A GROWING PRICING STRATEGY
Dynamic pricing, a process in which contracted rates fluctuate, scares travel buyers because it's new, say spokespeople for two major hotel corporations. And while dynamic pricing is a growing trend in hotel sales, it doesn't mean travel buyers will pay more than they do under the traditional fixed-rate model. According to Denise Lodrige-Kover, vice president of business travel sales and strategic partnership accounts for Hilton Hotel Corp., dynamic pricing cuts request for proposal (RFP) time dramatically and doesn't mean rates higher than the overall increases of five to six percent the hotel industry expects this year.
The reason travel buyers balk at dynamic pricing is there's no standard, she says. “Our customers believe that in a fixed-rate environment, they're looking at apples to apples,” she says. “Under dynamic pricing, rates change on a daily basis for some programs. Hilton's goal is to find that percentage discount off our BAR (best available rate) that will be break-even.”
Greg Land, senior vice president, global sales, Wyndham Hotel Group, says dynamic pricing “gives us more flexibility in being able to work with our inventory bucket and not having a static price locked in place.”
Both say travel managers already deal with dynamic pricing environments in most of their purchases. What's new is dealing with it in arrangements for corporate rates in the high-destination, top-volume cities where rates are already high.
“I cannot control my BAR pricing in a hotel or manage it based on one, two or three companies,” Lordrige-Kover says.
“In working with our high-volume accounts, especially corporate accounts, we know it's going to be a difficult transition,” says Land. “Everybody's moving to dynamic pricing and we see some competitors going more aggressively in that direction.”
“Anytime you make a change to your travel program you have to communicate that change to your travelers,” Lodrige-Kover says.
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