What You Should Know About Dynamic Pricing

Dynamic pricing, also called yield management, is the process of making frequent adjustments in the price of a product in response to certain market factors, such as demand or competition. As demand changes, prices should change. Within the hotel and lodging industry, this means a strategy for renting the right property, to the right guest, at the best possible time, for the highest amount, in order to maximize the revenue earned. The pricing model of the past, where a rate was set and did not change, is no longer effective. A “set it and forget it” strategy will net you less or worse yet, reduce your bookings while your competition beats you. Like hotels and airlines, rental property rates need to fluctuate.

As a company, we have moved to a true ‘daily rate’ dynamic pricing structure, meaning each day of the week can have a different rate. We have a well-developed strategy where we use a combination of manual rate setting paired with automated adjustment tools. Each individual property has a standard rate, manually set by us, which takes into account property condition, upgrades, comparable properties on the market, building amenities etc. Itrip has developed a program that makes adjustments to the standard rate - both up and down - based on factors such as occupancy and booking window. This technology also allows us to quickly create a new rate set for last minute discounts and also increase the price when demand and occupancy are high. Never fear, though - there are built-in safeguards that allow us to set minimum rates that the system will not drop below.