Home Accommodation Why are hotel rates so unpredictable these days?
AccommodationHospitality

Why are hotel rates so unpredictable these days?

47

Ever booked a hotel room only to see the price drop (or skyrocket!) a few days later? You’re not alone. Dynamic pricing has taken the hotel industry by storm, meaning the cost of your stay can fluctuate wildly based on demand, time of booking, and even the weather.

Unlike traditional set-it-and-forget-it corporate rates, dynamic pricing allows hotels to tweak room rates in real time as demand ebbs and flows. What was once an R1,200 per night corporate negotiated rate could suddenly surge to R3,000 or more if occupancy peaks during a busy period. It allows them to cash in on peak demand and maximise revenue, falling in lockstep with the rest of the travel industry’s pricing philosophies.

“Hotels realise they left money on the table with those old static rates. If they’re running at 90% occupancy, why not charge premium rates?” says Carmen Hidalgo, Customer Success Manager, Corporate Traveller. “After years of stagnant pricing, they’re making up for lost time.”

The pricing volatility crisis for corporates

Many major chains are now leading the dynamic pricing charge, though their approaches can vary. Some offer a hybrid model with static rates during slower periods, then flip the switch to dynamic pricing once occupancy crosses a certain threshold. Others have fully dynamic rates year-round that fluidly adjust based on bookings.

Carmen Hidalgo

“With room rates now able to fluctuate wildly based on a property’s occupancy levels, we’re advising our clients to urge employees to book further in advance whenever possible,” explains Hidalgo. “Waiting until the last minute could mean getting socked with incredibly high peak pricing that blows out travel budgets.”

Anchoring against pricing storms

The pricing rollercoaster created by these dynamic models has made negotiating corporate travel agreements crucial as a safeguarding measure. With a panoramic view into future marketplace shifts, travel management companies can forge deals that bundle in amenity packages, favourable rate ceilings, and more predictable pricing bands for clients.

Hidalgo says they can also compare their pre-negotiated rates against each corporate client’s existing agreements. The lowest hotel rate is deployed, ensuring clients receive the absolute best pricing. But the real magic happens when amenity bundles are customised.

“We’re negotiating creative corporate agreements that bundle valuable add-ons like free breakfast, parking and other extras to help offset those higher room rates when unavoidable,” notes Hidalgo. “Or we secure dynamic pricing models with advantageous rate capping for our clients during those peak madness periods. Our bulk buying power gives us a huge leg up to negotiate or offer our clients pricing packages that corporations could never get directly.”

Internationally, the dynamics shift as Corporate Traveller leverages its global negotiating leverage with major hotel brands. “Properties overseas are often less open to personalised negotiations, so being able to tap into our company’s master agreements is crucial,” she explains.

When it comes to rental cars, a travel management company (TMC) like Corporate Traveller again leverages its might to exceed typical corporate discounts. Another core tactic is pushing enrolment into loyalty programmes to unlock benefits—from priority service to free upgrades—at an enterprise level.

For airlines, corporate deals can include benefits like complimentary upgrades, baggage allowances, and the ability to earn miles/points for the company. These extras create a better, hassle-free travel experience for employees.

Hidalgo notes that an astounding 90% of their new SME clients come on board without any existing corporate agreements in place. “Our volumes allow us to negotiate directly at levels they’d never qualify for individually,” she says. We can give them immediate access to rates and perks usually reserved for multinationals.”

Working with a travel partner commanding global, cross-vertical negotiating power opens a world of possibilities for corporations. With tectonic shifts disrupting pricing models, that expertise and leverage have become utterly invaluable.

Related Articles

Future Found Sanctuary launches retreat packages

Future Found Sanctuary, Cape Town’s first and only 5-star regenerative travel destination,...

Leveraging Temporary Employment Services to boost South Africa’s hospitality and tourism sector

By Donné Nieman, Sales Director (Western Cape) at Workforce Staffing As South...

Protea Hotels Expands with Two New Openings

To celebrate its 40th birthday, Protea Hotels by Marriott announced the opening...

ANEW welcomes striking conference space to its portfolio

ANEW Hotels & Resorts is thrilled to announce the latest addition to...

Subscribe To Our Newsletter

Join our mailing list to receive the latest news on what's trending in the world of travel, beauty, fashion, tech, finances and more.

You have Successfully Subscribed!