Published on
June 18, 2024

The Power of combining Dynamic Pricing and OTA ranking optimization

Smart hoteliers implement dynamic pricing, but very smart hoteliers combine it with a strategy for reaching the top positions on OTAs. Dynamic pricing is crucial for hotels looking to maximize revenue and occupancy rates. However, great prices alone won't have the full effect if your listings are not seen due to a low ranking on OTA search results. This blog explores the power of combining dynamic pricing with OTA ranking optimization. Read on to become a very smart hotelier!

Understanding Dynamic Pricing

Dynamic pricing, or demand pricing, is a flexible approach that adjusts the price for hotel rooms to reflect changing market conditions. This strategy helps hotels optimize revenue opportunities and manage occupancy effectively by selling rooms at the best possible rates at the right times.

Why Implement Dynamic Pricing in Your Hotel?

  • Maximized Revenue Through Price Optimization: Dynamic pricing allows hotels to adjust prices according to high or low demand periods, maximizing revenue during peak times and boosting occupancy during slower periods.
  • Enhanced Competitiveness: Keeping track of competitor pricing and market trends helps hotels stay competitive. Dynamic pricing ensures that your offerings are attractive and priced right compared to others in the market.
  • Improved Inventory Management: Effective room inventory management through dynamic pricing reduces overbooking during high demand and underbooking during low seasons, leading to optimal occupancy rates year-round.

Integrating Modern Technology 

To successfully implement dynamic pricing, hotels can embrace technology such as:

Revenue Management Software (RMS)

Choosing the right software to help you set your prices is absolutely crucial. A frequently used RMS is Atomize, which we strongly recommend. The leading RMS uses advanced algorithms and real-time data to predict market demand and set optimal prices for hotel rooms. This technology automates pricing adjustments, making it easier for hotels to respond swiftly to market changes without constant manual oversight.

Hotels using Atomize show an average increase in RevPAR by 20% after 6 months and save around 30+ hours per month by moving from manual to automated price setting.

OTA Ranking Management Algorithm

OTA Ranking management enhances a hotel’s visibility on Online Travel Agencies (OTAs) such as, Expedia, Airbnb etc. It does so automatically, using an algorithm that changes parameters of listings to make them rank on top. This groundbreaking solution was introduced by Otamiser. By improving positions of hotels in the search results of the OTAs, Otamiser skyrockets listing views by on average 150%, increasing occupancy and revenue. The Otamiser Ranking Management Solution is based on the common parameter that 75% of positive click-through behavior happens in the first 15 listings on any OTA.

On average hotels who collaborate with Otamiser see an increase of 24% in their revenue. 

Linking Willingness to Pay with Dynamic Pricing

Dynamic pricing models leverage data analytics to understand consumer behavior and willingness to pay, aligning room rates accordingly to enhance customer satisfaction and drive more bookings. In behavioral economic terms; this moves the consumer surplus towards the hotelier. Using an RMS like Atomize allows for more precise adjustments that closely match what guests are willing to spend, optimizing both revenue and guest experience. 

Boosting OTA Rankings Through Dynamic Pricing and Enhanced Visibility

Implementing dynamic pricing with the support of technology like Otamiser’s Booster® can significantly improve a hotel's OTA rankings by:

  • Increasing Conversion Rates: Offering rates that reflect current market demand can lead to higher conversion rates on OTA platforms. This is a critical metric that OTAs consider when ranking properties.
  • Generating Positive Reviews: Guests are more likely to leave favorable reviews if they perceive they received good value. Enhanced guest satisfaction from fair pricing can improve review scores, further boosting OTA rankings.
  • Strategic Discounting and Promotions: Otamiser can help implement timely promotions, attracting more bookings from OTAs and thus improving search visibility and OTA rankings.

It's important to understand the full implications of these technologies in a broader context. While these tools offer formidable benefits, a reliance on one without the other can lead to unintended consequences.

Why Hotels Need Both Dynamic Pricing and Online Visibility

It's evident that a hotel's financial and operational performance can be compromised when focusing solely on dynamic pricing or online visibility. Without the harmonious interplay between the two, the potential of reaching and converting the maximum number of guests remains unrealized. On the one hand, without robust online visibility, the nuanced pricing strategies powered by Atomize may not effectively reach the intended audience. On the other hand, an enhanced online presence without the backing of dynamic pricing fails to capitalize on the fluctuating market demand, possibly leading to missed revenue peaks or pricing that repels guests during quieter times.

We’ll delve deeper into the pitfalls of such a one-dimensional approach and explore why a synchronized strategy is not just beneficial but necessary for hotels in today's digital marketplace.

The perfect mix of dynamic pricing and online visibility

Adopting dynamic pricing in your hotel, supported by cutting-edge technology like Atomize RMS and Otamiser’s Booster®, goes beyond simply adjusting room rates. It involves a strategic approach to price setting, inventory management, and online visibility on OTAs that can significantly enhance your hotel's competitive edge and market presence. By leveraging these modern solutions, hotels can not only increase their revenue but also secure a stronger position on OTA platforms, leading to sustained growth and success in the hospitality industry.

Learn more about the Revenue Management System of Atomize >

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