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How to capture more revenue with automated pricing

This guide – written explicitly for the independent hotelier – will explain the concept, strategies and benefits of automated hotel pricing. We’ll show you why automated pricing is the secret to capturing more bookings, higher room rates, and more revenue every day, even while you sleep. That is if you have time for sleep.


How to capture more Revenue with Automated Pricing Book Cover


Dynamic Pricing: Aligning Rates with Market Demand

As consumers, we know that prices play a pivotal role in our decision-making. For travelers, in fact, pricing is second only to location when choosing accommodation, according to a recent survey from STR.

To ensure they’re getting the best price, travelers spend hours comparing rates across hotels. And they have all sorts of platforms for doing so, from online travel agencies (OTAs) like and Expedia to Google, Tripadvisor, and hotel websites.

If your property’s rates are significantly higher on these platforms than comparable properties around you, travelers probably won’t book it. On the other hand, if your rates are significantly lower, they are more likely to choose it. In either scenario, you are missing out on revenue opportunities.

To prevent those lost opportunities, hotels practice revenue management. This is the process of managing room availability, pricing, and distribution to maximize revenue and profitability. A key part of revenue management is pricing

Pricing Today: A Moving Target

Illustration of a hand holding a mobile phone, with a speech bubble above it.

In the good old days, room pricing used to be simple. Hotels set rates by season and rarely changed them unless the World Cup or Superbowl was coming to town. As a result, however, hotels were often underpriced when travelers were willing to pay more and overpriced when travelers were more price sensitive.

Today, most hotels take a more dynamic approach to pricing. This means adjusting rates frequently in response to shifts in demand for rooms. When demand for hotel rooms increases, such as during weekends, holidays, and special events, prices go up to capture a higher average rate. When demand decreases, such as during winter season and on shoulder nights, prices go down to attract more bookings.

Dynamic pricing helps hotels increase occupancy, average daily rate (ADR), and revenue. And because many hotel costs are fixed, a higher proportion of the incremental revenue goes straight to the bottom line.

But dynamic pricing is a complex, time-consuming undertaking. It requires closely monitoring competitor rates, market conditions, and occupancy levels and regularly adjusting prices to meet changing conditions, sometimes as often as several times a day

Owners and operators of small, independent hotels – and by small hotels we mean any property with 5 to 100 rooms – simply don’t have the time required. They’re too busy taking care of guests, multitasking, and performing the myriad of other duties that come with operating a small property. And this puts them at a serious disadvantage.

Using Dynamic Pricing to Capture Desired Bookings

Let’s look at an example. Taylor Swift is a force to be reckoned with, not just in the music industry but also in the hospitality industry. This summer, the so-called “Taylor Swift Impact” brought over $208 million in additional revenue to U.S. hotels. And the Eras tour is now heading to Latin America, Asia, and Europe.

Now imagine that a Taylor Swift concert is announced in your city, resulting in a spike in demand from all the Swifties swarming in for the big event. But you’re too busy making beds and bussing tables due to staffing shortages to hear the news. By the time you raise your rates, your property is already sold out with lower-rated bookings.

Now imagine that the concert is canceled, resulting in a flurry of canceled bookings. Hotels across the city drop their rates to try to capture business from other sources, but you decide to hold your rates, banking on a busy weekend nonetheless. While bookings do pick up, most of them go to your lowerrated competitors, and you end with a lot of empty rooms – and no Taylor Swift.

It’s a fast-paced world out there. A concert is just one of many events that affect demand for rooms. Only by responding quickly to changing conditions, with market data to back your decisions, will you be able to reach your true revenue potential.

“Dynamic pricing is crucial for one’s positioning in the market. The booking behavior of guests is changing more and more and is becoming more spontaneous. As a hotel, we have to react to this, and the best way to do this is to adjust our prices to demand.”

– Anne Klaus, Head of Reception,
Hotel Rössli Gourmet & Spa, Switzerland