![]() One of the main points for advising travel managers to approach dynamic pricing with caution was that many hotels did not have the knowledge, skills and technical infrastructure to properly manage rates and availability ‘ Although dynamic room pricing is said to mimic the sophisticated revenue management techniques used by airlines, few hotels, however, have access to the kind of revenue management technology employed in air pricing, as the investment is often too high for properties that function as individual cost centers.’ CWT (Carlson Wagonlit Travel), published a brief back in July of 2008 (CWTVISION) stating ‘Overall resistance to dynamic pricing agreements stems from the fact that hotels have been slow to provide concrete evidence of fair or added value.’ Back then they advised travel buyers to continue to negotiate flat rates wherever possible. Another huge time and cost saver.ĭespite these advantages, travel buyers seem to prefer flat-rate contracts, especially when we are talking about high production volumes with and individual hotel. Rates are automatically adjusted according to economic trends. No more need for re-negotiation like during the 2009 crisis.Ability to negotiate multiple year contracts.Last room availability becomes the new standard.Increased availability and choice as no more black-out dates would apply and discount will be simply applied to all room types.Guaranteed lower rate than the public BAR (best available rate) and possibly even lower than negotiated flat rates on distressed days.It will give travel managers more time to add greater choice in hotel product. Time and cost savings due to easier RFP process and faster negotiations. ![]() The corporate rates, and all other rate planes, basically adjust as yield is applied (up or down) to the pricing of the hotel.īelow a simple graph to visualize the mechanics of dynamic pricing.įor corporate clients there are important upsides as well: Dynamic pricing simply means that you give your corporate clients a percentage discount of your BAR (best available rate) instead of a fixed (or seasonal) contracted rate. What are the up and downsides for all parties involved. So it seems our earlier articles and discussions on rate parity and rate integrity are at the core of this dynamic pricing r-evolution.īefore we go any further with recent news, let’s look at the concept of dynamic pricing a bit closer. Hotels seem to have too much of a challenge controlling rates over the various distribution channels. The biggest challenge in gaining acceptance was accredited to the lack of transparency in hotel pricing. The dynamic pricing model has long been accepted on the airline side, it seems in the hotel industry we are still behind. It featured a survey of 221 travel buyers of which two-thirds said they did not use a dynamic pricing system. ![]() On September 6, in a publication of Business Travel News, I came across and article titled ‘ Dynamic Hotel Pricing Making Limited Inroads among Buyers’. What does the travel manager community have to say about it? Ok, so that is the hotel side of the story. If you can forecast your results accurately, you can show corporate travel managers what they will be paying, essentially allowing them to budget travel expenses more accurately. The key to achieve this, as Stephen Powell, SVP of worldwide sales, put it, if good forecasting. Now they want move away from the hybrid model of offering both dynamic pricing in secondary and tertiary markets and fixed pricing in key markets and offer complete dynamic pricing to all corporate accounts worldwide. Upon inviting corporate clients in the APAC region to adopt the dynamic pricing model, over 1000 accounts signed up. They implemented the strategy worldwide this spring, but have met some resistance. Just over one month ago IHG announced at the National Business Travel Association convention that following the success of a test with dynamic pricing in Asia-Pacific over the summer, it now seeks global adoption of dynamic pricing. Even though dynamic pricing was first introduced in the hotel industry by chains like Marriott, Hilton and InterContinental in the early 2000’s, it seems we are only now starting to get onto the barricades in this hotel pricing revolution.
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