IHG Urging Large-Volume Buyers To Adopt Dynamic Hotel Pricing

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."