What Makes a Good Pricing Strategy for a Hotel?
In a fast-growing and highly competitive hotel market, pricing is one of the most powerful levers of hotel revenue management. With increasing digital bookings, fluctuating demand, and tech-savvy travellers, hoteliers need to move beyond just offering “best rates.” The choice between static and dynamic pricing can make or break your overall hotel revenue management strategy.
A good hotel pricing strategy involves setting prices that maximise revenue while remaining competitive and appealing to guests. It’s not just about charging the highest possible price but finding the “sweet spot” that balances high occupancy with optimal revenue. This requires understanding market demand, competitor pricing, and your own hotel’s unique characteristics – all of which are crucial aspects of effective revenue management for hotels
Static Pricing: The Traditional Route
Static pricing means setting fixed room rates for a season or the entire year. It’s still common in budget to mid-segment hotels, especially in leisure destinations like Manali, Udaipur, or Goa.
Pros:
- – Simple to implement
- – Easy to explain to travel agents and corporate clients
- – Stable for long-term planning
Cons:
- – Doesn’t react to sudden demand surges (festivals, weddings, cricket matches)
- – Can leave money on the table during high-demand periods
- – May result in low occupancy during off-season; even during peak season, depending on static rates can mean losing out on potential revenue
Dynamic Pricing: The Smarter Approach
Dynamic pricing adjusts room rates in real time based on demand, local events, occupancy, and competitor rates. It’s increasingly popular in metros like Mumbai, Delhi, and Bengaluru and is a core component of modern hotel revenue management practices.
Pros:
- – Maximises revenue by charging more during high-demand
- – Helps fill rooms during lean periods with competitive rates based on demand and peer group
- – Keeps your pricing in line with market trends
Cons:
- – Needs good data and tools to work effectively
- – Rate changes may confuse some customers and can be difficult to manage on offline channels still using static pricing
- – Requires tech investment (RMS, channel managers)
What’s Right for Your Hotel?
In India’s diverse and unpredictable market, a hybrid pricing model —a mix of both static and dynamic—often works best. Stable rates for known demand, dynamic pricing for spikes or unexpected drops in demand. Whether you’re hosting backpackers in Goa or business travellers in Mumbai, smart pricing is key to maximising revenue in every season and making your hotel revenue management strategy truly effective.
Additional Tips
Cross-selling spa and F&B services as inclusions for higher-category rooms can make them more appealing to guests and justify the pricing, thus fetching you a better ARR
Pro Tip:
Start small. Use tools like channel managers to efficiently handle pricing across all OTAs, track local demand and trends to gather data, and gradually shift to dynamic pricing to strengthen your hotel revenue management system.
Partner with Hospitality Minds
Building the right pricing strategy is only one part of successful hotel revenue management.. Partnering with experts can help you optimise your rates, improve occupancy, and grow your revenue sustainably.
Hospitality Minds is a leading hotel marketing and revenue management company in India offering end-to-end solutions – from digital marketing services for hotels hotels and online reputation management to OTA optimization and revenue growth strategies. With a proven track record of boosting hotel visibility and bookings across India, Hospitality Minds helps hoteliers maximise their online presence and drive sustainable growth.
