you the opportunity to help in the marketing of your property’s location. Working within a vacuum is not good for your business. Other location factors to include are close proximity to attractions, restaurants and activities. Water views, mountain tops and other attractive surroundings should also be considered. Your market value will be on the high side if you are in a popular destination in an attractive setting with great marketing.

Facility – Your entire Inn must always be a work in progress. Upkeep, improvements, re-doing guest rooms and baths, keeping up with all sorts of trends, from marketing to décor, the list goes on. If your rates have not been raised in three years and you have done nothing to your Inn in three years then you can’t justify raising your rates, because you have not added any value to your facility. But, if you have consistently made significant ‘value added’ improvements to your property and have communicated them to your potential guests loud and clear, then you are in a much better position to raise rates. Travelers will look at a ‘new and fresh’ guest room and put a higher value to that room in comparison to another room that appears dated and tired. Don’t forget to present these improvements on your website, Facebook and all your social media! Your amenities will also help to determine your individual room’s rates. The more bells and whistles the better.


Curb Appeal - A Cottage Suite at The Inn at Stockbridge, clean and pristine!

Competition – Positioning yourself properly within your marketplace is key. Knowledge of your competition will help you position yourself and determine whether your rate structure is competitive. Look at the rates of properties in your marketplace area that you determine are comparable to yours. If their rates are generally lower than yours, look deeper. What do they offer, i.e. smaller rooms and baths that appear dated, a property location that is not as attractive as yours, an inferior breakfast offering. Also look at the properties that have higher rates, again look deeper, are they offering more luxury amenities, and are they AAA Four Diamond or Select Registry? All of these offerings are perceived as having a higher value. If a potential guest determines there is value in what you offer then they will book even at a slightly higher price than your competitor.

There is also the consideration that the rates you and your competitors are currently offering are at the highest your market will bear. So if you don’t believe you can raise your rates at this time, what can you do to raise revenues? Creating and promoting special packages is a good way to accomplish this. “Packaging allows you to mask actual room rates with features which add benefits (value!) to staying at your Inn.” (Another quote from Mr. Salerno). The B&B Team is a firm believer in packaging as a great tool to increase your bottom line.

What next? Homework. Look at the three components and make lists of your strengths, your weaknesses and your opportunities in these three areas. This should give you an idea of the areas you need to work on and then make a ‘To do priority list’. Increasing the value of your Inn will eventually enable you to prudently raise your rates. When your occupancy starts to climb, when your revenue starts to climb from packaging and specials and better marketing of your Inn, these are clues that you are creating a demand and good value to your guests. When you are confident about the quality and value of the product you offer, then raising rates becomes any easy decision. No need to brood and ponder like Prince Hamlet. Determine your worth and take action.

Janet Wolf


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