As hotel negotiations commence, InterContinental Hotels
Group is urging large buyers to adopt dynamic pricing models for their 2011
hotel program, following a training and communication plan the global hotel
company launched with its national sales team.
"We want to take dynamic pricing, put it in the proper
box, wrap it up and put a bow on it," IHG senior vice president of
worldwide sales Stephen Powell told Business
Travel News. "This is about the large global accounts, and we're
sitting down with our clients and having high-level conversations with them."
Powell said IHG's new approach includes a workbook and
technology tool to show buyers potential value in accepting dynamic rates, a
discount off the hotel's best available rate, rather than fixed negotiated
rates. The sales team also is trying to address common buyer criticisms of
dynamic pricing, such as the difficulty it presents in budgeting.
"In our value proposition, we think we can predict with
greater accuracy because we have the history," he said. "It's what we're
already doing, because with fixed rates, we're predicting what average daily
rates are going to be in 2011. If we can get close to what we think ADR is
going to be, it can help in future budgeting."
IHG also wants to use dynamic pricing to continue to be
favorable to companies that provide large volumes to the company's hotels, he
said.
"We would continually reward marketshare," Powell
said. "As you continue to give us more business, the more valued rate you
would get. As you hit certain plateaus, that would go down."
Powell said discussions with large corporations also are
including hybrid dynamic pricing models, in which high-volume locations with
thousands of room nights continue to have fixed rates while locations with
lower volumes have dynamic pricing.
With negotiations in early stages, IHG has not yet signed
any deals, but Powell said the company "is getting with some very large
accounts. Many clients have said it's the first time that someone has really
sat down with them, explained it to them and showed how it might work."