Transcript Master Title - Philadelphia BTA

Dynamic Pricing Friend,
Foe or the Future?
Presented by
Sean McCurdy
Global Director of Worldwide Sales
Interstate Hotels & Resorts
Agenda

Hotel Trivia

Dynamic Pricing

What is it?

How to evaluate it?

Is it right for you?

Amenities Travelers Prefer

What is Negotiable?
Hotel Trivia 1930

The standard travel agent commission
was?

A. 5%

B. $1

C. 10%

Average Room Rate?

A. $1.34

B. $5.60

C. $15.80
Hotel Trivia 1950
JW Marriott opens his first hotel in?

A. Arlington VA

B. Atlanta GA

C. New York NY
1951 First hotel company to install
televisions in all the guest rooms?

A. Wingate

B. La Quinta

C. Hilton
Hotel Trivia 1950

Kemmons Wilson opens his first Holiday Inn,
where?

A. Atlanta

B. Memphis

C. Irvine

He named his hotel after?

A. His first Vacation

B. A National Holiday

C. A Bing Crosby movie
Economic Factors Driving
Dynamic Pricing

Inflation

Demand grew 4.5% vs. Supply of 1.3%

Consolidation of ownership-greater
control on pricing

Dramatic increase in control over rate
integrity and inventory

Aftermath of Hurricanes
Industry Factors Driving
Dynamic Pricing
Allied Members

Desire to simplify the RFP Process

Negotiate Rates based upon Demand

Major Brand Support
Direct Members

Increase Hotel Compliance

Opportunity to expand preferred partnership in
secondary cities

Eliminate 3rd Party Costs
What is Dynamic Pricing?


Fixed % off a floating benchmark rate.

Consortia

Corporate

Best Available
Benchmark rate will float up or down
based upon market conditions.
What should you consider?






How often do your travelers receive the negotiated
rate at your preferred hotels?
Will the discount apply to other room types?
Will it cover all properties (chain-wide) or selected
properties?
Will the % discounts vary by city & volume? Or will
one fixed % that applies to all properties?
Will you be able to negotiate value added
amenities?
What is your benchmark? Will the rate fluctuate by
night for a multiple stay?
Key Areas of
Consideration

Financial





Can your suppliers provide a data-driven model
that quantifies the economic benefits.
Are all of your suppliers providing a similar pricing
model, how will this affect non-dynamic preferred
agreements.
How do your current negotiated rates compare to
other benchmark rates?
Dynamic Pricing may add additional hotels that
could not offer you a negotiated rate, resulting in
incremental savings.
Measure the effectiveness on an on-going
basis.
Key Areas of
Consideration

Traveler Experience

How will you communicate the new model to your
travelers? Will they understand the value of the
discount?

How will travelers forecast or budget their hotel
costs?

If your travelers are performing client-billable
services, how will the changes be communicated
to their clients?

Are you travelers required to use per diem or city
caps?
Key Areas of
Consideration

Change Management






How will the forecast and budgeting process be
changed?
How will you manage cities where you have a
hybrid situation?
How will online booking tools and travel agencies
manage and sell rates?
How will the discounts be validated and audited?
How will pre-trip approval and post-trip expense
audits need to be changed?
Will you be able to quantify the value of the new
program to management?
Dynamic Pricing
 Is
it right for you?
What is negotiable?
Hotel Trivia 1960

1962 Curt Carslon buys shares of this
Minneapolis hotel?

Typical hotel had? 120 rooms, 39
rooms, or 78 rooms.

Average occupancy? 45%, 67% or 85%.

First cable movie station offered in hotel
rooms? HBO & Cinemax or Showtime &
The Movie Channel.
Questions & Answers
Available Resources
NBTA Hotel Committee:
Rate loading white paper-glossary of industry
terms.
2006 NBTA Modular Hotel RFP: includes copies of the
Modules, Specifications, Instructions, Templates,
Vendors, French, German and Spanish Translations
- Best Practices: Hotel RFP Package
- Best Practices: Company Overview Sample
- Best Practices: Rate Accept Sample
- Best Practices: Rate Reject Sample
- Best Practices: Cover Letter Samples
- How to Develop a Hotel Program
- Recommendations on Hotel Reverse Auctions
- Reverse Auction Resource List
- RFP Vendor Resource List
Historical Perspective of Occupancy and ADR