The New Pairing: Hospitality and Dynamic Pricing

Posted by Lara McLeod on June 13, 2023
Lara McLeod

Hospitality the Next to get into Bed with Dynamic Pricing 

With dynamic pricing infiltrating so many aspects of our lives, it is less surprising each time a new industry joins the bandwagon.

Given the popularity of dynamic pricing in travel costs (read more with Pricing Strategies for Tour Operators and Online Travel Agents), it is not a shock that hospitality as a whole appears to be looking at stirring up how they price their businesses.

This is true of hotels and also restaurants, the newest thread of hospitality to join in with dynamic pricing in a bid to increase profits and sustainability.

Dynamic pricing isn’t exactly new in the hospitality sector, with larger hotel companies using dynamic pricing since the early 2000s. But, smaller hoteliers and companies are beginning to join them.

The benefits of using dynamic pricing within the hotel industry is largely based on the increase to revenue adjusting prices can bring. It is not enough to just change prices for the high and low seasons, which has been the most common practice.

Instead, hoteliers must consider the whole outlook of their business. Looking back at previous trends, and being able to apply that for the future, is a great way to set pricing within the hospitality industry.

There could be a weekend, in a typically low-season point of the year, where demand increases due to a holiday, or event. This is where dynamic pricing would be key; recognise that pattern, and capitalise on it in the future.

Artificial Intelligence is also an aspect that is having huge effect on the way dynamic pricing works, including how dynamic pricing is applied to hospitality. Online travel agencies, like, already use AI based software.

This is speeding up the changes that are being made within the hospitality sector, as hoteliers are able to set educated rates based on knowledge of the demands their business is receiving.

The high-speed connectivity and the information garnered by online travel agencies means dynamic pricing is becoming increasingly popular and efficient. Room rates are adjusted in real time, and rates can be published across several sites easily and quickly.


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Restaurants are a little further behind when it comes to using dynamic pricing within their industry, but this is changing. Leading restaurants are leading the way with adopting dynamic pricing as a  strategy, and has already seen the benefits.

Bob Bob Ricard, which offers an opulent dining experience, has introduced a dynamic pricing structure within their business.

On their website, it states clearly that there are two menus, a lunch menu and a dinner menu. The lunch menu is described as being offered at “off-peak prices”, running at a cost of 15-20% less than the dinner menu.

Leonid Shutov, owner and Founder of the high-end restaurant, argued that this is different from what customers are used to seeing with “Early Bird” menus. Instead the entire menu is priced differently, rather than just a few select items.

Not only is this a relatively simple way to introduce dynamic pricing, it can be incredibly effective too.

Leonid stated that the strategy has evened out covers for peak and off-peak times, but also the spend-per-head has remained the same. Customers visiting at the cheaper times have more of an incentive to spend and indulge, with the view that they spend the same, but receive more.

There are key differences between how the hospitality sector can operate dynamic pricing compared to other businesses, for example Uber.

Restaurants could not, or would be very hesitant, to increase prices during periods of high demand. Unlike Uber, most restaurants, especially high-end eateries, would not indulge in surge pricing.

Restaurants rely on public opinion, and for customers to speak highly of their experience there- this could jeopardise that.

Another approach to dynamic pricing taken up by the restaurant industry was introduced by Tock, a restaurant reservation software company.

Described as feeling more like “buying tickets to a show” than making a dinner reservation, Tock allows restaurants a similar control over their dynamic pricing as online travel agencies give hotels.

An example of Tock in action is the Harrogate-based restaurant, Norse. Norse offers customers two options:

  1. Leave £15 deposit which will be taken from the final bill
  2. The Tock ticket based system, with diners buying a ticket at a reduced rate and then finding a date when the slots are released. This option gives Norse the power to change prices based on demand, daily and by the time.

So while hotels and restaurants are not the most natural fit to dynamic pricing, they are creating a way for it work for them.

With travel companies leading the way in this field, hotels are perhaps finding it easier to follow the pattern set.

Restaurants, on the other hand, are the newest to get into bed with dynamic pricing. While they do need to be careful, given the customer focused perspective of their business, they are finding new ways to make dynamic pricing fit with them.


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Topics: Dynamic Pricing, Dynamic Pricing Software, hospitality

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