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

GROUPTOGETHER A GIFT FOR TIME-POOR PARENTS

JULIE Tylman and Ali Linz have taken the stress out of gift giving by creating GroupTogether, an online platform whic...

SIRTEX CEO DISMISSED FOLLOWING SHARE TRADING PROBE

SIRTEX Medical Ltd (ASX: SRX) has sacked its chief executive officer, Gilman Wong (pictured), following an investigat...

SANTA DELIVERS KOGAN A GIFT

KOGAN.COM (ASX: KGN) has exceeded its expectations and reported another strong quarter of trade.

The online retail...

FOUR WAYS YOU SHOULD PROTECT YOUR IT SYSTEMS FROM EXTREME WEATHER

SHANNON Overs, co-founder of onPlatinum ICT, sees it too often, perhaps half a dozen times per year businesses tha...

Related News

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

SMES TAKE RETAIL MARKET SHARE AS CONSUMERS CHOOSE PERSONALISATION

IN a battle for the hearts and wallets of Australian consumers, it appears that small and medium retail businesses...

KNOWLEDGE WORKERS AMONG MOST SOUGHT AFTER IN 2017

BUSINESSES searching for efficiencies and improved systems are in search of knowledge workers early this year, say...

FEMALE ENTREPRENEURS GET SPRINGBOARD TO GROWTH

DESPITE the fast-growing number of women studying STEM subjects at school and university, women continue to be und...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter