Many industry experts believe that achieving hotel savings by leveraging suppliers is now limited for mature corporate travel programs. So, it makes sense for travel buyers to look for new ways to save on accommodation. One option is dynamic hotel pricing.
In the dynamic hotel pricing model, a hotel and a travel buyer negotiate a discounted rate, which the buyer then can apply to best-available rate. Dynamic hotel pricing is especially attractive to companies with high room volumes in high-demand markets. Such pressure on capacity often results in an unappealing combination of high negotiated rates and limited availability.
Even if this describes your situation, moving your travel program to dynamic hotel pricing is not a simple decision. A recently released paper from business travel consulting firm Advito—Rate Expectations: Is Dynamic Hotel Pricing Coming of Age?—highlights the pros and cons.
Advito advises that travel buyers who want to try dynamic hotel pricing get started with a few smart steps:
Dynamic hotel pricing model: Buyer’s checklist
- Establish how many and which of the group’s properties the contract includes
- Ask to see best-available rates for the previous year
- Establish the average number of rooms available for your chosen category on the nights you are most likely to book, rather than as an annual average
- In the early stages hold regular reviews with your suppliers and check the achieved price vs. your past average daily rate (ADR)
- Audit room availability and ADR
Want more details? Check out Advito’s paper, Rate Expectations: Is Dynamic Hotel Pricing Coming of Age? And ask your account manager what BCD Travel and Advito can do to ensure your program is using the right strategy for hotels.