Floating rates seem to be making their way into corporate contracts
Some major hotel groups are reported to have started using dynamic pricing – broadly, a time-based pricing model charging different rates for rooms or services depending on demand for that particular day – for corporate contracts. The move was a characteristic of the previous seller’s market. The global hotels company InterContinental Hotels Group, which is reported to have been trying to persuade buyers to accept floating rates for two years, now says that more than 1,000 of its accounts have accepted the implementation of discounts from best-available market rates rather than a fixed rate.
IHG’s stated target was to get 25% of its corporate clients to agree to use dynamic pricing of some kind for 2011. Dynamic pricing is the only way a hotel company can guarantee discounts on 100% of room nights for its clients, said Lara Hernandez, IHG’s director of business travel and worldwide sales. In the past, some major hotel groups have attempted to insist on dynamic pricing, particularly during the previous seller’s market, but most corporate clients have resisted. Now, however, some kind of dynamic pricing, with or without rate caps, is being accepted by around 22% of corporate buyers.