Mr. Chopra

Revenue Management

How Room Prices and Sleep Quality Are Interrelated

By Bhanu Chopra, CEO, RateGain

The scent of fresh sheets in a tidy hotel room can win any heart. Travelers unanimously agree that a 'hotel stay' should be nothing less than a rich and pampering experience; and they further justify the statement by saying that prices are paid immediately, as quoted online. In order to pay the guests due respect, hospitality chains claim that they change or improve their services as and when an insurgency crops up. So, the single biggest truth of the hotel industry is that 'sleep quality' drives this segment.

Believe it or not, this catch phrase has materialized into a key measure of health and productivity in the global public consciousness. Evidently, hoteliers are left with no other option, but to seriously address the buzz that is going around this phrase. When it comes to prices, new evolving trends play a crucial role.

On the spryer side, providing a 'good night sleep' is truly a science! Hotel owners, who are able to comprehend it, rule the roost in their pricing segment.

Sleep Quality: What Goes Behind the Scenes?

The science of sleep is called chronobiology. Researchers from this field, clinicians and patients have begun to use 'sleep quality' all over the place. The explanations by industry scholars outline that rich sleep quality equals positive outcomes in terms of better health, greater well-being and lesser sleepiness during the day. That is followed by good psychological functioning. On the other hand, poor sleep quality could lead to chronic insomnia.

"One in three of us suffers from poor sleep." - NHS UK

Chronic sleep deprivation can have adverse effects on health. It's a rule of thumb that humans need around eight hours of quality sleep every night. This is to ensure that the body's metabolism keeps functioning properly. But what has a hotel got to do with extravagant terms like sleep and chronobiology?

The Delicate Link between Hotels and Sleep Quality

Clearly, hotel stays are supposed to be treasured and cossetting experiences. Yet guests claim that they do not sleep well away from home. The culprits are a host of reasons spanning across disrupting noises and fluctuating room temperatures. As a result, assiduous hotel management teams and sleep consultants have figured out a few causes. Their findings reveal that every hotel room has countless sleep inhibiting distractions. A few of them are listed below.

  • Uncomfortable mattresses
  • Flimsy pillows
  • Window shades letting in too much light
  • Ugly wall paints and wallpapers
  • Bright night lamps or clock lights
  • Wall-mounted LED/plasma TVs
  • Rattling ice machines
  • Dingy and earsplitting elevators
  • Booze parties down the hall

No matter how hard a guest tries, such 'noisemakers' refuse to budge! As potential factors, they can inhibit sleep or in the worst case, taint a guest's experience, which can impact a hotel's hard-earned reputation. Carefully dealing with the situation can help hotels get their revenue bells ringing all the way again!

To be precise, a considerable financial incentive comes tied to the task of tending to a guest's unmet sleep-related needs. No wonder hospitality providers are in a mad rush to chase this goal.

Hotels Can Engineer Better Sleep Quality

Visibly, a relaxing night's sleep occupies the topmost spot in hospitality staff's to-do list these days. Industry mammoths and small players in the arena are implicitly and explicitly pushing their limits to render elusive experiences, so that guests get to enjoy the stay. Undoubtedly, hotels are actively involved in research works to improve a guest's sleep time experience.

Guest-coddling methods vary across groups; for instance, some hotels carry out tests in designated laboratories, while the others dedicate operational rooms for new design incorporation. Seemingly, the very first time hospitality focused on sleep quality was in the year 1999.

"When Westin Hotels & Resorts introduced its line of heavenly beds, hotels looked at innovation." - Huffingtonpost

Thereafter started the "battle of the beds" where competitors started made-to-order mattress campaigns, which were covered layer-upon-layer to create overstuffed comforters. In 2009, during the deepest economic downturn since the Great Depression, hoteliers were forced to move away from opulent marketing strategies, and adopt "back to the basics" tricks. Yet strategic shifts of the past decade started materializing with time.

The scenario today has completely transformed; hotels can't afford to ignore even the tiniest details in guest rooms. Market leaders and emerging hospitality rookies are increasingly adopting popular sleep therapy tactics for their guests.

Below enlisted are a few snippets of the tedious efforts of hotel staff.

  1. Some menus feature after-dinner "sleep tonics"; ingredients combine chamomile and apple cider to promote relaxation and sleep health.
  2. Rooms include "slumber kits" that have eye masks, ear plugs and soothing music CDs.
  3. Neuroacoustic therapists are employed as visiting consultants during peak seasons to counsel guests about sleep patterns.
  4. On demand special glasses are delivered to block-out blue light.
  5. Sugar/chocolate is taken off the dinner menu. A sugar-rush before bed could get in the way of the body's rest.
  6. Sleep consultants conduct sessions for hotel staff, to help them make 'bed-time' a priority, with the hope that these practices get conveyed to the guests.
  7. Taking care of bedding thickness, coil count, pillow tops and hire branded mattress companies to make quality beds. Benjamin Hotel, a leading hospitality group in New York, boasts of a dedicated 'sleep concierge' who offers extra pampering to the 'tired guests'. The same hotel has included a 'pillow menu' which covers seven pillow alternatives, spanning through 'extra cushy' and 'anti-snore' to 'organic-filled' ones.

