Most travel buyers who have adopted dynamic-pricing agreements in their hotel programs are satisfied with the results, according to a Global Business Travel Association Foundation study of 193 U.S. travel managers, but a significant portion of respondents remain skeptical and have no plans to accept dynamic pricing.
About one out of five buyers surveyed said they are using dynamic pricing—using a discount off best-available hotel rates rather than fixed rates—and most within that group are using chainwide agreements in markets where they have low volumes. Only 14 percent of those using dynamic pricing said they use it in individual property agreements, and 29 percent said they used it in high-volume cities.
Just under half of dynamic-pricing adopters cited improved cost savings as a benefit, more than any other benefit in the survey. About a third said the agreements give travelers access to all room types for last-room availability, and a quarter cited transparency of rates. Smaller percentages of the group said dynamic pricing benefited them by reducing time from the request-for-proposals process, reducing administrative resources or allowing for multi-year agreements.
Most buyers using dynamic pricing also indicated they were likely to keep using it next year, and about two-thirds are considering expanding it to at least one additional hotel, according to the survey.
Among the 78 percent of buyers not currently using dynamic pricing, however, adoption is growing slowly. Only 16 percent of non-adopters—a subset that made up half the survey's total respondents—said they had tried dynamic pricing in the past, and only 15 percent of that group said they planned to use it within the next three years. Difficulties in budgeting and measuring savings were the most frequently cited reasons among buyers who have not adopted dynamic pricing.
About a quarter of the survey respondents had never even heard of dynamic pricing, and most of that group came from companies with annual hotel volumes of less than $5 million.
"When these travel managers have heard of dynamic pricing, they are no less likely than other travel managers to say their company uses it," according to the report. "This suggests that companies with a low hotel spend may represent an untapped market that would benefit from dynamic pricing if they knew about it."