Dynamic pricing is a strategy in which market prices change in reaction to real-time supply and demand. While it is not a brand new concept, hotels have been using it for many years now. Dynamic pricing lets hotels remain competitive with a 24/7 price monitoring, boosting profits of 25% on the average. It gives hoteliers flexibility by allowing them to decrease prices during slow seasons and to increase prices in other to generate more profit when the hospitality business is thriving. This article discusses the benefits of dynamic pricing in the hospitality industry. It will highlight ways in which hotel owners can gain flexibility, remain competitive while monitoring competition. Below are several benefits of dynamic pricing.
Benefits of dynamic pricing in the hospitality industry
It gives you more control over your pricing trend
As a business owner dynamic pricing will give you access to real-time price strategies across numerous strategies in the hotel industry. You will have access to the price changes of your competitors, and a clearer idea of the demands of your patrons. This will help you maximize your revenues and fix the best prices for different services.
It provides you with flexibility without compromising the value of your brand
You can protect, and strengthen, your brand value with dynamic pricing. You can set a price that reflects your brand value and gives you the flexibility to stay profitable. Dynamic pricing can also be used to launch promotional and seasonal offers while remaining profitable.
Dynamic pricing saves you money in the long run
The concept of dynamic pricing is based on real-time changes in demand and supply. It accounts for price fluctuations and monitors competitor activity as well as individual product supply and demand. As a result, it gives hotel owners the right data that they can use to set optimal service prices and remain profitable despite price fluctuations. This saves you money in the long run since the calculations are based on web software and applications (you have no need to spend money on administrative activities and manual calculations).
Dynamic pricing can be managed efficiently using the right service
Monitoring numerous products and real-time demand and supply trends is a very complex and challenging task. However, it can be managed effectively using the right software. For example, the OTAInsight is designed to calculate, manage, and monitor dynamic pricing strategy based on real-time demand and supply trends. It automates the process and provides you with accurate data which is used setting optimal product prices.
It is not free from error, but you will still be in control
Just like any other technology forecast, there will always be a potential for error in dynamic pricing algorithms. However, even if the suggested pricing is inaccurate, it is still just a proposal. You will still be in control, and you will be able to review the changes in price that your application recommends.
As the hotel market becomes increasingly competitive, business owners need to be able to monitor competition and the hotel market as a whole. Pricing intelligence software along with dynamic pricing allows for this and incorporates other factors like conversion rates and the level of demand.