First of all you need to understand how it all fits together. This is a grossly simplified picture and explanation but bear with me Hotels have front of house systems where they do things like allocate room numbers, how many people can sleep in a room and so on. They can sell then by paper contracts or by connection to a common bed bank pool where wholesalers can connect in and buy directly from the hotel. Traditional contracting Consider this the old school model. A hotel chain has 10 hotels on the eastern coast of Australia. They allocate to each of four different wholesalers, prices may vary based on previous sales history, inclusions, mates rates, relationships and so on. The hotel will allocate 110% of the available rooms as no wholesaler ever sells all of their allocation. The more they pay in advance, the cheaper the rate they get. You can only sell your own allocation as availability at the hotel is not directly linked your system. If the contracting wholesaler does not sell their allocation then they hand it back two or four weeks before check-in to the hotel who attempts to sell over-the-counter. Often those rooms went empty. This was all good until Expedia came along…. Water damaged stock The simple version is Expedia approach the hotel four weeks before check-in dates and say “we know you’ve got empty rooms now. We know you won’t sell them all. We will give you 50% of what the other wholesalers gave you because you can have 50% of something or 100% of nothing.” This is why Expedia, if they have availability, is often better a couple of days before check-in. Some in the industry suggest it’s the leftover rooms (hence the term water damaged stock). However if you are booking something 4 to 6 weeks out, traditional wholesalers will generally have the better price. Dynamic pricing – the fightback So this is where the technology takes a quantum leap. Rather than paper contracts think about an entire chain of interconnected databases. The benefit for the hotel is they set one core price, control their margin. The bed bank distributes the same room from the same common pool to a number of wholesalers at once. Sometimes a discount is applied, sometimes a fee is applied. Fridays might be cheaper. A hotel may sell the first 15 rooms at a different price from the next 15 rooms. They might sell five nights for the price of four. Prices may change depending on how far in advance the sale is made. All contributors to a dynamic price. Theoretically the bed bank prevents overselling…. But all those interconnected systems means that on occasion, something goes wrong. That’s when availability disappears, reappears at a lot higher price. Why can I only get that room from the hotel? Particularly with the more expensive rooms hotels will hold onto their highest margin product. They like to be the one making money. Secondly, one group you buy off has one contracting method and they have exhausted their allocation. On the other hand another wholesaler has dynamic inventory which can sell up to and including the very last room available at the hotel. This is why sometimes one wholesaler, and not the other, will have the room you want. Dynamic pricing – the misnomer The other version of dynamic pricing is the price that changes after you buy something…..what the? This is based on sell prices that change with global exchange rates. So this would be why the rates change every Wednesday.

Indian Food Drama

All of the business partners in India have laughed at me one time or another as I sweat my way through another home-cooked delight