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Dynamic Pricing Strategy In Hotels: Benefits & How To Do

If you are a hotel business owner who wants to maximize their profit within a short span of time by strategically planning their pricing strategy, then you have landed on the right page.

If you are still using the traditional seasonal room rates, you are already losing out so much profit that you can easily accomplish. hotel

Dynamic pricing strategies in the hotel industry are essential to help you not only help you survive but get ahead of the competition.

Because updating your hotel room pricing strategy as per the changing real-time market conditions is the need of the hour today. And, learning how to set dynamic pricing in your hotel enables you to do that.

So, the question arises – how do you maximize revenue in changing market conditions and with fluctuating demand?

The answer to the same would-be dynamic pricing strategy in hotels.

In this article, we will discuss everything about dynamic pricing, different types of pricing in the hotel, its benefits, and how to implement it.

What is Dynamic Pricing?

Starting off with the definition of dynamic pricing is a strategic rate that varies as per the fluctuating real-time demand in the market.

When the demand is high, a hotel can use a dynamic pricing strategy to charge higher rates. On the contrary, when demand slows down, rates will drop in an effort to capture and increase the higher occupancy rate.

It responds well to the increasing and decreasing demand as a given check-in date approaches and updates the rate as per remaining inventory and availability.

One such example of dynamic pricing is if your inventory is close to selling out but the demand remains high, your rates would get much higher to capture the most revenue possible.

To get more information about hotel dynamic pricing watch this video:

Dynamic pricing for hotels

Know The Different Types Of Pricing in Hotel

There are different types of pricing in hotels that you can adhere to in order to maximize your revenue generation and helps you set an infallible dynamic pricing strategy for your hotel.

A few of them are listed below –

1. Competitor-Based

A competitor-based pricing strategy understands the market trends by looking at the competition.

Understanding the rates of the competitors provides powerful insights and ideas about how you can improve your pricing strategy.

Hotel competitor analysis allows you to get an understanding of how your competitors are setting their rates for each room category.

Also, you will know when they are increasing or decreasing their room rates which further helps you understand the market demand effectively.

Through this method, you can compare your rates with your competitors to understand what customers are already paying.

2. Forecasting-Based

Forecasting-based pricing strategy is to set prices based on what you expect the demand to be.

This expectation generally arises from understanding hotel occupancy data, revenue, cost per room, the average rate per room for the last couple of months, and the demand patterns in previous months.

It is a prediction based on historical pricing data and demands to accordingly modify hotel room prices. For creating forecasting-based pricing strategies, you must learn about using hotel data intelligence to increase your hotel bookings.

3. Occupancy-Based

Dynamic pricing is an effective strategy that allows hotel owners to drastically increase their revenue.

Thus, another example of dynamic pricing can be generated through an occupancy-based pricing strategy.

It works on the simple principle of demand and supply.

When the demand is higher with a fixed supply, you increase your room rates.

On the contrary, in low season to ensure better supply in low demand, you must charge lower to increase hotel occupancy rates.  

4. Cross-Selling

Cross-selling is a useful strategy where you get to encourage customers to book additional services once the hotel booking is made.

This might include airport transfer services, spa services, local area tours, and other such amenities. It helps hoteliers in better hotel revenue management.

Dynamic Pricing Algorithm That You Need to Focus On

There are different Dynamic Pricing Algorithms that you need to focus on which can effectively contribute to making your hotel price positioning strategy a success. These factors are –

1. Occupancy Demand

Dynamic pricing must work upon the occupancy demand of the rooms as it is a key factor that decides a suitable and fair rate for your customers.

2. Guest Booking Patterns

Another algorithm that you must focus on while deciding your dynamic pricing is guest booking patterns.

How frequently and for how long guests book a hotel room is also a crucial determinant while setting dynamic pricing.

3. The Average Length of Stay

The average length of stay of a particular guest will help you to understand a suitable pricing strategy for them. I

f the duration of the stay is quite long, you might want to offer some discounts to encourage more bookings.

4. Different Market Segments

Different market segments hold different types of customers and multiple budget segments.

A premium market segment often has more spending capacity and can pay higher tariffs for a particular hotel room.

On the contrary with a budgeted segment, you need to adjust your dynamic pricing strategy as per the spending capacity of the customers.

5. Day Patterns

You might want to take a notice of all the days on which you get maximum booking requests.

Understanding such day-of-week patterns and frequently raising the pricing on those days of the week will help you generate more profit.

Such days might be weekends or any other midday as per the locality of your hotel.

Benefits Of Implementing Dynamic Pricing Strategy In The Hospitality Industry?

Hoteliers can take advantage of a dynamic pricing strategy in multiple ways. The benefits of implementing dynamic pricing strategies in the hospitality industry are as follows –

1. Helps You Sell Rooms

A dynamic pricing model helps you to sell rooms easily even when the demand goes down in your area.

Using a variable rate to attract and lure customers provides you the flexibility to keep your rooms booked.

Read: The Definition Of Variable Pricing

2. Boost Hotel Occupancy Rate

A hotel with a dynamic pricing model can boost its hotel occupancy rate to a much higher level.

The rate you charge per hotel room in an effort to sell as many rooms as possible will determine your occupancy rate.

Thus, a fair price must be charged as per the demand and market conditions.

