Demand Based Pricing

Summit 1st meet in Bangalore – by

sachin pabreja
Web gds distribution
Each hotel shud work on grid of their
repective hotel and 3rd party partners.
Checklist for updation of each portal.
Rate strategy shud be done at lease
prior 2 months of each quarter.
Rate strategy rate codes as a standard
for all our hotels.
 What is Demand Based Pricing

Link the selling price directly to the demand faced by the

hotel.
If the hotel is in high demand, the price should be
accordingly high.
If the hotel is in low demand, the price should be
accordingly low.

The overriding principle is to charge the right rate at

the right time.
In an easy to execute manner.
 Target audience
Demand based pricing falls in the arena of Public Rates.
Available to any and all potential customers
Primarily aimed at non-contracted market.
Low brand/product loyalty from this market. They are mostly
“shoppers”
Looking for best value.
Contracted Corporate and Wholesale rates are not directly
impacted but must be logical in relation to Public Rates
 Guiding principles
Clarity in pricing structure.
Logical selling strategy.
Avoidance of adhoc rate decisions

Rational and fair pricing within the competitive market

place, based upon demand
Honesty, integrity and parity of rates offered.

Set the rates that you think are honestly good rates for a given
demand level.
Have the integrity to offer this rate - instead of a higher rate if you
think you can get away it…
The rates must be available in every channel at parity.
The residence 1st meet in blr
 Why do we need DBP
The most time consuming task is the actual setting of rates.
Therefore, difficult to reassess and reset rates often.
Results in rates being set for a month, or fortnight at best, and a few
days spent to set them each time…

Most basic thing a hotel/sales/front office does is occupancy and

availability forecasting.
If link rate availability to occupancy forecasting by pre-deciding
what rate to sell at what occupancy demand level…
Then the execution is merely “switching on” or “switching off”
a demand.

The residence 1st meet in blr

 What will be our model
There will be Five demand levels
City High
When the whole city is facing high demand.
Can charge premium rates.
Hotel High
When the hotel is facing high demand, but city is not.
Leaves the customer with choices.
Normal
As the name suggests.
Shoulder (S)
Occupancy is lower than normal, but it is not yet a critical need period.
Low
As the name suggests
 Rate setting
Rates will need to be set once a quarter for each demand level.

This will be done estimating the kind of business expected over

the next quarter.

Will need to forecast what occupancy/demand level should be

viewed as High, Low etc.

Set rates for each demand level accordingly.

 Example – Demand levels
For April to September you may set..
Hotel High – at 75% occupancy
Normal – at 50% to 75% occupancy
Low – at below 50% occupancy

Then..
Monitor demand build-up.
Based on occupancy build-up to any of the above..
Activate relevant demand level.
Complete flexibility is available

Occupancy forecasting, keeping lead times in mind, is the key.

 Rate Structure
There will be two rates in each demand level

Business Rate Rate (SR)

Primary selling rate
No restrictions
Equivalent of current SR rate

Extended Stay Rate (SR1)

Restricted by minimum length of stay
Must be lower than Promotional Rate
Credit card guarantee required
Entire length of stay to be charged on arrival
Early departures do not qualify for refund.
Equivalent of current SR1 rate.
 Rate Structure
There will be one additional rate.
Early Advantage Rate
Can be booked only a minimum of 21 days in advance.
May vary to higher advance booking by unit.
Must be lower than lowest Extended stay rate
Credit card guarantee required.
One nights charge to be pre-charged at time of reservation.
Non-refundable in case of cancellation, no-show or change of arrival date.
Not linked to demand level, pre-set for each quarter.

Packages
Based on requirements
Must include meaningful value add-ons.
Package guidelines will be circulated later.
 Distribution Channels

Will be set on on all portal

Will be available on GDS and Internet.
Will be available for hotel direct reservations
Will be available at Reservation
 Next Steps
Rate setting formats will be circulated with pricing
recommendations for next quarter.
Finalise the rates.
Will include both USD and INR.
Setting up rates on Online reservation system (utell,rezview)
Demand level management guidelines TO be circulated BY
individual sales head.
Once rates are decided and set up, demand level management
will be done by units, on all the sites.(a team/time needs to be
dedicated to this only and shud be monitored weekly)
Promotions which can be
participated by all our hotels…
Residence special rates
Rate codes
Value addition some of the example…are given below…