Why it’s time to put up your B&B room rates
So many times I hear B&B owners say that they are thinking of reducing their B&B room rates in order to attract more guests and I say the same thing to them every time:
Don’t Do It!
Before you lower your B&B room rates please think VERY carefully. No matter what you think, you will never be the winner in a price war. There will always be a bigger player who has bigger marketing power, bigger buying power and deeper pockets than you.
If you reduce your room rates you will end up working very hard for not a lot. You may be perceived as “cheap” and therefore not so attractive to potential guests.
It will stop you from growing your B&B further
What usually happens when someone charges really low prices is that they end up with lots of guests but, more often than not, they are the wrong type of guests. They usually create far more aggravation and hassle and make life pretty miserable for the B&B owner.
But there is also another problem with lowering prices that most B&B owners fail to realise – you lower your room rates, you get lots of guests, you’re busy working for very little profit which means you have no spare time to develop and grow your business further. This is not sustainable.
So often I see B&B owners drop their room rates in the hope that it will bring more bookings but they fail to see that not only are they working extremely hard for very little profit but they also leave themselves with no time.
So often I see people who are completely exhausted and totally burnt out but without a penny to show for it.
My attitude is to actually put up your B&B room rates!
“I can’t do that!” I hear you cry. Why not?
What’s the worst that can happen?
Well, firstly you will lose some of your existing guests when you put up your room rates. However, the ones that you will lose will be those who always ‘book on price’ and from experience I know that these are the guests that are really hard work.
These are the people who make you give an inward sigh when you see them or talk to them and the ones where you breathe out that sigh of relief when you say goodbye.
Whilst they might be lovely people, they usually demand so much more and they are much, much harder work. Would you really be worried if you lost their business or would it be a bit of a relief? You really don’t want this type of guest.
The guests that you want are those that actually don’t do business with you because of your prices, they choose you because of what you offer and the quality of that offering.
You will have greater profits
Raising your B&B room rates will mean that you can afford to lose the demanding guests who pay very little and you will become far more profitable. Let me give you an example.
Say your current room rate is £100 – you would need to sell five rooms to earn £500 of revenue.
If you priced your rooms at £125 you would only need to sell four rooms to generate the same £500 of revenue.
You can afford to lose some guests and still make the same money.
What this tells you straightaway is that you can actually afford to lose one in five guests and still be better off.
And yes, I do mean better off because although you are earning the same amount of money you are only doing 80% of the work and paying out 80% of the costs.
However, what actually happens is that your income won’t go down. Because you are only doing 80% of the work, you have more time to out more effort into selling another room (or two!) at £125 increasing both your income and profits.
On top of that, you’ll be surprised how many of your guests won’t even notice you’ve increased your prices and those that do will probably say that they’re surprised you haven’t done it before now.
Find the right balance.
But one last word here, over-charging can be just as dangerous as lowering your prices. I’ve seen B&B owners price themselves out of the market or put themselves under such pressure to deliver the high value service that equates to the price they are charging that it seriously affects the delivery and the guest experience.
The best way to build a thriving and successful B&B is to find the right balance for you and your guests. You need to feel comfortable about the price you charge your guests and your guests must feel that they are receiving value for money.
Until next time, remember…
If you haven’t put up your B&B room rates for a little while, then you should do it NOW. I promise you’ll be delighted with the results.