Dynamic pricing for hotels: revenue management for small and mid-sized properties

What dynamic pricing means for a hotel

With dynamic pricing, the hotel doesn’t just set one rate per season; it adjusts the rate for each date to the expected demand. If a weekend is well booked early, the rate for the remaining rooms goes up. If a period is running slowly, the rate is lowered carefully or an offer is created to bring in extra guests. The goal is not the highest rate but the best total revenue across all nights, measured for example by RevPAR.

Dynamic doesn’t mean chaotic. Guests accept different prices for different dates; they know that from flights and concerts. What annoys them are unexplained jumps within a few hours, or a price on the hotel website that is higher than on an OTA. Good pricing is therefore above all understandable and consistent.

For small hotels the most important tool isn’t an algorithm but routine. If you go through the next 90 days every week and make two or three pricing decisions, you are already doing revenue management.

Which factors determine the right rate

Every pricing decision is based on a few signals. The most reliable are your own data, because they show demand for exactly your hotel. Market observation, such as a look at the rates of comparable hotels in your area, can add to them but doesn’t replace them.

Pricing rules or recommendations: two approaches that complement each other

Pricing rules are fixed if-then instructions: “If occupancy is above 70%, plus 10%.” “Friday and Saturday plus €15.” “With less than seven days’ lead time and under 40% occupancy, minus 10%.” Rules are predictable, easy to explain and ideal to start with. Their limit: they only react to what you thought of.

Recommendation tools also analyse your booking history, notice for example that a date is booking faster than usual, and suggest a rate change. A good tool always shows why it recommends something, stays within your limits and leaves the decision to you. Be sceptical of promises such as guaranteed revenue increases, or of a black box that changes rates without explanation.

In practice, successful small hotels combine both: rules for the framework of season, day of week and occupancy, recommendations for the exceptions, and a fixed weekly review in which a person makes the decision.

Guardrails: minimum rate, maximum rate, minimum stay and rate parity

Every dynamic pricing set-up needs limits. The minimum rate protects you from dropping below your costs and your standards in weak periods. Calculate it from your costs per occupied room (cleaning, laundry, energy, breakfast and commission) plus a margin. The maximum rate protects your reputation: a weekend at three times the price may sell out, but guests will judge you by that price in their reviews.

A minimum stay is often more effective than a higher rate. A Saturday sold as a single night often blocks Friday and Sunday. Set a two-night minimum stay for strong weekends or events, and lift it again if gaps remain shortly before arrival.

Rate parity means the same room type with the same conditions is offered at the same price on all channels. Whether and how far OTAs may impose requirements on you depends on the contract and the country; if in doubt, have your OTA contract checked by a lawyer. Regardless of that, your direct rate should never be higher than on an OTA. The cleanest way to give direct bookers an advantage is a dedicated direct rate, an extra such as breakfast or late check-out, or better cancellation terms.

A worked example with four rules

A hypothetical 20-room country hotel has a base rate of €120 per night in its double room category, a minimum rate of €95 and a maximum rate of €185. It works with four simple rules that are applied one after the other. All figures are an example.

For a Saturday in August, 45 days before arrival, at 75% occupancy, the result is: base rate €120, high season plus 20% to €144, weekend plus €15 to €159, occupancy above 70% plus 10% to €174.90. The rate stays below the maximum. For a Tuesday in November, five days before arrival, at 30% occupancy, only the last-minute rule applies: €120 minus 10% gives €108, well above the minimum rate of €95.

Watch the order: whether a fixed weekend surcharge is applied before or after a percentage surcharge changes the result. So test your rules in a rate preview with typical stays before they go live.

How STRYK handles it

In STRYK a single pricing logic calculates the rates for the PMS, the booking engine on your website and the rate preview. For each room category you set the base rate, minimum and maximum rate and the minimum stay. Pricing rules work as a surcharge or discount in percent or euros, or as a fixed rate, and can be tied to period, days of the week, length of stay, lead time, occupancy and sales channel. In the rate calendar you set a separate rate for individual days, for example for an event. Rates can be derived from another rate, for instance a non-refundable rate at 10% below the flexible rate, so you only maintain one price. The rate preview shows for typical stays which rules apply and what the final rate is.

Connected OTAs receive the same rates and restrictions. Connect Booking.com, Expedia, Airbnb and other channels to STRYK. Manage rates and availability centrally and handle OTA reservations in the calendar. You set channel mark-ups deliberately instead of maintaining rates per OTA by hand. Rate plans, pricing rules, rate calendar and rate preview are included in the STRYK base price.

The Intelligent Pricing add-on adds forecasts and recommendations per category and stay date to the rules. It analyses occupancy, pickup, pace, booking curve, lead time, ADR and RevPAR; you enter events yourself. Every recommendation shows the current and recommended rate, the change, the strategy and the signals. You approve or reject recommendations manually, or let them be applied automatically within your minimum and maximum rates and your maximum change. Manually set special rates stay protected, and if the data is too thin, the automation stops and shows why. STRYK does not read competitors’ rates; there is no automatic rate shopper. Intelligent Pricing is free for one month and then costs 1.9% of the room revenue recorded in STRYK, only for as long as you have the add-on activated.