Dynamic Pricing
The Power Move That’s Not for Everyone
Let’s talk about one of the most talked-about pricing strategies in hospitality right now: Dynamic Pricing.
At its core, dynamic pricing is all about adapting your rates in real time based on demand. Room prices can change not just daily, but multiple times throughout the day, reacting to shifts in booking pace, local events, competitor prices, and even the weather. The goal? To optimise every booking and squeeze the most value out of every available room. The airlines have done this for years, hotels and holiday parks are just catching up.
Sounds like magic, right? And in many cases, it is. But like any tool in your revenue strategy kit, dynamic pricing comes with its pros and its potential pitfalls.
Why So Many Operators Are Turning to Dynamic Pricing
First, let’s give credit where it’s due. Dynamic pricing, when done well, often leads to a quick and noticeable lift in Average Daily Rate (ADR). That’s the kind of result we all want.
It’s particularly effective for properties in high-traffic locations or those that attract a lot of transient, price-sensitive guests—think city hotels, airport properties, or hotels near big attractions. These travelers are typically shopping around and comparing prices in real time. Being competitive (and agile) matters.
Dynamic pricing also allows hotels to respond instantly to changes in demand. Surge in bookings for a weekend? Your prices rise automatically. Slower weekday? Rates drop to stay attractive. It’s like having a digital yield manager working 24/7—if you have the right tools in place.
So… Why Isn’t Everyone Doing It?
Because it’s not always the right fit.
For properties that have loyal return guests, a more predictable pricing structure can actually be a strength. These guests often value consistency and trust over the thrill of a bargain. If your regulars start seeing wild price swings or find that a standard room is suddenly more expensive than a suite, they might lose confidence—or worse, start shopping around. It’s also difficult conversation for your staff to explain over the telephone sometimes.
Then there’s the operational complexity. Dynamic pricing isn’t something you can manage with a spreadsheet and a gut feeling. A solid Revenue Management System (RMS) is essential. And so is having the right Channel Manager setup to push all those price changes across your OTA platforms, direct booking engine, and everywhere else.
Without automation, the sheer number of pricing decisions becomes overwhelming—especially if you have multiple room types, rate plans, and distribution channels. It’s not just about moving prices up or down; it’s about doing it intelligently, consistently, and without disrupting your brand integrity.
Potential Pitfalls to Watch Out For
Rate cannibalisation: Imagine this—your standard rooms are selling like hotcakes, and your pricing system bumps the rate up. But your superior rooms aren’t moving, and suddenly they’re cheaper than the standard ones. This kind of misalignment can create confusion, damage brand perception, and even leave revenue on the table.
Loss of customer trust: Guests talk. They compare prices. If someone books early and finds out later they could’ve paid less, that can leave a sour taste—especially if you’re targeting return guests or long-stay markets.
Internal friction: Corporate clients, groups, wholesalers—they may not love seeing inconsistent or fluctuating pricing either. It’s essential to decide whether dynamic pricing applies to all segments or just to Best Available Rates (BAR).
So… Is It Worth It?
It can be. Absolutely.
But like any revenue strategy, it needs to match your property type, your guest profiles, and your business goals. Dynamic pricing works best when it’s part of a bigger plan—not just an isolated tactic.
Want to give it a try? Start small. Test it on selected room types or limited date ranges. Use buffers or price floors to protect your brand. Make sure your systems are talking to each other. And most importantly—watch your data closely.
Final Thought from Revenue Creatures
Dynamic pricing can be a powerful lever for increasing revenue, but it’s not a one-size-fits-all solution. It requires investment—in tools, time, and training. But for the right property, at the right time, it can unlock a whole new level of profitability.
At Revenue Creatures, we’re here to help you figure out what strategy suits your business best—because growing your revenue shouldn’t come at the cost of losing your identity.
Tools of the Trade: Revenue Management Systems Worth Exploring
While both RMS and Newbook come with built-in dynamic pricing modules—and they’re a fantastic starting point—we know not every property is created equal. For many, these internal tools are more than enough to get results. If set up and monitored correctly, they can deliver a 10–15% uplift in ADR with minimal fuss.
They’re relatively simple to implement, don’t require much training, and give you a solid foundation for managing price shifts based on occupancy, booking pace, and seasonality. For smaller parks or boutique properties, they strike the perfect balance of automation and control.
But if you’re running a larger, high-volume property or want more control over strategy, forecasting, and segmentation, it might be time to look at external revenue management plug-ins.
Here are two worth considering:
RoomPriceGenie
A great option for small to medium-sized properties looking to take the next step.
User-friendly interface and quick to onboard
Integrates with many PMSs, including Newbook
Adjusts rates automatically based on real-time demand
Offers pricing suggestions you can approve or override
Generally more affordable than the larger enterprise options
Ideal for: Independent hotels, motels, and glamping/cabin businesses dipping their toes into automated pricing.
IDeaS Revenue Solutions
This one’s a heavyweight—designed for properties with complex room mixes, multiple market segments, and high booking volumes.
Advanced forecasting, group pricing, and competitor rate tracking
Integrates with a wide range of PMSs and channel managers
Requires more setup time and investment
Known for producing 25–35% revenue uplift when used strategically
Ideal for: Larger hotels, resorts, or high-occupancy parks with diverse accommodation types and distribution channels.
A Word of Warning: No System is Set and Forget
Even the smartest tech still needs a smart human behind it. You’ll need to:
Monitor your results regularly
Adjust strategies as markets shift
Coordinate with sales and marketing teams
Make sure your guest experience isn’t compromised by wild pricing swings
The best results come from a hybrid approach—where automation does the heavy lifting, and you keep the steering wheel.
If you’re not sure which way to go, Revenue Creatures can help you navigate the options. Whether you want a simple setup that just works or a full-blown revenue engine with all the bells and whistles, we’ll make sure it suits your size, style, and strategy.
Let the data do the hard work—just make sure you’re asking the right questions.