3 Pricing Choices That Help Independent Hotels Handle Sudden Demand

In the week of the April 8, 2024 total solar eclipse, hotels in Dallas raised their average daily rate (ADR) by 20.1% compared with the same week a year earlier, to $150.33. That was the biggest ADR jump among the top 25 US markets that week, according to CoStar's STR data. Revenue per available room (RevPAR) rose 38.8%.

The eclipse date was known years ahead. Many demand spikes are not. A home team makes the playoffs. A band adds a second show. A storm strands travelers. The hotel that adjusts first sells its rooms at the new price. The hotel that adjusts last sells them at the old one.

Responsive pricing comes down to three choices: how strongly your prices react, how fast new prices reach your booking channels, and what you do when demand falls instead of rising.

Choice 1: How Strongly Should Prices React to Demand?

Not every hotel should react the same way. A small B&B that fills through early bookings may prefer steady prices. A hotel next to a stadium may want to push hard on game nights.

In PriceLabs, the Demand Factor Sensitivity setting controls how much prices move for holidays and events:

• No Demand Factor: turns off demand-based changes.
• Conservative: keeps prices steadier and favors earlier bookings.
• Moderately Conservative: a little more movement than Conservative.
• Recommended (default): aims for higher rates closer to busy dates instead of selling out early at lower prices.
• Moderately Aggressive: pushes prices a little higher than Recommended.
• Aggressive: charges the most on peak dates, for hotels willing to wait longer for bookings.

Pick the level that matches your risk. If empty rooms worry you more than missed upside, start conservative. If you often sell out weeks before big events, your prices are probably too low and you can move up a level.

Here is how that plays out for three common property types:

• A six-room rural B&B that relies on guests booking weeks ahead usually starts at Conservative. Steady prices protect early bookings, which this kind of property depends on.
• A 40-room city hotel near an arena usually starts at Recommended. Game nights and concerts sell late and at a premium, so the hotel benefits from holding rates higher closer to the date.
• An airport hotel with steady weekday demand may sit at Conservative and lean on occupancy rules instead, because its demand rarely spikes on single dates.

Review the setting after each busy season. If big dates sold out very early, move one level up. If they were still half empty a week out, move one level down.

A pricing calendar shows how demand on each date moves the price away from the base rate

Let Your Own Occupancy Push the Price

Market demand is one signal. How fast your own rooms fill is another. Multi-Room Occupancy Based Adjustments raise or lower prices based on how full a room type, or a group of room types, is at each point in the booking window. If most of your standard rooms are gone three weeks before a date, the price climbs before the last rooms sell cheap. You can pick a ready-made profile or build your own. Our guide to room-type occupancy adjustments walks through the setup.

Occupancy-based adjustments raise prices as rooms fill up across the booking window

Choice 2: How Fast Do New Prices Reach Your Channels?

A price change only helps once guests can see it. By default, PriceLabs sends prices to your PMS once every 24 hours. Hotels in fast-moving markets can add up to three automatic syncs per day, at an extra $1 per month per room type. For hotels that need changes to go out as bookings happen, read about Real-Time Sync.

Choice 3: What Do You Do When Demand Drops?

Volatility works both ways. Events get cancelled. Flights get grounded. A slow week appears out of nowhere.

Don't discount by the calendar. Many pricing tools cut prices step by step as a date gets closer. Hotels rarely sell this way, so PriceLabs recommends hotels choose No Last Minute Adjustment. A price that falls every day teaches guests to wait.

Target the room types that are stuck. The Booking Recency Factor gives a short-term discount only to room types that have gone a long time without a booking. Your busy room types keep their price.

Remove event pricing fast. If an event you priced for gets cancelled, delete the manual change the same day so rates return to normal.

A Weekly 15-Minute Routine

1. Check pickup for the next 30 days and note any date filling much faster or slower than usual.
2. Scan local news, venue calendars and event listings for new dates.
3. Look at what your main competitors charge for your busiest upcoming dates.
4. Review manual price changes that are still active and remove the ones that no longer apply.

For more on how different events move hotel demand, see how events affect bookings. For the basics behind all of this, start with our hotel dynamic pricing guide.

The Pushback Worth Hearing

Some owners worry that sharp price jumps look greedy and hurt reviews. It is a fair point. Guests remember paying a peak price for a basic room. That is why sensitivity settings and maximum prices exist. Responsive pricing does not mean the highest possible price. It means the right price, set early enough to matter.