External Article26 January 2009
The Weird Science of Hotel Pricing
New York Mag
How did you get stuck shelling out $229 for your room when the guy next door paid $159? According to Bjorn Hanson, who teaches hospitality courses at NYU, hotel-room rates can vary wildly depending on where you look (the hotel’s website versus online discounters), when you book (six months ahead or the day before), and when you’re traveling (spring break or a Tuesday in the dead of winter). To come up with a price, hoteliers crunch a number of variables—industry trends, economic factors, special events—to forecast an occupancy rate for every day of the year. (New York hotels are looking at a rate in the high seventies this year, Hanson says, down from the 80-plus percent it’s been in recent years.) Hoteliers keep close track of the pace of booking, and will bump or lower rates to help them reach their desired occupancy. “If the booking pace is ahead of what’s forecast, hotels will switch to a higher rate,” he says. Online-booking sites may not fluctuate in tandem with hotels, in part because they often buy blocks of rooms at discounted rates and are able to sell them for less than the hotel charges. So how can you take advantage of the price swings?