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Analysis

What is the price disparity between luxury rooms and suites in London?

The upscale and luxury hotel pricing strategy for rooms and suites differs significantly from one brand to the other: while at some the suite may be considered and extension of the room, at others it constitutes a product in and of its own that does not follow the same pricing rules.

In recent years new upscale and luxury hotels offered their guests suites whose surfaces tend to be expanding. In 2012, it could already be observed that the surface area of suites had increased by 13% over 2009, and this evolution continued to expand. This observation may be explained particularly through the quest to save on expenditures (personnel, buying...), while the larger surface area may be compensated for by higher prices. Thus we may naturally observe a positive correlation between the surface area of and their price per square meter: the bigger the suite : the higher the price per square meter.

This logic partly explains the difference in the brand positioning: on the one hand the positioning of upscale brands that offer suites with surface areas and rates similar to those of "high standard" rooms, on the other more luxurious brands where suites are separate products, much bigger and more furnished and, therefore, much more expensive.

Luxury brands, which post the highest prices for suites, are the ones where the difference in prices for rooms and suites are the highest. More specifically, these refer to the brands Luxury Collection, Four Seasons, Intercontinental and Conrad. For example, the price of a Luxury Collection room represents only 22.1% of that of a "penthouse" suite at the same hotel. For these brands, the suite is considered a product that is truly differentiated from the hotel's other offers.

Inversely, upscale classic brands tend to keep their suites in the continuity of their room supply: they are the same type of product, but slightly superior. The brands that follow this strategy are Thistle, Hotel Indigo, MGallery and Park Plaza. The price of suites at these brands is not more than 1.5 times the price of a room. This strategy also makes it possible to position the room as a loss leader for the more expensive suite.

This analysis was made using a price survey made at the end of 2014 for a reservation on Saturday, January 10, 2015 in the Greater London area. It compares room and suite rates at four- and five-star hotels offering these two types of accommodations.



This analysis was also carried out in Paris, where results were often comparable.

To read the full study about the dynamic pricing practiced in 2015 (with prices per room and suite as referred to in this article, price positioning 2015 per brand and country on each segment, the the scope of variations per brand and per market on a single date with different reservation periods…),

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