Travel Managers Find Satisfaction, Cost-Savings with Dynamic Pricing Model

Last week, the GBTA Foundation released a study looking at travel manager awareness, adoption rates and satisfaction with dynamic pricing models for hotels. Dynamic Pricing for hotel corporate rates has been around for approximately 10 years, but the adoption of this pricing model has been a slow one.

The study, Dynamic Hotel Pricing – Has Its Time Come?, sponsored by Hilton Worldwide, surveyed nearly 200 travel managers and delves into why current adopters use this pricing model and why non-adopters do not.

Nearly one-quarter (22 percent) of the survey respondents have “adopted” the dynamic pricing model and are currently using it with at least one hotel company. All current adopters noted they were likely to continue using dynamic pricing agreements and are generally satisfied with the service. In fact, two-thirds of the respondents indicated they are likely to enter into a new dynamic pricing agreement with at least one additional hotel in 2015. The majority of adopters reported it is the only discount available at hotels for travel managers who book a lower volume of rooms.

Dynamic pricing can allow corporate travelers to obtain a discount on rooms, particularly in a market where companies do not have sufficient volume to negotiate a set rate. Travel managers using a dynamic pricing model cited cost savings, access to more types of rooms and transparency of rates as their top three benefits of using the pricing structure.

When it comes to the non-adopters, the study found there is room for education, particularly among travel managers from companies with a hotel spend of less than $5 million annually and low volume need. Travel managers with these companies represent an untapped market, as they stand to benefit the most from the dynamic pricing structure, yet are the least likely to have heard of dynamic pricing.

The majority of non-adopters who have been offered dynamic pricing said that concerns about confusion, price fluctuation and uncertainty prevented them from adopting dynamic pricing. The research indicates that effective communication would provide managers with increased clarity about dynamic pricing that could be converted into higher adoption rates.

Industry trade reporters also weighed in on the study. Business Travel News reporter Michael Baker wrote most travel buyers who have adopted dynamic-pricing agreements in their hotel programs are satisfied with the results, according to the study, and a Successful Meetings article called dynamic pricing: the next trend in business travel.