Dynamic Pricing Friend Foe or the Future Presented

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Dynamic Pricing Friend, Foe or the Future? Presented by Sean Mc. Curdy Global Director

Dynamic Pricing Friend, Foe or the Future? Presented by Sean Mc. Curdy Global Director of Worldwide Sales Interstate Hotels & Resorts

Agenda l Hotel Trivia l Dynamic Pricing l What is it? l How to

Agenda l Hotel Trivia l Dynamic Pricing l What is it? l How to evaluate it? l Is it right for you? l Amenities Travelers Prefer l What is Negotiable?

Hotel Trivia 1930 l The standard travel agent commission was? A. 5% l B.

Hotel Trivia 1930 l The standard travel agent commission was? A. 5% l B. $1 l l C. 10% Average Room Rate? l A. $1. 34 l B. $5. 60 l C. $15. 80 l

Hotel Trivia 1950 JW Marriott opens his first hotel in? l A. Arlington VA

Hotel Trivia 1950 JW Marriott opens his first hotel in? l A. Arlington VA B. Atlanta GA l C. New York NY l 1951 First hotel company to install televisions in all the guest rooms? l A. Wingate l B. La Quinta l C. Hilton

Hotel Trivia 1950 l Kemmons Wilson opens his first Holiday Inn, where? l A.

Hotel Trivia 1950 l Kemmons Wilson opens his first Holiday Inn, where? l A. Atlanta l B. Memphis l C. Irvine l He named his hotel after? l A. His first Vacation l B. A National Holiday l C. A Bing Crosby movie

Economic Factors Driving Dynamic Pricing l Inflation l Demand grew 4. 5% vs. Supply

Economic Factors Driving Dynamic Pricing l Inflation l Demand grew 4. 5% vs. Supply of 1. 3% l Consolidation of ownership-greater control on pricing l Dramatic increase in control over rate integrity and inventory l Aftermath of Hurricanes

Industry Factors Driving Dynamic Pricing Allied Members l Desire to simplify the RFP Process

Industry Factors Driving Dynamic Pricing Allied Members l Desire to simplify the RFP Process l Negotiate Rates based upon Demand l Major Brand Support Direct Members l Increase Hotel Compliance l Opportunity to expand preferred partnership in secondary cities l Eliminate 3 rd Party Costs

What is Dynamic Pricing? l l Fixed % off a floating benchmark rate. n

What is Dynamic Pricing? l l Fixed % off a floating benchmark rate. n Consortia n Corporate n Best Available Benchmark rate will float up or down based upon market conditions.

What should you consider? l How often do your travelers receive the negotiated rate

What should you consider? l How often do your travelers receive the negotiated rate at your preferred hotels? l Will the discount apply to other room types? Will it cover all properties (chain-wide) or selected properties? Will the % discounts vary by city & volume? Or will one fixed % that applies to all properties? Will you be able to negotiate value added amenities? What is your benchmark? Will the rate fluctuate by night for a multiple stay? l l

Key Areas of Consideration l Financial n n l Can your suppliers provide a

Key Areas of Consideration l Financial n n l Can your suppliers provide a data-driven model that quantifies the economic benefits. Are all of your suppliers providing a similar pricing model, how will this affect non-dynamic preferred agreements. How do your current negotiated rates compare to other benchmark rates? Dynamic Pricing may additional hotels that could not offer you a negotiated rate, resulting in incremental savings. Measure the effectiveness on an on-going basis.

Key Areas of Consideration l Traveler Experience n How will you communicate the new

Key Areas of Consideration l Traveler Experience n How will you communicate the new model to your travelers? Will they understand the value of the discount? n How will travelers forecast or budget their hotel costs? n If your travelers are performing client-billable services, how will the changes be communicated to their clients? n Are you travelers required to use per diem or city caps?

Key Areas of Consideration l Change Management n n n How will the forecast

Key Areas of Consideration l Change Management n n n How will the forecast and budgeting process be changed? How will you manage cities where you have a hybrid situation? How will online booking tools and travel agencies manage and sell rates? How will the discounts be validated and audited? How will pre-trip approval and post-trip expense audits need to be changed? Will you be able to quantify the value of the new program to management?

Dynamic Pricing l Is it right for you?

Dynamic Pricing l Is it right for you?

What is negotiable?

What is negotiable?

Hotel Trivia 1960 l 1962 Curt Carslon buys shares of this Minneapolis hotel? l

Hotel Trivia 1960 l 1962 Curt Carslon buys shares of this Minneapolis hotel? l Typical hotel had? 120 rooms, 39 rooms, or 78 rooms. l Average occupancy? 45%, 67% or 85%. l First cable movie station offered in hotel rooms? HBO & Cinemax or Showtime & The Movie Channel.

Questions & Answers

Questions & Answers

Available Resources NBTA Hotel Committee: Rate loading white paper-glossary of industry terms. 2006 NBTA

Available Resources NBTA Hotel Committee: Rate loading white paper-glossary of industry terms. 2006 NBTA Modular Hotel RFP: includes copies of the Modules, Specifications, Instructions, Templates, Vendors, French, German and Spanish Translations - Best Practices: Hotel RFP Package - Best Practices: Company Overview Sample - Best Practices: Rate Accept Sample - Best Practices: Rate Reject Sample - Best Practices: Cover Letter Samples - How to Develop a Hotel Program - Recommendations on Hotel Reverse Auctions - Reverse Auction Resource List - RFP Vendor Resource List

Historical Perspective of Occupancy and ADR

Historical Perspective of Occupancy and ADR