Dynamic Pricing, often referred to as-demand based pricing is a budgeting strategy or a revenue management system under which businesses set variable prices for the products or service they offer. Hotels are now equipped to change the price of their inventory based on advanced learning algorithms that take into account various internal and external factors.
Pricing Hotels on daily basis is a challenge, quoting prices according to different room categories like Standard, Deluxe, Suites and also the customer segments like tourist versus business guests, group discounts for corporations, governments, etc. Optimal pricing depends critically on the knowledge of customer demand and the 24 hours lifecycle of perishable inventory.
"To quote this simply, price of an Ola or Uber ride goes up if the demand is high within the region. This concept has been in industry since long and is now expanding its wings into multiple sectors."
Hotels now are taking aggressive step in terms of having more flexibility in the types of rates they currently have and how they wish to bucket different rates according to various factors.
For example: The month of November and December are highly demanding in terms of hotel accommodation for metro cities whereas holiday destinations are prone to customer flood in summers and at new year’s example popular hill stations and Goa respectively.
Starting form a manual process where the sales or revenue managers have to play within 5 to 10 types of rate buckets in a typical revenue management system for hotels, now they have hundreds indeed. In order to accomplish this task our research methodology takes into account a number of factors like current booking statistics etc. of the respective property, all of which is supplied to a machine learning algorithm.
Many hotels groups already take into account these kind of general factors for pricing the inventory, but in Nodal Revenue Management system we do things differently with our significant hospitality experience for recommending the best suitable prices to hotel business owners using our proprietary formula by which they are able to generate more revenue per room or booking.
We believe that: "It isn’t always about surging the hotel prices — it often require to lower them too on the basis of various customer and hotel specific features"
Our solution for the clients assures quality, where we not only make money for the hotel owners, but also make sure that guests are getting the best price too. The system is thrashing to find the optimum point where the revenue per available room is maximized.