Hotel Revenue Glossary · Pricing

Dynamic Pricing

A pricing strategy where room rates change frequently based on real-time demand signals, competitive positioning, pace, and market conditions. Unlike fixed seasonal pricing, dynamic pricing adjusts rates daily or even multiple times per day.

Why it matters: Dynamic pricing captures revenue that fixed pricing leaves on the table. On high-demand nights it raises rates to maximize ADR; on low-demand nights it lowers rates to capture occupancy. Over a year, the cumulative effect is significantly higher total revenue.

Worked example: A 100-room hotel prices a Wednesday at a flat A$180 and sells 74 rooms: A$13,320. Price it dynamically instead - A$159 while pace is behind at 21 days, A$189 once pickup catches up at 10 days, A$225 in the final week - and the same 74 rooms might split 30 at A$159, 28 at A$189, 16 at A$225: A$4,770 + A$5,292 + A$3,600 = A$13,662. Same rooms, A$342 more, purely from when the rate moved.

Common mistake: Moving rate every day and calling it dynamic pricing. Without a rule that says what triggers the move — pace behind at a checkpoint, the comp set shifting, a restriction expiring — daily changes are noise, and they teach repeat guests to wait. Write the triggers down, then let the rate sit still when nothing has changed.

All glossary terms BAR (Best Available Rate) Yield Management Rate Shopping