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The Weird Science of Hotel Pricing

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How did you get stuck shelling out $229 for your room when the guy next door paid $159? According to Bjorn Hanson, who teaches hospitality courses at NYU, hotel-room rates can vary wildly depending on where you look (the hotel’s website versus online discounters), when you book (six months ahead or the day before), and when you’re traveling (spring break or a Tuesday in the dead of winter). To come up with a price, hoteliers crunch a number of variables—industry trends, economic factors, special events—to forecast an occupancy rate for every day of the year. (New York hotels are looking at a rate in the high seventies this year, Hanson says, down from the 80-plus percent it’s been in recent years.) Hoteliers keep close track of the pace of booking, and will bump or lower rates to help them reach their desired occupancy. “If the booking pace is ahead of what’s forecast, hotels will switch to a higher rate,” he says. Online-booking sites may not fluctuate in tandem with hotels, in part because they often buy blocks of rooms at discounted rates and are able to sell them for less than the hotel charges. So how can you take advantage of the price swings?

A few strategies:
Book a few months early, when hotels are feeling most skittish about their occupancy numbers.
Call a few hotels for quotes, then go back and ask if they can do better than the lowest quoted rate; you may end up with a discount or even a free night.
Periodically check sites like Expedia, Quikbook.com, or Hotels.com, which change rates as often as hotels do.
• Forget the first tip and book last-minute instead; hotels would rather slash rates than leave rooms empty.


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