In terms of pricing strategy, what is dynamic pricing?

Dynamic pricing refers to a flexible pricing strategy where prices are adjusted based on current market demand. This approach allows hotels to respond to fluctuations in demand, competition, and market conditions in real-time. For example, during peak travel seasons, a hotel might increase its rates to match higher demand, while during slower periods, it may lower prices to attract more guests. This strategy enables hotels to maximize revenue by optimizing the price that consumers are willing to pay at any given moment.

By using dynamic pricing, hotels can better align their offerings with consumer willingness to pay, leading to potentially higher average room rates and revenue. This approach is supported by data analysis, technology, and market research, allowing hotels to make informed pricing decisions. It contrasts with fixed rates, seasonal pricing, and strategies focused only on occupancy, all of which do not adapt to real-time market changes.