coins being stacked up to reflect how an open pricing strategy can revive your hotel revenue management

Open pricing is a hotel pricing and room distribution strategy that sells rooms at a rate that will both benefit the customer and provide the highest possible profit for the hotel at the same time. Properties that utilise open pricing strategies allow rates for all room types, dates, and across all hotel distribution channels to be optimised independently of one another with the primary goal of maximising revenue.

NB: This is an article from Cvent

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Rooms are not blocked or closed off by booking restrictions commonly in place with other popular pricing strategies, such as best available rate (BAR) pricing or room type-focused models.

How does open pricing work?

Hotels turn to open pricing to offer room rates that customers find attractive, regardless of seasonal shifts in occupancy, area events, or other circumstances. Properties that follow an open pricing revenue management strategy utilise a range of incremental price points that follow a demand curve. Instead of offering room rates at a designated discount or percentage off of hotel rack rates, open pricing allows the revenue management system to optimise prices based on customer behaviour and current booking patterns.

Open pricing vs. BAR pricing

Best available rate pricing, also known as “fixed-tier” pricing, is a fixed pricing system in which each available room type sells at an established price related to a predetermined “best available rate.” Open pricing offers more flexibility than the popular BAR strategy used by most hotels.

The lowest rate offered for a specific room type is the hotel’s best available rate. It is the lowest price that potential guests will see published on any channel without applying member rewards, group codes, discount codes, or corporate rate information. The rate for each available room type is set based on the best available rate, with prices typically increasing as the room type upgrades.

Is open pricing the same as dynamic pricing?

Hotels that utilise dynamic pricing strategies allow prices to change and optimise based on demand and shifting market conditions. Open pricing is a different strategy than BAR pricing altogether, open pricing is a phase of dynamic hotel pricing.

The first phase occurs when rate ranges are set based on historical data, current demand data, and essential environmental characteristics, such as the hotel’s size, location, and room types. In the second phase of dynamic pricing, rate shops are completed to identify and analyse competitor rates.

The third phase, open pricing, is an evolution of dynamic pricing made possible by advances in hotel technology. During the open pricing phase, a cloud-based revenue management system uses real-time data to make decisions, set room rates, and optimise pricing based on guest demand and changes in the market. This cross-elasticity price optimisation results in precise inventory allocations and brings each room rate to the highest price customers in different market segments are willing to pay.

The advantages of open pricing

Using an open pricing strategy allows hoteliers and revenue managers to spend less time loading rates and more time uncovering new business. The flexibility, independence, and revenue-capturing potential of open pricing enable revenue managers to step away from rate monitoring, trusting that the RMS is making intelligent decisions based on real-time, real-world data.

Read the full article at Cvent