How to Use Rate Mixing to Maximize Your Revenue

Even though advanced rate mixing is a practice already widely adopted in the hotel industry, only a few of the big hostel chains have joined in on the fun. Why is it important? Implementing dynamic rates increases your rates yield (revenue). Rate mixing gives you better chances of being booked by customers who are looking at your offers because they always see the best combination of value-for-money. Plus, you won’t need to constantly adjust your rates every time demand changes or seasons and events are coming up.

How does Rate Mixing work?

Rate mixing is a simple concept. You combine two or more different rates within the same reservation option to deliver the guest a desirable offer. Even if you don’t change your rates often, you still do rate mixing one way or another. For a detailed explanation on how rate mixing works in general, check out this step-by-step guide to start maximizing revenue right away.

The Step-by-Step Guide to Rate Mixing

Here is an overview of all the conditions you can use to set your rate plans (under “Rate Plans → Edit”). We’ll will take you through them and get you going on revenue optimization in no time. Below are some examples on how you can use rate mixing on Dorms.com to increase your yield rates.

Seasonal Rates

The most common scenario is the transition from one rate into another at a certain time of year. Let’s say you charge $34 per bed during peak season (summer) and $28 per bed off-season (winter). Most hostels already do this and it is still fairly easy to adjust this manually.

Weekend Rates

Another simple scenario that most hostels use. You charge a higher price on weekends than on week nights. Typically, seasonal rates and weekend rates are programmed into what is called the Best Available Rate (BAR), which is a flexible daily rate in which promotions are ran.

Discounts for Advance Payment

Once you’ve set up your conditions, you can decide whether you want to offer refundable or only 100% prepaid bookings, and determine a price increase or decrease from your standard rate. You can also select which services you want to include under each specific condition.

In this example, guests booking for a night on a weekend would pay 20% more than the standard rack rate (blue box on the right). Plus, to give guests an incentive to pay the booking in advance (remember: guaranteed revenue!) we only increased the weekend rate by 15% and offer free breakfast if they settle the payment in advance with non-refundable bookings (purple box on the left).

Adjust Rates based on Length of Stay 

To offer different rates for guests who book your property for a certain number of nights, use the “length of stay” condition. In our example, guests who stay a minimum of 5 nights are shown a rate lower than our standard rate - that way they get a discount for booking more nights (here: for up to 12 nights).

Note that this is different from setting minimum and maximum number of nights for your property. This only changes the rates shown for certain length of stays.

Adjust Rates for Advanced Bookings (Lead Time)

Now, let’s add an advance purchase rate to the mix. Say that you set a discount for people who book more than 35 days in advance. The booking window (the time the rate discount appears & disappears) opens in the middle of their search date. Dorms.com automatically includes it, and combines it with the other rates to give the user the best deal.

In our example, we set our Lead Time to start 6 weeks in advance and end 5 weeks before arrival date. Guests who book 5-6 weeks before the arrival date get a discount on the standard rate.

There are also other restrictions you can set, such as decreasing rates when more beds are selected by a guest. Or how about basing it on the amount of beds you have left to maximize your occupancy?

Optimizing for Bookings: Prioritize Rate Plans

This is all quite simple if you look at each condition by itself. Now here’s where it gets interesting: several conditions can apply to the same rooms at the same time. You can have a parent rate (let’s say, our weekend rate) and add a child rate to it (someone books a weekend 6 weeks before the arrival date). Your weekend rate will be the parent, and your lead time will be the child rate.

With so many rates, how do you know which ones apply? What if you have set contradicting rates? Here’s your solution. You can select certain rate plans and give them priority over others, meaning that if your “weekend”-plan and your “number of beds available”-plan overlap, you choose which one is shown to the guest first. Or you let Dorms.com optimize the priorities for you - we’ve developed an intelligent algorithm that shows the most attractive rates to guests comparing hostels.

We’d love to help you if you have more questions on how to set up your advanced rate plans. Drop us a line at helpdesk@dorms.com and let us know what you’d like to find out more about. We're also happy to see your comments in case there are more features you’d like to see implemented!

Ready to start maximizing your revenue with rate mixing?

Go to https://www.dorms.com/hostel-signup to sign up now

Looking for more information?

Email us at helpdesk@Dorms.com and our dedicated team will get back to you within a few hours.