Why is Dynamic Pricing important for your hotel?
The Dynamic Pricing, also referred to as roll pricing, demand pricing, or time-based pricing is a pricing strategy in which businesses set flexible prices for products or service based on current market demands. Hotels are able to change prices based on algorithms that take into account competitor pricing, supply and demand, and other external factors in the market. It has become a common practice in hospitality and travel industry. Dynamic pricing helps you gain greater revenue out of your existing property based on effective yield and revenue management.
As a hotelier, you can not increase your revenue on the property once it is sold. Changing the prices as per high season and lowering the price as per low season is not enough to increase the revenue. The hotelier must look at the bigger picture and identify in advance what’s happening in the city, look at future bookings. Adapt your services as per the special occasions, provide the offers and provide value-added services to the customer. Your past knowledge about the time of year is your greatest asset to implement a strategic rate plan!
Look at Room Revenue as well as Occupancy
You should focus on the room revenue rather than focusing on occupancy. It can help to increase your margins at the lower cost. Keep a sharp eye on competitor sell-off. Competitor sell-off can suggest the higher demand for the particular dates or competitors lower prices. However, an advanced strategy of increasing the price for the same dates can bring higher yield for your hotel.
Even if you will not achieve sell out with the higher rates for your rooms but fewer rooms to service, hence reduced costs can also be achieved.
Use Artificial Intelligence for the Dynamic pricing
AI is changing the view in most industries. Same is happening with hospitality. Big OTAs such as Booking.com and Expedia are already using software based on AI. Such software is helping hoteliers set rates based on the booking demand into their property and the demand of their pre-determined competitor set.
Revenue management and dynamic pricing will be everywhere in the matter of no time. Both small to medium providers accommodation provider need to change. Because of this change, we will see a shift away from the traditional fixed ‘one rate all year round’ or ‘high and low’ season rates models.
Our Revenue management software, helps you achieve your desired yield using Dynamic pricing. We also help you connect with all major OTAs through our Channel Manager.