HSMAI, Duetto Release White Paper on Open Pricing

The white paper makes the case for moving past best available rates and pricing all room types, channels and dates independently of one another to maximize revenue.

"While in the short term, hotel industry revenues continue to rise, commissions paid to third parties are growing twice as fast – threatening hotel revenues and profitability. A response from the industry is needed – and improvements in business intelligence, data and analytics are providing hoteliers better forecasts by specific channels. Together with new technology that is allowing connectivity among property management, central reservation and revenue management systems, open pricing is becoming a reality," said Patrick Bosworth, CEO and co-founder of Duetto.

Dynamic pricing, which has many different meanings, involves managing rates based on fluctuations in supply and demand in the market. Hotels capture revenue by adjusting their rates on a daily, or hourly, basis. But typically all of those rates are a derivative of the best available rate (BAR).

With open pricing, hoteliers can price each room, segment and channel based on actual demand.

"Open pricing is the future," concluded Bosworth. "It means never closing the door on a guest who wants to book a hotel. It's also what revenue management should be about: Maximizing revenue by selling the right room to the right customer at the right time for the right price."

The open pricing model also balances shoulder dates more effectively, and allows the modifier between standard and premium rooms to fluctuate versus staying the same all the time.

"Most hotels are missing the opportunity to use differentiated pricing applicable to different behaviors exhibited by people booking from other channels," says Marco Benvenuti, a co-founder of Duetto and its chief analytics and product officer. "Is someone booking through an OTA automatically only going to accept paying 35 percent less? Maybe they'd be willing to pay 30 percent less. Maybe even 20 percent less."

As revenue per available room (RevPAR) has risen so has the cost of customer acquisition. A recent study from the Hospitality Asset Managers Association (HAMA) revealed the rate of growth for business acquisition costs is growing almost twice as fast as the rate of revenue growth. And as demonstrated in the Distribution Channel Analysis, published by the HSMAI Foundation, the U.S. hotel industry was paying $3.8 billion to intermediaries in 2010, but that number could double by 2015.

The HSMAI-Duetto white paper explains that open pricing will better align supply with demand and also with rising distribution costs. As technology and revenue strategies evolve, so do the opportunities available for hotels to move beyond a fixed-tier approach to pricing.

The "Opening the Doors to New Revenue" white paper is available in the HSMAI Foundation Knowledge Center (http://www.hsmai.org/knowledge).

About Duetto
Duetto delivers dynamic, intelligent revenue strategy solutions to the world's leading hotels, allowing them to maximize profits through superior, actionable data to better manage pricing, revenue and business mix decisions. Leveraging a cutting-edge, cloud-based architecture, combined with a feature-rich product set, Duetto transforms the way hotels price and sell rooms.

Duetto has attracted many of the highest regarded investors and advisors from the hospitality and technology industries, including, among others, Accel Partners, Thayer Ventures, Battery Ventures, Altimeter Capital, Trinity Ventures, Benchmark Capital, Leland Pillsbury, founder, Co-Chairman and CEO of Thayer Lodging, Marc Benioff, founder, Chairman and CEO of Salesforce.com, Mark Lomanno, former CEO of STR, Rich Barton, former CEO/Co-Founder of Expedia and Sam Shank, CEO and Founder of Hotel Tonight.