Discover how dynamic pricing helps accommodation providers set the right price based on occupancy, booking lead time and demand trends.
The right price at the right time
In the hotel industry, the price of a room should not be fixed. Demand changes constantly based on the time of year, remaining availability and customer behaviour.
An effective tariff must therefore adapt to booking trends. When demand grows, the price can increase to maximise the value of the remaining availability. Conversely, when bookings are slower, a more competitive tariff can help to stimulate sales.
This approach is named dynamic pricing and makes it possible to manage rates more flexibly, while always maintaining control over the minimum and maximum prices set by the hotel.
Among the most important factors to consider are:
- the occupancy of the facility;
- how far in advance the booking is made;
- the day of the week;
- the seasonality;
- the remaining availability for each room type.
The importance of booking in advance
A booking made well in advance can represent a positive signal for the hotel: in fact, it helps to build future occupancy, reduces uncertainty regarding subsequent dates and offers an already secured demand base. A good level of advance bookings allows the property to plan sales better and manage remaining availability with greater confidence.
However, this does not mean that an early booking always has to come with a high price. When the arrival date is still a long way off, it can be advantageous to offer a slightly lower rate, or a specific condition of early booking, to encourage the customer to book immediately. In this way, the hotel gains greater visibility over demand and turns future availability into concrete occupancy in advance. The benefit of the reduction must still be assessed based on seasonality, expected demand and the risk of selling too early at a lower price than the market might support later on.
Even bookings made very close to the date require specific analysis. If remaining availability is still high and occupancy is below targets, lowering the price can help maximise room filling before arrival. If, on the other hand, the property is already close to full occupancy, a last-minute reduction would not be necessary and could reduce average revenue without generating any real benefit.
The booking deposit therefore makes it possible to distinguish between different situations:
- early bookings, which can help build future occupancy and justify an incentive rate;
- medium-term bookings made, useful for evaluating sales velocity and the evolution of demand;
- last-minute bookings, which may command a more competitive price when remaining availability is still high;
- last-minute bookings during periods of high occupancy, where it is not necessary to reduce the rate;
- dates still a long way off, for which it is advisable to monitor trends before making significant changes to the price.
Considering lead time alongside occupancy and remaining availability helps the hotel choose when to stimulate bookings, when to hold the price and when to drive more value from the last remaining rooms.
Occupancy and remaining availability
Employment is one of the most immediate indicators for understanding how much product is left to sell.
When many rooms have already been booked, availability decreases and the value of the rooms still on the market may increase. Continuing to sell at the same initial price could in fact mean missing out on a portion of potential revenue.
When occupancy is low instead, particularly close to the arrival date, a more accessible rate can help improve the pace of bookings.
Even in this case, there is no rule that applies to every facility. The occupancy level must be interpreted by considering:
- the size of the hotel;
- the room type;
- the time of year;
- the usual question;
- the average length of stays;
- the time remaining until the arrival date.
A small property can quickly reach a high occupancy level, whereas a larger hotel may still have plenty of availability even after selling numerous rooms. For this reason, it is important that pricing rules are configured based on the specific characteristics of the hotel.
Weekend and weekdays
Demand behaviour also changes depending on the day of the week.
In leisure-oriented hotels, weekends can be characterised by higher demand. Fridays and Saturdays, in particular, may see greater demand compared to weekdays. In these cases, the hotel can maximise the value of available rooms by applying a rate that reflects the greater appeal of the period.
For a business hotel, on the other hand, the situation can be different. Demand often tends to be concentrated on weekdays, while the weekend can see a lower presence of corporate clients.
In this scenario, the weekend can be managed with a more competitive strategy, possibly linked to dedicated offers for couples, families, or leisure clients.
The weekend factor therefore does not automatically have to mean a higher price. Rather, it should help the system recognise the differences between:
- hotel leisure;
- hotel business;
- facilities in tourist resorts;
- hotels located in urban areas;
- peak and off-peak periods.
The same day can have a very different value depending on the type of property and the prevailing customer segment.
Automate without losing control
A system of dynamic pricing It must be automatic, but not uncontrolled.
This is why it is important to establish a minimum and a maximum price for each room type. Within this range, the system can adjust the rate based on booking trends and the parameters defined by the hotel.
The minimum price helps to protect the value of the room and avoid excessive reductions. The maximum price, on the other hand, makes it possible to keep the rate within a limit consistent with the property's positioning.
The hotel therefore retains its commercial strategy, while the system takes care of applying it more quickly and consistently.
The contribution of the RMS
There are several RMS available on the market, namely Revenue Management System, designed to support tariff decisions through the analysis of numerous data.
In addition to occupancy, booking lead time and calendar, some RMSs may also consider:
- competitor hotel prices and availability;
- local events and shows;
- Bank holiday;
- historical data;
- trend in demand;
- weather conditions;
- characteristics of the different customer segments.
These elements can offer a broader perspective and help the hotel better understand the context in which it operates.
At the same time, the effectiveness of a revenue strategy does not depend solely on the amount of data analysed. It is essential that the information can be translated quickly into operational decisions and effective rate updates.
CybHotel: he pricing directly into the PMS
CybHotel brings dynamic pricing directly inside the PMS, with a native integration that allows you to link rate rules to the property's daily management.
The hotel can define its strategy by considering factors such as:
- employment rate;
- booking deposit;
- weekends and weekdays;
- minimum and maximum tariff limits.
Once the rules have been configured, the system automatically applies the corresponding effect to selling prices. It is therefore not necessary to separately manage the analysis, the updating of tariffs and the publication of new prices.
Among the main benefits for the hotel are:
- fewer manual tasks;
- faster tariff updating;
- greater consistency in pricing management;
- check on minimum and maximum values;
- automatic adjustment to booking trends;
- direct integration with the PMS;
- reduction of the risk of forgetting a tariff update.
Simpler and more responsive management
Dynamic pricing doesn't mean complicating tariff management. On the contrary, it means systematically using information that is already available to make more consistent decisions.
Occupancy, booking lead time and weekends represent a concrete basis for adapting the price to demand. Additional data and analysis tools can be added to these factors when necessary.
The advantage of cybHotel is turning this strategy into an automated action directly within the PMS. The price is updated inside the management system and can reflect the hotel's commercial situation more quickly.
In this way, the property can work with greater efficiency, protect the value of its rooms and seize sales opportunities without having to manually intervene on every rate.
Article written with the support of Perplexity, an AI assistant for research and technical writing.