"What should I charge for a double in August?" Many hoteliers answer by looking at the neighbours, tweaking last year's rates or following their instinct. Sometimes it works. Often money is left on the table in strong periods and rooms are sold short in weak ones.

Setting room prices at a three-star hotel doesn't need expensive software — it needs a method. Here it is in five steps.

Step 1: know your floor (cost)

First, you need to know what a sold room costs you and what it costs to keep the hotel open. Two numbers:

  • variable cost per occupied room: cleaning, linen, breakfast, supplies, extra energy, commissions;
  • fixed costs to cover in the period (permanent staff, rent or mortgage, basic utilities, maintenance).

Net price should never fall below variable cost, and over the season it must also cover fixed costs. See how to calculate the cost of a room and assess a rate.

Step 2: look at demand

The right price changes with demand. Gather:

  • historical occupancy by day and period;
  • booking pace (pickup) for future dates;
  • events, long weekends, holidays;
  • rising or falling searches and enquiries.

High demand = higher price. Low demand = more accessible price, but be careful not to go too low.

Step 3: compare with the right competitors

Choose 4–6 truly comparable hotels (location, category, amenities, reviews) and watch their prices for the same dates. Not to copy them, but to understand where you stand. See competitor prices: which hotels you should really compare.

Step 4: consider perceived value

Two three-star hotels on the same street can command very different prices in guests' eyes. What counts:

  • review score: the higher it is, the more you can charge;
  • amenities: parking, pool, breakfast, beach;
  • precise location;
  • the quality of photos and presentation online.

If your score is 9.0 and your neighbours' is 8.0, there's no reason to have the same price.

Step 5: build your rate structure

  • a base rate (BAR, best available rate) for each period, varying with demand;
  • room types with consistent price differences (e.g. +15% for a balcony, +25% for family rooms);
  • derived rates: non-refundable (−5/−10%), book early, long stay;
  • rules: minimum stay in strong periods, cancellation terms;
  • clear supplements (extra bed, pets, half board).

From fixed rate sheets to prices that move

The old seasonal rate sheet (low, mid, high) is a starting point, but today most hotels get better results by updating prices based on how bookings are going. You don't need to change them hourly: even a weekly review makes a difference. See fixed rate sheet or dynamic pricing: what's best for a small hotel?.

The most common mistakes

  • the same prices all year, or nearly;
  • prices set by copying the cheapest competitor;
  • never raising prices, even when the hotel is full months ahead;
  • cutting prices in panic when bookings slow;
  • forgetting OTA commissions when calculating net revenue.

Frequently asked questions

How often should I review prices?

At least weekly for periods on sale, more often near events or high season.

Do I need revenue management software?

It can help, especially with many rooms or channels. But for a small hotel, a clear method and up-to-date data already do much of the work.

Must my website price match the OTAs?

It's not mandatory — in the EU, Booking.com can't impose rate parity. Many hotels offer better conditions on their own website. See how to make booking direct worthwhile without always lowering the price.

Want a pricing strategy for your hotel?

Pricing is one of AI Hotel Agency's services, born at our own hotels in Rimini. With our free marketing audit we analyse your hotel's prices, demand and competition and show you where you're leaving margin on the table.