TECHNOLOGY
EVEN MORE DYNAMIC
THANKS TO TECHNOLOGY , SETTING A ROOM RATE REQUIRES ‘ CONSTANT OPTIMIZATION .’
Contributed BY JULIANA SHALLCROSS
The Malibu Beach Inn in Malibu , California
Dynamic pricing has been a go-to strategy by hotel revenue managers . But as the business intelligence tools that collect market data and customer information become more sophisticated and more timely – coupled with the volatile conditions of the real world ( like this year ’ s dramatic hurricanes ) – setting a room rate is an increasingly complicated proposition .
“ This is an evolving discipline ,” says Micah Richins , chief commercial officer of MGM Resorts International . “ The better data you can get , and the more quickly you can understand the data , the better you can price the market products .”
In Las Vegas , where demand is tied to events , MGM Resorts is “ ever-measuring ” its competitive set . “ We look at pricing by room types and by segmentation , and we put all that together to help us make our own dynamic pricing that switches every day ,” Richins says . “ It ’ s a constant optimization process that we go through .”
LOTS OF VARIABLES Aside from demand and segmentation , hotel revenue managers play around with other variables such as length of stay , room attributes like views and bed types , and booking channels , something that revenue managers couldn ’ t necessarily do before . “ Time-based pricing on today compared to tomorrow , that ’ s been normal for a while ,” says Johnathan Capps , vice president of revenue for hotel operator and manager Charlestowne Hotels , Mount Pleasant , South Carolina . “ But now when you ’ re talking about setting a price for today with differentials that are different from tomorrow , then we ’ ve gone to another level .”
Pricing by room views and bed types
56 hotelsmag . com November 2017