Corporates welcome dynamic room rates

Written on the 7 October 2009

WHEN it comes to hotel pricing, corporate clients that bedded down a ‘dynamic rate’ are now reaping the rewards.

Dominant trends in hotel pricing show companies that have embraced a dynamic pricing model were generating significant savings on their hotel spend as properties slashed rates to combat falling occupancy levels.

Joe McCormack, from FCm Travel Solutions, says due to the current market conditions, corporates on dynamic pricing and those using best available rates and non-last room availability pricing were optimising hotel spend.

“During the past 12 months we have seen evidence of companies driving significant savings using the dynamic pricing model. This is where clients pay a rate which is a percentage off a hotel property’s best available rate (BAR) instead of locking in a fixed static rate. On this model, corporates will commit to an agreed volume target with the hotel, to obtain a percentage discount off the BAR rate,” says McCormack.

“In some cases hotel rates are a third of what they were when rates were quite high a few years ago, so companies that previously agreed to use a dynamic pricing structure are now paying a discounted rate, negotiated from an already heavily reduced rate.”

McCormack says it wasn’t that long ago when dynamic pricing was considered a gamble.

“Dynamic pricing used to be a dirty word because when hotel rates were on the rise a few years ago, companies were paying more almost on a weekly basis because their corporate negotiated rates fluctuated according to demand,” he says.

“Because of this, a lot of corporates weren’t comfortable with dynamic rates and were prepared to pay a little more to have a fixed rate throughout the year.”

Current industry trends reveal corporates have gained the upper hand in negotiating hotel rates and were likely to maintain that hold for some time yet.

According to FCm, it’s unlikely that major hotel chains will increase rates in the immediate future. Across most markets economic recovery is expected to be gradual and it may take some time for hotel companies to regain the heady corporate rates of 2007.


Latest News

PROFIT BOOST FORECAST AT VILLA WORLD

VILLA World has forecast profit growth of 5 per cent in the first half of FY17 in an earnings guidance released to th...

WP CURVE SOLD TO GODADDY

NASDAQ-listed tech company GoDaddy has bought Gold Coast's WP Curve for an undisclosed sum.

The subscription-b...

BOARD SHAKE-UP TAKES OUT SURFSTITCH FOUNDER

ONLINE actionwear retailer SurfStitch Group (ASX: SRF) has announced a major board shake-up in a move that effectivel...

ORIGIN TO DIVEST UPSTREAM OIL AND GAS BUSINESS

ORIGIN Energy will spin off its upstream oil and gas business in an as-yet unpriced IPO.

It will allow the Sydney-...

Related News

HOW MCDONALD'S AUSTRALIA REDISCOVERED ITS INNOVATIVE SPIRIT

MCDONALD'S is such a ubiquitous part of the Australian landscape today that it is easy to forget how it change...

JB HI-FI IS THE GOOD GUY IN $870 MILLION ACQUISITION

ELECTRONICS giant JB Hi-Fi has formally completed its $870 million acquisition of home appliance chain The Good Gu...

ACCC ACTS AGAINST MERITON'S RIGGED REVIEWS

MERITON Property Services is under fire from Australia's main consumer watchdog, after it allegedly engaged in mi...

ACCC FIRES WARNING SHOT TO IVF PROVIDERS

IVF clinics have been put on notice by consumer watchdog, the Australian Competition and Consumer Commission (ACCC...

Contact us

Email News Update Sign Up Contact Details

Subscribe to our mailing list

* indicates required
Email Format

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter