Hotel Revenue Glossary · Pricing

Penetration Pricing

A strategy of entering a market or launching a new property with deliberately low rates to build market share, generate reviews, and establish brand awareness quickly. Rates are gradually increased as the property gains traction and reputation.

Why it matters: New hotels and recently renovated properties often use penetration pricing to overcome the cold-start problem. The risk is setting rate expectations too low, making it difficult to raise prices later. A clear timeline for rate escalation is essential.

All glossary terms BAR (Best Available Rate) Rate Shopping MPI (Market Penetration Index)