Use of AI Based Pricing in Hospitality Industry
February 10, 2022
Many revenue management systems already use pricing algorithms supported by artificial intelligence, which determines the optimal prices by analyzing a slew of historical, forecast, and market data, and A.I. is likely to bring pricing optimization to restaurants, spas, and other outlets too.
Why there is a need to embrace AI in hotel revenue management system?
AI and machine learning have entered the traditional hospitality landscape with an assurance of driving revenue, enhancing hotel reputation, and taking the customer experience to the next level – something which the legacy systems could not do efficiently.
Hotel legacy systems are usually complex and technically outdated. The software performance is low, because of which, the data processing is delayed, leading to conflicting information on inventories. The result is – low occupancy and significant revenue loss. However, an Al-based hotel Channel Manager like Numerah, can significantly change the situation.
Benefits of dynamic pricing system
Hotel room pricing changes frequently based on seasons, monthly and weekly fluctuations as well as daily or hourly changes. You can use technology to implement the dynamic pricing system and match price to demand.
- Change room rates daily or hourly or even up-to-the-minute with dynamic pricing model
- Achieve balance between underpricing and overpricing by adjusting room rate with response to demand and supply.
- Use dynamic pricing to maximize profits with each customer
- Build an effective pricing model that best works for your property type
Fixed Pricing v/s Dynamic Pricing
Fixed Pricing for the Hotel Industry:
- A constant price is maintained leaving no scope for a price bargain or negotiation.
- It restricts a hotel owners’ potential to increase profit by the volume sold.
Dynamic Pricing for the Hotel Industry:
- This is time-based pricing. Price your rooms as per the time.
- Increase/decrease room rates as per the demand or the lack of it
- Find an effective pricing model that works best for your hotel property
- Use automated systems to collect accurate data to forecast accurately, increase RevPAR
- Use Dynamic pricing strategies to work around room rates by watching competitor pricing using technology