The question of how hotel rooms are priced is a particularly nuanced one. The supply of traditional hotel rooms is pretty much fixed in the short term: when demand increases in the peak season, you can’t just instantly build more hotels to meet the opportunity. That means the price for a hotel room skyrockets for travelers during the busy season.
At the same time, if hotels raise their prices too much, they risk a pretty bad outcome: the rooms could sit empty and not generate any revenue at all!
Hotels play a delicate balancing act with their pricing, aided by revenue management software. They need to predict when demand will be high, and just how richly they can price the room based on competition, local events, and people’s vacation schedules. At the same time, during periods of lower demand, they need to make sure the prices are enticing enough that their rooms aren’t sitting empty. The result is that prices are highly volatile and fluctuate dramatically by season.
So, we thought we’d take a look at how hotel prices in various cities in America vacillate by season. One of our customers, Hipmunk (the travel search engine) provided us with the data from all of 2014 about how much hotels in US cities charge based on the the time of year. Over the course of the year, hotel prices change a lot.