The Retail Psychology of Branded Prices

It keeps airlines in the black & some hotels in Europe follow this concept however does this work? and how beneficial is it towards maximising revenue?

Branded fares apply retail psychology by assigning a simple price point to a better bundle of amenities. For $34 more, the consumer would receive a checked bag, priority boarding, and more flexibility in the airline industry for example.

Branded fares may share their origin with the successful “meal deal” methods used by fast food restaurants all over the world. Consumers are comfortable and respond well to offers that bundle all the usual amenities in a single price.

Positive results have also been disclosed by Air Canada. While the carrier uses a different revenue management approach, 46 percent of domestic consumers picked a fare bundle above the lowest price fare. Nearly half chose more comfort and convenience over the cheapest price.

Consumers may upgrade to higher-priced bundles that offer more perks.

This is proving that when properly merchandised this approach can fetch a premium.

Where as an airline is essential for a guest to get to a destination and they need to take baggage a hotel is not an essential vehicle to get to a destination and there are many more competitors. However ancillary revenue / upselling still has a very valid place in the hotel industry and can make significant gains in top line revenue.

Guests already do expect to pay for laundry and spa etc however bundling packages that include perhaps breakfast, wifi, view upgrades etc can add significant revenue.

A recent survey revealed the most attractive extra features to hotel guests is breakfast, wifi and upgrades.

Although we are trying to offer value to encourage direct bookings and save on commissions beware you don’t lose out on potential ancillary revenue as well.

Fuller Service hotels are argues to have the best ancillary or a la carte platform however budget properties such as and have launched their websites with this concept offering value add ons for additional fees for products such as Breakfast, Air conditioning, Towels, hairdryers, Internet, Entertainment packages.

Perhaps some of these “standard inclusions” are acceptable to the customer for budget properties as their expectations are a lot lower to start with.

According to Marriott International the top additional revenue earners are breakfast, internet and guest laundry.

Remember that wifi charges today replace the revenue loses eroded by mobile telephones.


“The presence of a spa is now a major influence for almost half of international hotel-going consumers according to a new global report from Hilton. The survey of 6,000 respondents throughout the UK, the US, Australia and China found that 45% of consumers would be more likely to book a spa with a hotel…some 69% internationally said they would be at least “somewhat likely to use the spa if one was offered at their hotel”.


Targeted merchandise

AIRLINES can realise significant increases to ancillary revenues by personalising & tailoring bundled offerings to customers, according to new merchandising research. A study into the add-on product, commissioned by Amadeus and conducted by Frost & Sullivan found targeted product bundles can potentially increase revenues by as much as $51 per passenger. The report suggested airlines better use customer data already collected, such as mobile app and social media behaviour as well as inflight internet session histories, travel history and online purchase records to create “a single unified customer profile”. – June 2014

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