According to some, the concept of the Best Available Rate (BAR) is a thing of the past.
NB: This is an article by Blake Madril, Revenue Technology Strategist at IDeaS
Yet, in nearly every hotel I encounter, they still offer a best available rate—especially global chains. Has BAR gone the way of the “rack rate” or have they both slowly evolved from a one-dimensional element of a pricing strategy into a multifaceted component of superior business optimization? How exactly has Best Available Rate been affected by the changing industry and is it time for its moment of silence?
One rate to rule them all
Once upon a time, BAR and all the rates derived from BAR, were created as a method to establish a hierarchy for various rate plans, links, discounts, etc. This proved efficient in a manual environment—especially as hotels moved from analog to digital during the advent of OTAs. By managing only one rate, all other rates adjusted accordingly.
It was a breeze to adjust rates that were linked to BAR in a time when, thanks to the internet, hotels went from three rate plans for the leisure traveler to three hundred rate plans, practically overnight. Industry insiders called this “dynamic pricing”, meaning discounts adjusted as BAR adjusted. But the percentage they adjusted by was by no means “dynamic”, and in most cases, it was fixed.
Fast forward to today’s hyper-competitive landscape where OTAs, alternative lodging and hotels compete for the same consumer. Hotels no longer compete with just the building next door, they are competing with thousands of products online, all priced differently and all claiming to offer the best price. A digital Times Square if you will, all vying for the attention of the potential guest.
Not dead, but not the same
BAR is often configured using multiple rate levels. Hotels select their most common BAR price point and add tier increments of 10, 20 or 30 dollars above and below that common price point to flex pricing when demand dictates.
The new BAR configuration has evolved and hotels no longer need to decide which price points to pick. Analytically-driven revenue technology will select any price point available within a continuous spectrum of rate options. This provides the greatest opportunity to capture demand at each interval of price sensitivity.
In addition to continuous pricing of BAR, true revenue strategy comes with understanding the impact a set price has on other business. This means if a hotel raises their Best Available Rate, what effect will that have on other business that may or may not be linked to BAR?
Being able to independently price or flex discounts is important, but if discounts can be flexed anywhere from 0% to 30% without consideration for how that impacts other rates, how valuable is it? Will offering a 30% discount cannibalize other rate plans? Is offering a 2% discount simply a way to deter consumers from booking rather than truly yielding the rate? These are concerns that rules-based revenue technology is unable to address during optimization.
A modern BAR for a modern world
BAR is no longer a one-dimensional element. With cutting-edge technology, it can be configured to price by day, length of stay, using rate tiers or a continuous spectrum for all available room types. These options give BAR the ability to meet the needs of each individual hotel, and their existing technology, to better personalize an offer for the guest.
To put it simply, BAR is not dead. It’s just closing one chapter and opening another. It’s finally becoming a dynamic, demand-based price, which understands the relationships that exist between other business to set the optimal price point for all segments and room types.
However dynamic BAR pricing becomes, hotels still need an unqualified rate that helps define their pricing structure and revenue strategy. Ignoring it all together, or pretending it’s dead, is not the right approach to take. Embrace the evolving flexibility of BAR pricing and don’t settle for technology that does anything less.