3. Maximizes Profits

Another benefit of implementing a dynamic pricing strategy in the hotel industry is that it maximizes your profit.

Ensuring that you get the most out of a room, generates higher revenue than possible in a particular scenario.

4. Customer Loyalty  

It provides a sweet spot between charging enough so that you can make money while charging a fair price so you don’t lose customers to the competition.

It helps you to own customer loyalty while charging a decent amount that they are willing to pay.

Read: Benefits Of Yield Management To Increase Customer’s Loyalty To Your Hotel

How To Implement A Dynamic Pricing Strategy In Your Hotel?

To implement a dynamic pricing strategy in your hotel the main focus lies on data.

Because of numerous factors implementing a dynamic pricing strategy without proper software is impossible.

Factors such as market pricing, supply, demand, competitors’ pricing, and current trends require a real-time software solution.

You can track hotel prices by using a hotel price comparison API. One such user-friendly hotel comparison tool is Makcorps hotel API which allows you to access real-time price trends from over 200 plus OTA platforms instantly.

Hotel pricing monitoring is an essential step while implementing a dynamic pricing strategy in your hotel.

Using such hotel rate shoppers for getting hotel pricing data allows hotels to automate the process so that the work can be done without any errors.

Also, Makcorps hotel data API doesn’t only helps you to stay updated with the latest market trends but also provides hotel price history on the basis of your queries and notifies you of any change instantly.

Also Read: The Benefits Of Using Rate Intelligence For Hotel

You must make sure that the software you choose aligns with the overall business strategy of your hotel.

Important Things to Consider in a Dynamic Pricing Strategy

There are a few important factors that you must consider when implementing a dynamic pricing strategy.

Starting with Keeping a track of the supply and demand in the local market and making sure that your hotel rates do not go where above or lower than the market price.

Another thing to consider is the value of the services and the types of rooms being offered.

You should have a range of rooms at different pricing so that you can meet different customer segments and meet up your target profit point.

Also, you must always keep a check on your competition to understand their pricing, current occupancy rate, seasonality, and even the day of the week.

This will provide you with a better understanding of the local market conditions so that you can effectively implement your dynamic hotel pricing strategy.  

How Does Makcorps Pricing API Can Help You with Dynamic Pricing for Your Hotel?

Using a price comparison software solution such as Makcorps pricing API helps you to get real-time pricing information in your nearby area.

By getting a deep understanding of the current market price trends and competitors’ pricing will give you an upper edge in the market.

Knowing about what customers are ready to pay you can optimize your pricing strategy to attract more guests.

Makcorps Hotel Rates Searching API is an automated software solution that instantly crawls through 200 plus OTA platforms to come up with the best results based on your query.

It helps you save an ample amount of time as well as money in collecting valuable price-related data.

Also, it updates you with the latest information instantly so that you remain one step ahead of your competitors.

The software is user-friendly and provides you with reliable and quality data.

Frequently Asked Questions By Hoteliers:

Static pricing occurs when a hotel keeps the same room rates over a period of time.

This is a major concern for hotels as they are losing out on multiple opportunities to generate higher revenue.

Demand-based pricing helps hotels to maximize their profits as per the real-time market trend.

Yes, dynamic pricing is also good for consumers as it offers them the mobility to pay fair pricing at a given time.

Also, they can enjoy multiple discounts in offers when the demand goes down.

The biggest concern for hotel years with dynamic pricing is the threat to lose early loyal customers who have paid the same flat rates for years.

Also setting a price that is fair in the public perception is quite challenging and concerning.

Dynamic pricing ensures that you capture as much rate as possible, don’t sell out too early, and fill rooms at competitive prices even when the demand is slow.

This has helped hoteliers to generate more revenue while keeping a higher occupancy rate over a period of time.

Such attributes had made dynamic pricing increasingly popular in the hotel industry.

Hotels and the airline industry both work on guest behavior and market trends.

Dynamic pricing helps them to understand and gain a deep understanding of both terms effectively.

Also, it alleviates manual work from your plate to focus on more impactful strategy work.

Furthermore, generating higher profits through an effective dynamic pricing strategy has proved as a boon for both fields.

The main differnce between static and dynamic pricing is, in static pricing room prices are fixed for a long period of time regardless of demand, hotel occupancy, and competitor’s pricing.

As opposed to it, dynamic pricing hotel rates fluctuate in accordance with pricing trends, competitors, demand, forecasts, and more.

Of course, dynamic pricing is best when it comes to maximizing hotel revenue. Dynamic prices are set after analyzing market trends which can help you get insights into ideal room rates for hotels at a specific location. And, fluctuates your pricing strategy accordingly.


Dynamic pricing strategy holds a lot of scope in the hospitality industry through which hotel years can benefit themselves in multiple ways.

Utilizing dynamic strategies to optimize prices can help you make the most out of your hotel revenue.

But, in order to make your dynamic hotel pricing strategy successful you need to keep certain factors in mind.

These factors include supply and demand, time of the year, target segments, and competitors.

You can use different types of hotel dynamic pricing softwares and methods as per the required situation and need to set optimal dynamic hotel pricing strategy.

Also, the introduction of smart technologies has replaced manual work with automated and efficient solutions.

Choose a suitable Hotel price API such as Makcorps for yourself that aligns well with your business strategy to get the most out of it.

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