your opinion

How often do your clients request sustainable or zero-waste practices?
 
How often do your clients request sustainable or zero-waste practices?
• Always
0%
• Often
0%
• Sometimes
67%
• Rarely
33%
• Never
0%
 
 

latest issue

Latest Issue

Dynamic Hotel Pricing

Pinning negotiations on market conditions can reap benefits or wreak havoc. What's a CTM to do?

Although a decade has passed since American corporate travel managers and their hotel partners first started tapping into dynamic pricing, in Canada there’s been more talk than action about this alternative to negotiated fixed rates.

“I think dynamic pricing is the sexy thing to talk about… But in Canada we haven’t seen demand for it,” says Scott Allison, vice-president, Canadian operations for Marriott Hotels of Canada in Toronto.

Under dynamic pricing, hotels offer corporate customers a Best Available Rate (BAR) that fluctuates with supply and demand. Travel managers are usually able to negotiate a fixed discount off the BAR. It’s called dynamic pricing because either the BAR or the discount can fluctuate in response to market conditions. Hence, BARs are usually higher when times are good, and lower when times are bad.

When major clients issued Requests for Proposal (RFPs) for 2011, neither Marriott nor Starwood Canada received requests for dynamic pricing. Corporate clients still prefer to negotiate fixed rates for a season or the entire year, especially in situations where they have high volumes, says David Ogilvie, regional vice-president of sales and marketing, Starwood Canada in Toronto.

Still, dynamic pricing has become a buzzword of late. The recent recession may be the reason, suggests Judy Williams who teaches hotel contract negotiations and is president of Vancouver-based Expert Meeting Consulting.

Conventional wisdom prior to the recession was simple: the further in advance one books, the better the negotiated rates. But when the economy took a hit, long-held negotiation tactics felt the reverberations. Williams says at least one of her clients, who had negotiated what was considered to be a great hotel rate a few years before their 2009 event, discovered that room rates had dropped by about $60 a night by the time their event took place. “Those flat rates that travel managers negotiated didn’t look so good after the market crashed,” Williams says.

Hotel chains like the idea of dynamic pricing because it allows them to yield their pricing, Ogilvie explains. If business is strong, a hotel is able to charge a higher rate under dynamic pricing compared to fixed rates.

But for travel managers, it’s exactly that reason—the unpredictability of dynamic pricing—that can create havoc with budgeting. Katarina Kelln, senior director, program management Canada, for Carlson Wagonlit Travel in Toronto, says most of her clients prefer the certainty of fixed rates. Still, there are a few who see the benefit in dipping their toes in the waters. “Where we’re seeing dynamic pricing work is with larger businesses like the banks,” Kelln says. “They may have one [hotel] chain in the program that they have dynamic pricing with.”

Dynamic versus fixed? What’s a CTM to do?
Research and ask questions. Even though Canada isn’t quite there yet, dynamic pricing is a reality among global hotel chains and international clients. Find out whether dynamic pricing offers real value for your organization.

Tips:
• Best Available Rates (BARs) are usually lower when there is a poor economy and hotel occupancy is down. By the same token, BARs usually increase when room demand goes up with a rising economy.

• Ask hotel partners to be very clear about their definition of the words “Best,” “Available,” and “Rates,” advises Judy Williams. For example, are best rates based on numbers listed on the hotel’s website?  The lowest available rate up until the time of arrival? A week before arrival? What about comparison rates offered by a discount travel service like Priceline.com?

• If you want to experience dynamic pricing, but don’t want to make a sweeping change, try it with just one hotel chain and always ask to speak to some of their other clients before committing, says Williams. Evaluate the situation after one year.

By Angela Kryhul

other articles in this section

The Waiting Game

Q&A with Suzanne Neufang, Executive Director, GBTA

By the Numbers

Keeping Corporate Data Safe

Are Your Female Business Travellers Safe on the Road?

Flight Turbulence

What’s your Data Plan?

Get it in Writing

Follow the money

In Harm’s Way

It’s all in the timing

Covering Trouble in Paradise

Flight Plan

For Safe Keeping

Smooth Moves

On the Safe Side

At Your Bleisure

Cover me!

Uber. Airbnb. Lyft…

Q&A with Anthony Pollard

Data Dilemma

Getting on track

So Long, Swipecards

Take your Best Shot

Benefits of Integrating Mobile Payment Platforms

Trend Setter, Dorothy Dowling

Newest Cloud Technology

Is it Time to Dust Off your Corporate Travel Policy?

The Future Travel Credit Management Solution

Planes, trains and data plans

When employees fall ill on the road

Burnout Busters

The Rules of Compliance

Communal Spaces Boost Hotels' Comfort Factor

Making the most of travel and expense management systems

May the Best Vendor Win

Evaluating disaster recovery plans

On the Road Again

Hotels Taking Wellness to a Whole New Level

Corporate Travel Tracker

Controlling Corporate Travel Costs

The Anti-stress List

The Blurred Line Between Corporate Travel Manager and Planner

Big Flight Discounts for Small Businesses

Are Business Travellers Putting Corporate Data at Risk?

Timesaving Mobile App for Superior Car Service

Company Car or Driver-owned?

10 Healthy Travel Tips

Navigating Emerging Markets

Business Travel Etiquette

Rogue Travellers on Spending Sprees!

Business Travel and Health

Social Media and Travel Programs

Baggage Handler Confidential

Travel Expense Reporting

Buses Mean Business

Travel Budgets Analyzed

Q+A with Ron DiLeo

Progressive Extended-Stay Programs

Dynamic Hotel Pricing

The Perfect Travel Management Company

The Kindest Cuts

Green Businesses

Travel Policy Compliance

Car Sharing: The leaner, greener choice!

Expense Accountability

Hotel Program Success

Costly Corporate Credit Card Programs

Travel Less, Save More?

Dynamic Pricing

Travel Program Success

Meetings Abroad: Are you Prepared?

Maneuvering Through the RFP Process

Cross-Border Air Travel

Time for a Travel Policy

10 Ways to Avoid Business Travel Pitfalls

Bargaining Table Car Rental Tips for Corporate Planners

Creating Travel Policy Compliance

Sustainable Travel Tips

Crucial Travel Policy Changes to Save Time and Money

Tipping Guide for Business Travellers

Corporate Travel Policy

Passport Essentials and Other Requirements

Managing your Company's Travel Risks

Duty of care to travellers goes beyond borders