One of the most challenging and important aspects in revenue management is providing the right price for the right customer at the right time. It can be a struggle to mix together pricing strategies that won’t fall flat in a complex and time-consuming process.
Over the years, hotels have been steadily moving away from fixed strategies toward dynamic strategies. Dynamic pricing is the continual adjustment of prices based on the value of demand for the remaining available capacity. There are a lot of variables that contribute to successful dynamic pricing, and the ultimate goal is to determine the highest price that a guest is willing to pay to stay at your hotel.
Dynamic strategies don’t focus on only setting prices. Rather, successful dynamic pricing optimizes a hotel’s demand and revenue to maximize total revenue performance. These are the two crucial aspects for hotels to balance because the combination of the two will have the greatest impact on overall revenue performance.
This is also where analytics of your revenue management technology become a critical component in organizing and deciphering data to employ an optimal dynamic strategy. Dynamic pricing approaches use three main analytical components that complement one another:
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