Never Say "No" with Open Pricing

If you’re still using the BAR method to set rates, you’re setting the bar too low. And you’re likely missing out on some major revenue opportunities.

Instead, use Open Pricing—a unique and flexible way to set rates that allows hoteliers to price all room types, channels and dates independently of each other 365 days a year and never say “no” to a customer.

Let’s look at an example to illustrate how Open Pricing might boost revenue:

It’s not uncommon for hotels to apply restrictions to bookings, like a minimum length of stay on high-demand days on which the hotel expects to sell out. For example, hotels near a major event might not allow guests to stay just one night. Instead, management might implement a three-night minimum, hoping to fill the dates with less demand.

On paper, it looks like you’re capitalizing on the high-demand date to fill the shoulder dates. But in practice, you may be turning away guests who are willing to pay top dollar to stay only one or two nights.

With Open Pricing, there are no restrictions and instead rates on the night of the event would significantly increase. Guests willing to pay top dollar could book, even if it’s just for that one night.

While Open Pricing might sound complicated, the right technology can make it easier to manage by significantly reducing the time spent doing manual calculations and data entry. Integration is crucial — the right revenue management system seamlessly interfaced with the CRS and PMS can automate these tasks and push approved rates in real time.

Implementing a solid Open Pricing strategy starts by laying the groundwork. Duetto’s latest whitepaper, Drive Profits by Implementing an Open Pricing Strategy, can help by offering seven steps to get you started:

  1. Rally the troops. Open Pricing is holistic and requires collaboration from several other key departments, such as sales and marketing. Everyone has to be on the same page and working toward the same goals with promotions and discounts.
  2. Evaluate your discounts. Instead of offering a percentage off BAR every day, offer up to a certain percentage discount. This gives you the flexibility to offer deeper discounts during low demand periods and shallower discounts on compressed dates.
  3. Market your message. Certain promotions, like BOGOs for example, can limit the flexibility of Open Pricing. Evaluate your promotions and look for ways to combine discounts within the framework of an Open Pricing strategy.
  4. Train your staff. Moving away from the BAR approach to Open Pricing can be complicated. Make sure everyone understands the “why” and the ‘how” if you want total buy-in.
  5. 86 fixed modifiers for room types. Not all rooms are created equal. Instead of using fixed modifiers to differentiate between rooms with double beds and king beds, price room types based on demand.
  6. Good guests are forever. Loyalty programs are a great way to offer repeat guests fenced rates without breaking any parity agreements. They also drive more profitable direct bookings.
  7. Keep all channels open. If you close availability, you might also be losing visibility. Instead, yield each channel independently and adjust discounts based on demand, even if that means offering a 1% discount.

The practice of Open Pricing is the future of hotel revenue management. To learn more about how to implement an Open Pricing strategy and start yielding each segment individually to increase profitability, go here.


Joanna DeChellis, Digital Marketing Manager

Joanna joined Duetto in May 2015 as a Digital Marketing Manager with more than a decade of writing, editing and graphic design experience for both print and online trade publications. She is passionate about digital media and driving engagement.

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