Ask a Hotelier: Nightly Rates and Booking Patterns

QUESTION: Why do rates (and for that matter, pricing in general) vary so widely hotel to hotel?

ANSWER: Rates completely depend on supply and demand. The room inventory that is remaining in the hotel dictates the guest room rate. Hotel A may have a group already contracted and that makes rates higher than Hotel B over the same dates. Hotels rely on history to determine peak seasons and to set reasonable rates.  

ANSWER: While the two old adages of “location, location, location” and “supply and demand” typically dominate the hotel strategy, as well as impact when or if you’ll find value pricing, there are several additional factors in play:

Service level. There is a fair amount of overlap given the industry doesn’t really agree on the terminology, but whether you prefer Select over Focused Service or Economy vs Limited service descriptions, the availability of amenities such as an on-site restaurant or swimming pool provides market segmentation in a broad sense for the industry and tends to striate the pricing in a destination more definitively than other factors.

Hotel rating. The actual meaning of how many stars a hotel has varies somewhat depending on the source of the rating (AAA vs Expedia, for example), but the basic idea that more stars equates to a more luxurious, comfortable stay and a finer attention to detail (and higher price)
holds true.

Amenities. Although basic amenities play into a property’s service level and hotel rating, the availability of some seemingly amazing offerings can greatly impact a hotel’s pricing structure, as well as determine when you’ll find less expensive dates and patterns compared to other hotels. Amenities such as indoor and outdoor waterparks, spas and salons, shopping, golf and casinos can have a tremendous impact on demand and, therefore, pricing.

Nearby demand generator. Whether it’s a resort whose own amenities create the demand, a downtown, convention center or sports-venue location, or simply being located in a popular area of town, a property’s demand generators will have a large impact on one hotel’s price compared to another.

QUESTION: Are there certain nights/patterns of the week that are generally cheaper than others when booking events?

ANSWER: Tuesday/Wednesday patterns are the most in demand patterns and, therefore, drive the rate higher. Thursday/Friday and Sunday/Monday patterns will offer the best rate. However, this can definitely vary from city to city and type of hotel. For example, resorts will have different patterns than downtown hotels.

ANSWER: If you are looking for value pricing for a specific hotel, be flexible on your dates and day pattern. If you are looking for value pricing for a specific date or pattern, be flexible as to which property or location you are willing to go with.

It’s not unusual for two properties in a destination to have completely opposite low and high demand periods. For example, a downtown property near a convention center may be very busy and very expensive during weekdays with corporate clients and groups, but be able to offer preferred pricing for rooms and events happening on the weekend. A family-orientated resort located just outside of that same downtown area may provide great value midweek in the fall and spring, but be less able to do so in the middle of summer or on weekends.

Have a question you want answered? Interested in providing feedback to planners? Send your questions or interest to josh@tsae.org. Participants will remain anonymous.
Photo credit: ©iStock.com/xiefei

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