How to Use Hotel Dynamic Pricing Rules

Are your static rates keeping you from maximizing your revenue and occupancy potential? RoomRaccoon gives independent properties the ultimate competitive edge with dynamic pricing functionality included in all our packages at no extra cost. 

If you’re new to dynamic pricing, you’ve come to the right place. 

To help you get started, we’ve compiled a series of recommended rules you can use as they are or customize to match your guests’ specific booking patterns.

Dynamic Pricing Rules in a Nutshell

What are the conditions you can control?

Date Range:
Specify the time period during which this rule will be in effect. This is an optional condition, perfect for managing campaigns.

Occupancy:
Specify the number of overall rooms or room categories that should be sold out before the pricing rule kicks in.

Days Before Arrival:
Define the number of days prior to check-in when the rule should kick in.

Price Adjustment:

Set the percentage by which the room rate will be discounted or increased. You can also consider a stop-sell condition, which will automatically set your selected rate plan price to zero and make the room unavailable to book.

Room Category:
Apply the rule to specific rate plans for each room category, ensuring the right strategy for different room types and rate plans.

How to Create a Dynamic Pricing Rule

RoomRaccoon’s Recommended Dynamic Pricing Rules

The following section explains the recommended rulesets, the opportunities they present, and how the pricing adjustments work. However, it may not be suitable for all types of lodging businesses. When developing a dynamic pricing strategy, it’s important to understand your business’s booking behaviour trends. 

For instance, if your business books well in advance, you can take advantage of reduced rates by a smaller percentage to capture early bookings and improve cash flow.

Recommended Ruleset 1: Last-minute availability

What does it mean? 

Last-minute availability refers to offering rooms to guests who book within a short timeframe before the check-in date. Typically, this can range from same-day bookings to bookings made up to three days before arrival.

Opportunity 

You can maximize occupancy by offering attractive last-minute deals to guests who book within a short booking window. After all, an occupied room at a lower rate is better than an unsold one, right?

How does this dynamic pricing rule work?

The most important variable in this dynamic pricing rule is the ‘days before arrival.’ 

If you activate this pricing rule, your rates will be reduced by 20% when your room availability is between 20% – 100% and no rooms are sold within 0 to 2 days before arrival.

Recommended Ruleset 2: Late availability

What does it mean? 

Late availability refers to rooms that remain unsold as the check-in date approaches. Typically,  this can range from bookings made 7 days or less before arrival.

Opportunity 

You can maximize occupancy with discounted rates to attract guests from particular traveller segments, such as spontaneous travellers (backpackers and digital nomads) and business travellers with sudden travel plans.

How does this dynamic pricing rule work?

If you activate this pricing rule, your rates will be reduced by 10% when your room availability is between 25% – 100% and no rooms have been sold within 3 to 7 days before arrival.

Recommended Rulesets 3: Long-term high demand, long-term very high demand, and long-term super high demand 

What does it mean? 

Unlike short-term spikes in demand (major events or holiday weekends), long-term high demand refers to sustained periods during which the demand for hotel rooms remains consistently high over an extended duration.

Opportunity 

Individuals and families who are planning vacations, especially to popular tourist destinations, often make their bookings well in advance to secure their preferred dates and locations. Travellers who want to spend holidays like Christmas or New Year’s in specific destinations also tend to book early to ensure availability during peak times. 

Moreover, large corporations or organizations that are planning meetings, incentives, conferences, and events (MICE) often make hotel reservations well in advance to secure the necessary facilities and accommodations for their attendees.

How do these dynamic pricing rules work?

The most important variables to consider are ‘days before arrival’ and ‘availability.’

Long-term high demand

If you activate this pricing rule, your rates will be increased by 10% when your room availability is between 60% – 80%, and there are 180 to 360 days before arrival.

Long-term, very high demand

If you activate this pricing rule, your rates will be increased by 20% when your room availability is between 40% – 59%, and there are 180 to 360 days before arrival.

Long-term super high demand

If you activate this pricing rule, your rates will be increased by 30% when your room availability is between 1% – 39%, and there are 180 to 360 days before arrival.

Recommended Ruleset 4: Medium-term high-demand

What does it mean? 

Medium-term high demand typically refers to a period ranging from a few weeks to a few months before the arrival date. This timeframe is shorter than the six-month window associated with long-term planning but longer than the late availability. 

Opportunity 

The booking window is usually influenced by immediate needs or spontaneous travel, as well as major holidays, local festivals, school holidays, mid-term breaks, corporate events, and large-scale conferences announced a few months in advance.

How does this dynamic pricing rule work?

If you activate this pricing rule, your rates will be increased by 15% when your room availability is between 1% – 25%, and there are 90 to 179 days before arrival.

Recommended Ruleset 5: Short-term high demand

What does it mean? 

Short-term high demand refers to a sudden or seasonal spike in hotel room demand that occurs over a brief period. 

Opportunity 

The booking window is typically driven by factors related to special events, such as the Eras Tour, which saw hotel occupancy rates in Chicago soar to nearly 97%. These events are usually unexpected but are prime opportunities to boost occupancy and maximise revenue, so it’s best always to stay prepared.

How does this dynamic pricing rule work?

If you activate this pricing rule, your rates will increase by 15% when your room availability is between 1% – 20%, and there are 30 to 89 days before arrival.

Bonus Rules

Stop-Sell Non-Refundable Rates

What does it mean? 

You can set up a stop-sell rule to hide your non-refundable rate based on specific variables.

Opportunity

Non-refundable rates benefit both hotels and guests. They are often discounted to encourage guests to commit, and the hotel can enjoy upfront payment for improved cash flow. 

However, this type of rate plan is often more effective for capturing bookings well in advance. This is because travellers are less likely to cancel closer to the arrival date, having already finalised their travel plans. As a result, you’ll have the opportunity to charge the full room rate without needing to offer discounted rates. Plus, most hotels are also generally covered by their cancellation policy closer to the arrival date.

How would you use a stop-sell rule?

Typically, you’d activate stop-sell rules starting 30 days before the arrival date. For example, if you activate this pricing rule, your discounted non-refundable rate will be hidden when there are 24-30 days before arrival.

Competitor-Based Rules

What does it mean? 

Competitor-based dynamic pricing rules enable you to adjust your prices in real-time based on your competitors’ pricing activity and availability.

Opportunity

By unlocking the RaccoonRev upgrade, you can access a CompSet dashboard that shows you real-time pricing data of your top three competitors. This feature enables you to easily benchmark your prices against competitors and activate CompSet-based pricing rules, ensuring you always remain competitive and win the market.

How do CompSet-based dynamic pricing rules work?

You can choose from three dynamic pricing actions based on competitor activity:

1. If one or all of your competitors are sold out, you can activate a rule to increase your rates.
2. If a competitor’s specific room category is sold out, you can activate a rule to increase the rates of similar room categories or rate plans.
3. If your competitors’ overall prices decrease, you can activate a rule to decrease your rates.

A Dynamic Pricing Success Story Featuring the Bull Auberge

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