Quite simply, it leaves them at an unfortunate disadvantage. Hotels that optimize both pricing and inventory (i.e., business mix, stay patterns, strategic overbooking) improve revenue performance over hotels optimizing pricing alone.
A pricing-only approach focuses attention on pricing single arrival dates. This leads to key factors being neglected, including length of stay, derived rates and other rates – such as contracted rates that need their availability managed to prevent overselling cheaper rates.
The best overall revenue optimization is achieved through finely balancing the management of all business – not just the priceable business. A dynamic pricing approach analytically assesses price sensitivity while accounting for season, day-of-week, days-to-arrival and length of stay. Additionally, this approach helps manage rate availability, overbooking and stay patterns to drive the most revenue overall.
An easy way to think about the differences between a dynamic pricing approach and a pricing-only approach is to look at the quality of your revenue. Pricing-only approaches will fill your hotel fast and easy. While it may seem great having those initial bookings, hotels relying solely on pricing-only strategies see the inevitable crash and burn, eventually losing higher paying customers and revenue. Dynamic pricing approaches, on the other hand, use both pricing and availability to fill hotels while providing long-term sustainability for healthy revenue performance and growth.
Not all revenue is the same. For healthy revenue performance, it is critical to use analytically-derived dynamic pricing strategies to fill your hotel with quality business that provides the greatest revenue performance.