In the hotel industry, revenue managers and hoteliers know how quickly markets can fluctuate and how quickly travel demand can change. Hotels must be able to adjust revenue strategies quickly to capture as much business as possible when demand changes, even when overall travel to the area is lighter. Hotel revenue managers have been able to stay afloat during uncertain economic times by implementing dynamic pricing strategies.
Hotel dynamic pricing is explained in our comprehensive guide for hoteliers. Whatever your hotelier needs, we’ve got you covered – whether you’re just starting with dynamic pricing or brushing up on the tools available today. Let’s take a deep dive into hotel dynamic pricing: what it is, how it works, and how it can benefit you.
What is dynamic pricing and how does it work in the hotel industry?
In dynamic pricing, hotel room rates are frequently adjusted according to supply and demand. With dynamic pricing, the best rates are projected for the right season and the right guest at the right time.
The goal of dynamic pricing is to monitor your target audience, their booking patterns, their length of stay, their preferences, as well as your competitors’ pricing structures.
Advantages of Dynamic Pricing
- COVID-19 heavily impacted 90% of hoteliers
- To reduce cost burdens during COVID-19, 75% of these hotels required an automated solution that provides dynamic rates.
Dynamic rate strategy is more important than ever in hotels right now to ensure you’re on the right track for recovery. You can adopt dynamic pricing as a revenue management strategy by considering these three benefits.
#1: 15-25% increase in revenue is possible
By using dynamic pricing, you can increase room revenue, ADR (average daily rate) and RevPAR (revenue per available room) based on factors such as competitive pricing, seasonality, demand forecasts, etc. The average revenue increase for PricePoint’s clients is over 19% per hotel and occupancy by 13% (on average, according to our pre-pandemic data).
Regardless of the season, this pricing strategy shows you how to sell your room at the best price to generate the most sales. Additionally, it tracks competitor pricing to match the changing market trends in minutes.
#2: Help reach a broader audience
Your room rates can be updated in real-time to reach a much wider audience when you use dynamic pricing in the hotel industry. Based on your guests’ booking patterns and preferences, as well as domestic and international demand, your room rates adjust according to what they are willing to pay.
#3: Price-wise, it’s right on time
By using dynamic pricing, you can achieve a better balance between underpricing and overpricing in the hotel industry, since you will never charge too low or too high a price that no one will pay for your rooms.
With dynamic pricing, you can increase the prices based on the higher guests’ willingness to pay when demand is high. Dynamic pricing, on the other hand, helps fill up occupancy when demand is low by reducing prices.
In Conclusion
An AI automated hotel pricing software will automatically respond to changing hotel pricing trends if you are not sure or want to react quickly. RMS PricePoint can also identify which individual days require further price increases and react more quickly for a more targeted approach. It will also adjust your room prices early on the days when you are not selling at the higher rates.
We’d love to show you what we can do! Request a demo today!