What Not To Do Wednesday-Argue With Market Price
I am originally from the Eastern Shore-“The Delmarva Peninsula,” as we call it. This stands for the Delaware/Maryland/Virginia Peninsula. Delmarva is known for agriculture, amazing beaches and Maryland Blue Crabs! If you are from Delmarva-and Maryland specifically-you most likely LOVE crab and know how to pick them.
When you buy crabs at any time of year in Maryland, you are going to pay, “Market Rate.” There is no set price-the rate is based off daily supply and demand. Marylanders know it, don’t argue with it, and if they want crabs, they pay it. If the crab industry gets this concept-why are we still so backward in the Outdoor Hospitality Space?
Too often, we hear owners say to us, “Our rate is too high; we are not worth this.” I remind them, the market is telling them otherwise. Their revenue is up and the market is paying the rate. The market is telling them they will pay that rate and they are worth it.
They seem to be very scared to allow rate to be pushed. I say to them what I say to my staff…“Numbers don’t lie.” Numbers will tell us when the market has not been pushed enough or when it has been pushed to the limit. Yet, daily we have park staff or owners want to buck the market and go rouge.
I find this to be a battle unique to this industry. Never did we have Marriott micromanage our revenue managers. They cared about the rate and occupancy balance, and if these were working, they never drilled down into what we were charging or the occupancy percentages. They just wanted revenue managed.
Here at AOS we find it takes very savvy owners and investors to understand Revenue Management. Some are just never going to get it-and that is the struggle we see this industry when managing revenue. The familial relationships they form with their guests, and the contra-market thinking lead them to lose revenue every day because they are not willing to agree with the market and charge market rate.
Take a lesson from the mighty crab industry, allow us to set your prices at market rate and make you money while doing it. By doing so, you will see overall revenue increase even if occupancy falls. This is the magic that happens when the market is heard.