Setting Up Rate Level Open/Close in Revenue Management (Cloud)

The Rate Level Open/Close functionality in Visual Matrix PMS allows revenue managers to dynamically adjust room availability based on occupancy triggers. This feature, available for properties with the Rate Levels option enabled, helps optimize revenue by controlling which rate levels are available at various times based on occupancy and booking windows.

The strategy behind Rate Level Open/Close is to sell fewer rooms at higher rates, ensuring that rooms are offered at the right price based on demand. This reduces the need for discounts and enhances profitability.

Prerequisites

- Rate Levels must be enabled in your PMS.

Path: Management > Rates > Discounts > Setup > Rate Levels

- Auto-tiering must be set up in your system, as the time-based variation set from the auto-tiering setup screen will be used for rate level configuration.

Setting Up Rate Level Open/Close

Step 1: Accessing the Rate Level Open/Close Setup

- Navigate to the following path: Revenue Management Live! > Revenue Management Live! > Auto Tiering > Rate Level Open/Close

- Once there, you will see a grid showing time-based variations and tier triggers.

- Time-Based Variation: Configured in the auto-tiering setup screen (e.g., 0, 30, 60, 90 days in advance).

- Tier Triggers: The 9 available occupancy levels (e.g., 9%, 21%, 35%, etc.).

Step 2: Selecting Time Windows and Tier Triggers

Click on the intersection between a time-based variation (e.g., 30 days in advance) and a tier trigger (e.g., 45% occupancy). This will open a pop-up window where you can configure rate level availability for that specific point in time.

Step 3: Configuring Rate Levels

In the pop-up window, you can open or close individual rate levels (A to H) based on the occupancy and time window:

- Open: Keep the rate level available for booking.

- Close: Restrict the rate level for that time window and occupancy level.

Step 4: Applying Changes

Once you’ve configured the rate levels for the desired occupancy triggers and time windows, click Save to apply your settings.

Strategy Behind Rate Level Open/Close (Example)

The Rate Level Open/Close setup is based on a common revenue management strategy that maximizes profitability by limiting the number of rooms sold at lower rates and prioritizing higher rates as occupancy increases. Here’s how the strategy works:

- Longer Booking Windows (90+ days in advance): At low occupancy levels (e.g., 10%), only the most basic rates (Levels A and B) are made available. As occupancy increases, higher rate levels are gradually opened. The idea is to close off lower-tier rates as you get closer to the arrival date and occupancy increases, allowing you to sell rooms at higher rates as the booking window narrows.

- Smaller Booking Windows (30–60 days in advance): If occupancy is low, all rate levels may remain open, especially if the booking window is close. At this point, you may want to open everything to sell as many rooms as possible, as the booking window is shrinking and occupancy is still relatively low.

- High Occupancy (Above 80–90%): As occupancy nears full capacity, you can close out discounted rooms (like levels D-H) to increase rates, ensuring that you sell the remaining rooms at higher prices. The theory here is that it's better to sell fewer rooms at a higher price rather than filling up all rooms at a discounted rate. For example, being 80% full at $100 per room is more profitable than being 100% full at $80 per room.

Insights on Maximizing Revenue

The key idea behind this strategy is to sell fewer rooms at higher rates and avoid filling your property with discounted bookings. Here’s why this is a great strategy:

- Selling rooms at higher rates, even if fewer rooms are sold, can often yield higher total revenue.

- Less discounted inventory leads to more profitable pricing.

- By closing lower-rate rooms at higher occupancy, you maximize revenue on every available room.

- There’s also less operational burden: with fewer rooms to manage at a higher rate, you streamline operations and avoid unnecessary discounts.

Key Takeaways

Rate Level Open/Close allows for dynamic control of which rate levels are available based on occupancy and time-based triggers.

This strategy helps you maximize revenue by focusing on fewer, higher-rate rooms as occupancy increases.

For properties with Rate Levels enabled (primarily Best Western properties), this feature is a powerful way to manage pricing with precision.

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