Top-tier luxury chains are striving to eliminate "anti-sleep" services. Designated room attendants are assigned to dim the lights, adjust indoor heating/cooling, turn on soothing music and draw the curtains.

Pricing Plays a Crucial Role

Rates are crucial drivers of the entire hospitality industry. Cleverly packaged pricing strategies can fatten up a small hotel's bottom line. However, the way these rates are set can have positive as well as negative repercussions. The competitive hospitality marketplace is a crow's nest, where everyone is in a constant lookout for an ultimate 'wow' factor! In a quest to ensure that guests return again and recommend services to their friends, quality of a bed is only the first step. Additionally, hotels strive to figure out all other associated resources as well.

Top meta-search engines and travel forums illustrate the experiences of countless travelers and the extent of opportunities available, in order to be able to cater to a sleep-savvy populace.

"55% of travelers look for online reviews that addresses sleep quality and 18% look for hotels offering special sleep amenities." - TripAdvisor survey

In case the hotel is sure of its sleep related comforts and amenities, it can place its inventory competitively in the market across distribution channels. In order to do so, the following pointers need to be followed:

  • Hotels set room prices according to nearby accommodation providers, who are competitors. Apartments and suites, that have luxurious frills, like posh interiors, can be set at slightly higher rate segments. Key features like comfortable beds, cozy lighting, warm wall paints might be highlighted to target sleep-savvy buyers. That way, hotels can win the best of both worlds, where they not only win over deal-seeking guests, but also make more than the closest competitors.
  • A simple example is $99.99 instead of $100. This tactful pricing technique is an effective common pricing strategy. It is very popular across the globe. Digital places such as 9, gets rounded up to 10. So the price $99.99 is psychologically perceived by the buyer as cheaper than $100! This boosts room sales to a great extent.
  • Basic rooms are generally set to the cheapest prices. All others are set close to base prices of mid and high level competitor inventories. Small hotels target higher markets in a single go like this.
  • By offering rooms at lowest possible prices, crowds of guests are drawn to a property. Since guests love to be familiar with the idea of running promotional discounts, it helps to get the word out! Besides, promoting room comfort levels and sleep-friendly frills, also attracts more eyeballs. These are generally short bursts for instant guest attractions.
  • Hotels must incorporate rate parity across channels and promote sleep-oriented room features for better visibility. This would ensure equality across channels, as this common practice is quite prevalent lately. Parity always has a significant impact on hotel revenue. It leads to the exact place where customers choose to book. On one hand, consumers shop across multiple sites, and on the other, when the room price is not in parity, demands get driven to the lowest-price channel. This is where the dice can be rolled in favor of rooms incorporating sleep quality. Hotels should have due strategies in place as price disparity always has a negative impact.
  • In case prices are unavailable for potential high-budget clients, hotel can lose out to other providers. If prices are too low or high, this becomes quite tricky. So the room must promote sleep welcoming skins in their kitty to attract customers.
  • Some hotels try to stand out by setting room rates higher than competitors. This is where service quality comes into play. Hospitality providers do so only when they are confident about their services. Some hotels even throw in extras to justify leaps and set hard-to-ignore industry standards. Hotels who pursue this strategy can deliver their promises by including the previously discussed sleep therapy techniques, so that tedious efforts of hotel staff gets paid off. On the other hand, luxury chains can eliminate "anti-sleep" services by integrating cozier features which ensure that their guests sleep well.

As a matter of fact, every property is unique. Measuring individual successes by price tweaks is tough. Collective revenue should be measured to understand how sleep-friendly tactics help hotels clutch target markets. Only then occupancy rates and RevPAR are calculated accurately. Owners must make final calls about set targets and tactful pricing goals. Thereafter, chosen strategies can be deployed, with appropriate reservation and accommodation management systems. This would draw up essential hotel reports, so that correct sleep-oriented pricing strategies can be put in place at the appropriate time intervals.

To be precise, hotels are rolling out full-scale sleep initiatives to stay ahead of competition. 'Bed-wars' are on the rise and are escalating rapidly. Though this rush is a blessing-in-disguise for mattress companies, the 'sleep-quality' uprising has successfully begun to force hotel chains to adopt 'branded bed programs'.

"Hotel chains are coming out with new beds because that's what their customers want." - CEO, AHLA, Washington, D.C.

At the end, a good night's sleep is all that matters. 'Sleep quality' and allied parameters are being tackled diplomatically, so that the 'price-ball' still remains in the hotel's court! This results in a 'win-win' situation for both contended guests and hospitality providers.

Bhanu Chopra, CEO of RateGain is responsible for establishing the vision that guides the development of RateGain’s solution offerings and delivery methodology. Mr. Chopra is a seasoned start-up entrepreneur in IT consulting. Prior to RateGain, he co-founded Riv Consulting. He began his career at Deloitte Consulting where he worked on large ERP implementations for Fortune 500 companies. Mr. Chopra earned a double Bachelor’s degree in Computer Science and Finance from Indiana University, Bloomington. He is one of the founding member of iSpirit a policy think-tank for Indian Software Product companies. RateGain has become a leader in hospitality and travel technology solutions for revenue management, decision support, rate intelligence, seamless electronic distribution and brand engagement. Mr. Chopra can be contacted at bchopra@rategain.com Extended Bio...

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