By Roeleen Johnson, Director of Client Services at HTS (Hotel and Travel Solutions)
As the Head of Account Management here at HTS, my team and I often speak with clients about how best to manage their hotel spend. One topic that comes up occasionally is dynamic pricing. I’m asked what it really means, how it works in practice, or how it stacks up against traditional negotiated hotel rate programmes.
If you’re considering which approach is right for your business, here’s my perspective, based on what we see every day at HTS.
What is dynamic pricing?
Dynamic pricing means hotel rates fluctuate in real time. Hotels adjust prices automatically based on supply and demand. Room availability, booking trends or large local events (think sporting events, music events or public-facing exhibitions) can all affect the nightly rate in a hotel – or an entire city’s hotels.
You’ve probably seen this when booking a flight: the earlier you book, the cheaper it often is. But prices can suddenly shoot up when seats start selling out.
Hotels use the same principle.
How is this different from negotiated hotel rates?
A negotiated rate programme means your company locks in agreed, discounted rates with selected hotels or chains for a set time. The agreements usually last for one year.
This guarantees a consistent price, plus you often receive extra benefits such as free – or reduced-rate – breakfast or more flexible cancellation terms.
For companies with a fairly consistent number of travel bookings to the same cities, these agreements deliver cost predictability and stronger partnerships with hotel providers.
The downsides of dynamic pricing
From my experience (22 years in the hotel booking and management industry), while dynamic pricing can sometimes result in savings when demand is low, it has some drawbacks for business travellers and travel managers.
Costs can be highly unpredictable, with prices changing daily or even hourly, which makes budgeting and forecasting a real challenge.
Travellers also lose out on added benefits, as hotels are less inclined to offer perks like room upgrades, complimentary meals, or other valuable benefits when booking at public dynamic rates.
Many travellers find it frustrating to see inconsistent prices for the same hotel across different trips, and without pre-agreed rates. Plus, it becomes harder for travel managers to ensure bookings align with company policy and preferred suppliers.
When does dynamic pricing work well?
Dynamic pricing can work for companies that have a small number of irregular travel bookings that don’t justify negotiating contracts or unpredictable destinations.
It can also be a useful fallback for secondary or one-off destinations outside your main areas. But if you have a managed hotel programme, a good travel management company will achieve a good rate anyway, even for a one-off destination.
What I recommend
In my experience, the most successful clients use a well-managed negotiated hotel programme, with all the benefits of bill back in core locations. And as a hotel specialist, we negotiate rates for their top destinations – improving their hotel supplier relationships – and negotiate ad-hoc trips or destinations by using HTS rates.
HTS rates are the rates we negotiate and achieve for key suppliers in UK cities based on our excellent supplier relationships and our combined client portfolio hotel spend.
This strikes the right balance between traveller satisfaction, savings, and predictability.
Want to know more?
If you’d like to review your current hotel strategy or find out if you’re missing out on hotel savings, my team and I are here to help – feel free to contact us.
Roeleen Johnson is a founding member of the senior management team at HTS, bringing over 20 years of experience in the business travel, hotel and events sector. She played a key role in shaping the company into one of the UK’s Leading 50 Travel Management Companies.
Roeleen specialises in client account management and business development, with a strong focus on delivering results, building lasting relationships, and adapting to changing market needs.
