In hotel revenue management, how is "dynamic pricing" best described?

Dynamic pricing in hotel revenue management is characterized by the practice of adjusting prices based on market demand. This approach allows hotels to optimize revenue by increasing prices during periods of high demand and potentially lowering them during low demand, thereby maximizing occupancy and profitability. By constantly monitoring various factors, such as booking patterns, competitor pricing, and even local events, hotels can make real-time pricing decisions that reflect current market conditions.

This method contrasts significantly with fixed pricing models, where prices remain constant regardless of changes in demand. While promotional discounts can be part of a revenue strategy, they do not encompass the flexibility and responsiveness of dynamic pricing. Similarly, while pricing increases during the high season reflects an understanding of demand trends, it does not fully capture the broader, more nuanced adjustments involved in dynamic pricing throughout the year, including shifts that may occur even within high-demand periods.