Recently I performed a comprehensive overview of our expenses and occupancy to see if I could pinpoint the appropriate price range for our center. Our practice has always been to compare competitors pricing and perceived value against our own. This usually resulted in a modest percentage increase to our all-inclusive packages. However, this year this exercise seemed futile. Increased labor and food costs challenged our bottom line. Heightened demand from our guests prompted us to deviate from our normal services and offer a more executive experience. Requests for weddings were on the rise. So, with the recent closing of a local retreat center, the time was right to challenge our rates and our pricing philosophy as well.
I researched marketing and pricing strategies. I reviewed my notes from the rate setting workshop at last year’s annual conference. The more I read, the less I felt I knew. I discovered rate setting is a multi-layered discipline and that it is the only marketing application that results in real dollars. Getting this right presented an enormous opportunity.
I applied theories, gathered data and crunched numbers. Then I charted the results in order to compare approaches. My findings were generated from these perspectives:
* Fixed & variable cost calculations
* Annual occupancy percentages and consumer demand for special services
* Competitor pricing
* IACCA’s benchmark percentages for food and labor
* The restaurant rule of thirds
The results were illuminating. Our adaptation in customizing services had outgrown our historical all-inclusive pricing model. While an all-inclusive price point was tremendously guest-friendly, we had limited our revenue potential with this simplistic model. In order to realize desired annual gains, we would have to substantially increase our all-inclusive packages, therefore pricing us out-of-the-market for many church groups.
The answer, for us, I believe lies in the implementation of all strategies: tiered all-inclusive retreat rates for mid-week and weekend stays, premium pricing for special events and services, and cost-driven pricing for large group, extended stays. This agile approach to pricing will require more thought and adjustments to billing and reservation software. In the end, this effort will serve both center and guest well.