HOSPITALITY INDUSTRY EXPERIMENTS WITH DYNAMIC PRICING TO BOOST REVENUE AT RESTAURANTS

Your next steak dinner could cost you more money on a Saturday.

While hotels and airlines have always used dynamic pricing as part of their business models — a strategy to charge more or less depending on time, day of the week, or season — restaurants and stadiums could start increasingly relying on it.

When it comes to pricing out menu items for peak dining times, or reserving prime tables, hospitality operators may be able to hone in on data to get more insight on consumer demand and price accordingly. It’s similar to how Uber may charge more during rush-hour traffic, holidays, or when fewer rides are available to hail in the rain.

Data-driven tech innovations could help operators better identify foot traffic and demand. On a Saturday night for example, when diners are vying for a popular 7 p.m. table, owners may tack on a charge for reservations when they normally wouldn’t on, say, a Tuesday night. Or, perhaps menu items may see a slight surge in pricing on weekends compared to slower weekdays.

Algorithms are able to help operators see spikes in demand and determine when it makes the most sense to charge more for less for services and experiences like amenities. Restaurants could be following in hotel and airline industry footsteps by using data to factor in seasonality and occupancy and set prices based on consumer demand and other variables. These data points allow operators to implement a pricing strategy specifically geared towards supply and demand.

Indeed, hotels, at the beginning of the day, may have a forecast of bookings up until the afternoon and if reservations exceed their estimate they can increase price quotes for the next day or booking window. Restaurants could also follow this model with reservations. The most expensive days to book a hotel room are reportedly Monday through Wednesday and hotel searches drop as much as 30% closer to the weekend, Afar reported. Restaurants could consider adopting a similar strategy by opening reservations up earlier in the week, and, perhaps, dropping prices closer to the weekend if open slots are unclaimed or customers cancel. On the contrary, if fewer rooms are booked during a time slot, a hotel operator may decide to lower prices during that same time the next day just as a restaurant may make more tables available if people cancel.

This pricing method has resulted in cost savings for operators. Indeed, according to a survey by the Global Business Travel Association of 200 travel managers, 47% (nearly half) said they say cost savings as a result of dynamic pricing.

A number of companies have started experimenting with charging more during peak times. The MCR Hotels, one of the largest hotel owners in the U.S. has begun charging guests $20 to check in early, and another fee for late checkouts at hotels like the TWA Hotel at New York’s John F. Kennedy International Airport, The Wall Street Journal reported. Guests of the hotel could also expect to pay $25 to take a dip in the pool on a Saturday but get in for free on a Tuesday, while gym use would also have an a la carte charge, according to the same report. And NFL teams have also ramped up dynamic ticket pricing over the years adjusting the cost of game tickets in real-time based on day-of conditions like weather and supply and demand depending on the game and time of year.

And companies like Disney reportedly have been known to implement dynamic ticket pricing in years past during the most in-demand travel times, like around Christmas, when ticket prices would be at their highest and lower during school days mid-week.

It may have taken a bit longer to catch on, but It’s no surprise that hospitality owners and operators are thinking of ways to maximize profits during peak demand periods and incentivize customers with deals when there are more vacancies and open tables.

Originally published at https://www.linkedin.com.

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Branded Strategic Hospitality “Branded” is an investment & advisory company that leverages its ecosystem of hospitality venues, expertise, and deep relationship

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Branded Strategic Hospitality

Branded Strategic Hospitality

Branded Strategic Hospitality “Branded” is an investment & advisory company that leverages its ecosystem of hospitality venues, expertise, and deep relationship

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