Have you ever wondered why the price of a hotel room changes so often and sometimes seems unpredictable?

Revenue management consulting, more and more central in the hotel sector, helps each hotel to pinpoint the ideal price for maximising profits.

Understanding how this process works will allow you to appreciate how sophisticated the work lying inside a simple booking is.

Booking a room is not only a question of finding a number that satisfies you: it is the final step in a fascinating process that involves many variables.

Behind this choice lie mother Offer, father Demand and a precious son: the Price, which is born of a dance of balances and global influences.

Demand

We must first of all understand that the motivations driving people to book a hotel room are very numerous and often unpredictable.

Let’s see some examples.

The daily necessities: Booking is sometimes a necessity. Think of work transfer, moving site or home problems that force us to find temporary accommodation.

Unexpected events can create peaks in demand, so that hotels need to trust in revenue management consulting to manage the rise in demand.

Atmospheric conditions: The weather may also play a fundamental role.

A rainy day may lead to a rise in bookings for facilities with a spa or wellness centres, while a heat wave may drive people to seek sea or mountain destinations.

Emotions and personal needs: Not all bookings are planned.

Sometimes the need for diversion or relaxation or just a desire for change can lead us to choosing a hotel room.

This is where the hotels’ ability to predict this behaviour comes into play, a skill that revenue management consulting can refine through data and market analysis.

Events and parties: Festivities, concerts and local events are among the main engines of demand.

When there is a big event in town, hotels see a rapid rise in demand.

To best manage these fluctuations, hoteliers use dynamic pricing strategies, often developed through revenue management experts.

Outside influences: Let’s not forget the effect of online reviews, influencers or media trends.

A film or TV series set in a city may suddenly make the destination popular, causing a peak in demand.

Offer

If demand is a fluid, fickle entity, so is offer. But what exactly is offer in the context of hotels?

It is the availability of rooms on the market, and this too is anything but static.

Flexibility and capacity to adapt play a fundamental role in this case too.

The rooms available at a given moment may vary for many reasons: cancellations, seasonal closures or new facility openings.

Constantly monitoring the offer allows hotels to adapt prices, a central aspect of revenue management consulting.

For example, a pandemic may lead to many structures’ temporary or permanent closure.

On the other hand, a major international event, like the Olympics or an important conference, may drive hotels to double their temporary capacity for meeting demand.

Constantly monitoring the offer allows hotels to adapt prices, a central aspect of revenue management consulting.

Price: How it arises and why it changes

If offer and demand have the features that we just covered, how is it possible to imagine a price that is static or only differentiated or, at best, weakly and unawarely dynamic?

The price of a hotel room is never a matter of chance.

It is the result of a process combining inner and outer factors, with the aim of finding the right balance between demand and offer.

Never before has revenue management consulting played such a key role in determining it.

The dynamic price

The dynamic price allows hotels to modify prices in real time.

An approach based on some data, including the room availability, how long there is before the date of the stay, the periods of the year with their seasonal peaks and lows.

By analysing this data, hotels can rapidly adapt to market changes.

In practice, the price of a room is like an acrobat: it moves constantly to find its ideal balance.

Another determining factor is the value perceived by the client.

Hotels with good reviews, excellent services and a sound reputation can afford to apply higher rates.

Consultation in revenue management also helps hotels place themselves correctly, increasing the perception of quality.

Overall, the price of a room is not just a number.

It is the result of a complex weave of factors, including demand, offer and the hotel’s ability to respond efficiently to market dynamics.