The correlation coefficient is a statistical calculation that is used to examine the relationship between two sets of data. The value of the correlation coefficient tells us about the strength and the nature of the relationship. Correlation coefficient values can range between +1.00 to -1.00. It helps to identify
- the competition better
- identify which competitors should be followed closely (closely related, opposite)
- JW Marriott and Oberoi tend to follow similar pricing strategy as your hotel.
- Taj and Park follow opposite pricing strategy as your hotel.
- Casino hotel does not have any relationship with your pricing strategy.
Dynamic Price Index
Since the prices of hotels are dynamic and not static. DPI is an index to measure dynamicity of a particular hotel. It helps to:
- Get to know my competitors dynamic pricing index, so that i can see my relative position among my compsets in terms of DPI.
- Get to know my dynamic price index, if it is too low i should re adjust my prices according to demand to maximize my profit.
Example (higher the value is better)
This will help to
- You will get to know about the possible event which led to such abnormal rise or drop in competitor’s price
- You can then adjust your price accordingly depending on location of your hotel, type of demand, etc. and be in line with the market trend
- Competitor X is pricing 33% more than its median rate on 24 Aug 2018
- Competitor Y is pricing 27% less than its median rate on 29 Aug 2018
- 3 out of 8 competitors are pricing 30% higher than their median rates on 15 Aug 2018
- Helps you to monitor the activity of your competitors
- When this happens then that means demand is high on that particular day. You might want to increase your own room rates to make sure you are not losing out on revenue and profit
- Tells you the exact number of competitors that are being booked across all OTAs on a particular date