Have you ever wondered how so many hoteliers fail to maximize their revenues despite making a great deal of effort? As a revenue manager, I see many properties that focus on minor tweaks and do not have a strategic framework. Today, I would like to share a proven way to boost your profits and bookings. It is the 4Ps Revenue Management.
Download the Modern Revenue Management Guide.
Understanding the 4Ps in Revenue Management
We call these 4Ps the “4Ps” and they are the basis of a successful revenue management hotel strategy. Pricing What is your pricing strategy? Positioning Your brand’s perception is what you need to consider. Pace The booking rate is a measure of how quickly the bookings arrive. The Performance of a The concrete outcome of your efforts. All four elements are linked in a continuous cycle; any change to one will have an impact on the other.
Pricing: the Foundation of Your Commercial Strategy
Pricing is key to commercial success and positioning your brand. Once, I advised a hotel which had set its prices too high. The hotel quickly experienced a significant increase in bookings after realigning its rates to reflect the market expectations and the guest perception. The right price is determined by aligning the rate with market expectations and perceived value of your product.
A strategic pricing plan that is well timed can boost customer perceptions of value, and therefore strengthen your brand. This increased brand recognition gives you more power to set prices, which allows you the ability to reposition and assert your brand in the market. Maintaining consistent pricing in line with your position reinforces your value moat, leading to positive reviews, a higher NPS and a lower CAC.
Positioning Your Brand: The Image of Your Brand as a Key Driver
The positioning of your hotel is what customers believe about it before they book. Strong positioning will help you justify your prices and increase demand. Pay attention to guest reviews. Especially those on TripAdvisor or OTAs. Respond to as many as possible.
Negative reviews left unmanaged can lead to significant booking decreases. If your positioning is wrong, even with the right pricing you will see bookings drop. Positioning involves focusing on guest reviews, your online presence and the volume of reviews. Plan meaningful touchpoints to engage guests before their arrival.
Pace: The Rhythm of Success or Trouble
The pace is the rate that you book future dates. It allows you to see in real time if your pricing and positioning work. The first sign of a problem is usually a slowdown.
You should not only compare booking trends to historical data, but also to the market’s movement (e.g. post Covid historical data was irrelevant). If you notice something off in your pace, review it every day. Ask yourself: Is my pricing aligned with the demand? My positioning is it appealing? For answers to these questions, it is important that you examine your segmentation. The segmentation process will allow you to identify any shifts in demand. Then you can examine your pricing and visibility in order to ensure that you are aligned with the changing demand patterns.
Performance: A tangible outcome of your strategy
Pricing, positioning, and pace are the “Three Ps”, which drive commercial strategy for hospitality. The tangible result of your strategy is performance. This should be measured objectively by using both internal benchmarks such as budget goals, forecast accuracy or year-over-year growth, and external references.
These key metrics will help you to understand your performance and monitor it.
- Occupancy rate: Measurs the efficiency with which you are using your inventory.
- RevPAR (Revenue Per Available Room): Measures your ability to generate revenue regardless of occupancy levels.
- Customer Acquisition cost (CAC): Measures how effective your marketing strategies and distribution are at acquiring customers.
The continuous looping of performance data into decision making allows for better segmentation and demand forecasting. It also allows for more accurate rate setting and informed resource allocation.
Performance as a control layer
Performance serves as a control layer. It validates and corrects course for decisions.
A disciplined approach—where you actively manage the Three Ps and regularly review the Fourth—enables your team to create a virtuous cycle:
- Positioning refinements improve perceived value.
- Pricing strategically increases yields while remaining competitive.
- Distribution that is well-paced smooths out demand curves, and encourages early conversion.
- The regular performance review will then show you what is working and what needs to be doubled down on or adjusted.
This cycle maximizes efficiency and adds value to the business, both for the owner through increased profitability and asset appreciation, as well as for guests through a more tailored experience.
Performance is no longer a passive result in today’s dynamic, data-rich environment. It is now an asset that must be harnessed. If a hotel combines the strategic execution of Pricing, Positioning and Pace and reviews Performance with rigor, it can achieve a continuous improvement state and create value.
I think this is the basis for sustainable growth, greater guest loyalty, as well as stronger returns for owners.
Bring the 4Ps to your daily operations
How can you immediately put this virtuous cycle into action? This simple checklist will help you integrate the 4Ps into your hotel management.
- Monitor your Pace daily. Investigate anything that seems out of place.
- Check your position monthly by reviewing guest reviews and OTA visibility.
- Price regularly according to demand signals and competitor behaviour.
- Use your key metrics to measure your performance every month.
I have found that the best results are achieved by a proactive approach and a strategic, structured plan. When is the best time to maximize your revenue? Now is the time.
For Additional Insights, download the Modern Revenue Management Guide.
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LodgIQ™ is a leading AI-enabled revenue management platform for the hospitality industry, transforming data integration and decision-making for hotel commercial teams. Our platform combines Revenue, Sales and Marketing data and provides insights into market trends, consumer behavior, and strategic data-driven decisions. LodgIQ gives you a complete, real-time overview of key metrics. This allows for better room rate adjustments and more effective marketing campaigns. LodgIQ, a tool that is committed to optimizing operations while maximizing revenue in the hospitality industry, is an essential tool. LodgIQ is currently working with more than 550 hotels. Its products combine powerful machine learning and an intuitive and powerful interface to deliver advanced recommendations and actionable analyses. LodgIQ’s headquarters are in Silicon Valley with offices in New York City and Bangalore. Visit our website for more information. https://lodgiq.com/
Alex Woolsey
Vice President for Business Development
LodgIQ™
