theWorks - the Nexus Blog

is dynamic rising?

I know we're still in Q1, but preparations are already under way for the 2009 rate season. It seems to start earlier every year (I blame global warming). The NBTA annual adjustments have been made and one of the most significant additions to the process this year is a set of questions about dynamic pricing - do hotels offer it and if so, how it will operate (level of discount? from which rate? is there a max/cap/ceiling? or a min/floor?) Your view on dynamic pricing will depend on which side of the negotiating table you're sitting. If you're a hotel you want your managed clients to be as yieldable as possible so you can avoid displacing high rate business in busy periods. This is a difficult challenge if rates are fixed within the traditional 3 or 4 season periods covered by an annual contract. If you're a Corporate (or its travel management company), you just want the absolute best rate you can get for your employees. If dynamic means your absolute best rate gets absolutely even better when a hotel is in a low demand period, all well and good. Just as long as the rate absolutely doesn't go any higher when the hotel is making hay. And perhaps more to the point, just as long as the cap/ceiling rate is no higher than it would have been in a non-dynamic environment. This is of course hard to prove during a negotiation. It makes T&E expenditure planning more problematic too. Which is why at the moment it seems that most Corporates are not quite ready for this brave new world. Like a small child, a rate that doesn't move is much easier to deal with. You can keep your eye on it and make sure it doesn't go where it's not supposed to. We have our Nexus Community Forums coming up in the next few weeks and I'll be very interested to see how our hotel clients are going to approach this year's rate season. Should be a dynamic discussion...

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