Dynamic pricing can work for corporates, a senior executive of one of Europe's largest online hotel booking agencies said.
Trevor Elswood, commercial director of BSI, said a flexible approach with "very firm policy standards where negotiated rates are underpinned by rate caps" worked for many companies. He is the latest industry figure to enter the continuing debate about dynamic pricing where hotels charge the best rate of the day according to demand – a model strongly opposed by many corporates.
Mr Elswood said he could understand corporate concerns where they were forced to accept dynamic pricing. He said this often happened where global hotel chains played on customer loyalty and by corporates' "perceived dominance of some brands." In these cases, he recommended that companies look to national brands where the quality was often as high as the global chain but the hotels were less bullish on prices. But where there was no imposition of dynamic pricing, Mr Elswood said most of his major clients adopted a mix and match approach with a negotiated fixed price model underpinned by a rate cap.
"Policy application is the key. If you set per diem levels at city levels with clear minimum standard duty of care facilities then ultimately the budget is set in advance and is not in the hands of the supply chain," he said. "If you set a rate cap of £120 in central London, you also set a programme that underpins that programme so that you can get the best of both worlds.”
"So if the market forces you above that £120 rate, you have to make sure you have other hotels of the right quality with the right duty of care available.
"This needs a lot of research. But otherwise you just have to follow your preferred hotel even when the price might go up to £160."
But he said there could also be advantages with dynamic pricing where a corporate had negotiated 1000 room nights with a chain for Wednesdays but occasionally wanted one night stay on Sundays or Mondays when rooms were cheaper.
But Mr Elswood warned that "open supplier relationships are key to reaching an equitable balance and addressing dynamic pricing concerns."
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