A small messy hotel room with views of the mountains. Picture: Pexels
Dynamic pricing has revolutionized the way hotels set their rates, with costs fluctuating based on factors like demand, timing of bookings and even local events.
This unpredictability can cause significant disparities in pricing so here’s how company’s can work around it.
According to Carmen Hidalgo, Customer Success Manager, Corporate Traveller, dynamic pricing has taken the hotel industry by storm, meaning the cost of your stay can fluctuate wildly based on demand, time of booking and even the weather.
She said that, unlike traditional set-it-and-forget-it corporate rates, dynamic pricing allowed hotels to tweak room rates in real-time as demand ebbed and flowed. The result is what was once an R1 200 a night corporate negotiated rate suddenly surging to R3 000 or more, if occupancy peaks during a busy period.
The business travel expert said that this allowed them to cash in on peak demand and maximise revenue, falling in lockstep with the rest of the travel industry’s pricing philosophy.
“Hotels realise they left money on the table with those old static rates. If they’re running at 90% occupancy, why not charge premium rates? After years of stagnant pricing, they’re making up for lost time,” she said.
The travel expert shared how companies could prevent being caught up in dynamic pricing.
The pricing volatility crisis for corporates
Many major chains are now leading the dynamic pricing charge, though their approaches can vary.
Some offer a hybrid model with static rates during slower periods, then flip the switch to dynamic pricing once occupancy crosses a certain threshold. Others have fully dynamic rates year-round that fluidly adjust based on bookings.
“With room rates now able to fluctuate wildly based on a property’s occupancy levels, we’re advising our clients to urge employees to book further in advance whenever possible,” explained Hidalgo.
She said that waiting until the last minute could mean getting socked with incredibly high peak pricing that blew out travel budgets.
Anchoring against pricing storms
The business travel expert highlighted that the pricing roller-coaster created by these dynamic models made negotiating corporate travel agreements crucial as a safeguarding measure.
She said that with a panoramic view into future marketplace shifts, travel management companies can forge deals that bundle in amenity packages, favourable rate ceilings, and more predictable pricing bands for clients.
Hidalgo added that they could also compare their pre-negotiated rates against each corporate client’s existing agreements and the lowest hotel rate is deployed, ensuring clients received the absolute best pricing; however, the real magic happened when amenity bundles were customised.
“We’re negotiating creative corporate agreements that bundle valuable add-ons like free breakfast, parking and other extras to help offset those higher room rates when unavoidable.
“Or we secure dynamic pricing models with advantageous rate capping for our clients during those peak madness periods. Our bulk buying power gives us a huge leg up to negotiate or offer our clients pricing packages that corporations could never get directly,” she said.