Hotel pricing architecture: how technology determines a hotel's profitability

Pricing in the hotel industry is no longer limited to the base rate. The so-called "pricing architecture" defines where a hotel's profitability is actually generated and its capacity to react to changes in demand. In practice, the technological system used determines whether the hotel anticipates revenue or, conversely, optimizes it in real time.

Three levels of management

The first level corresponds to static management, still predominant in much of the industry. It is based on setting a base price and applying linear surcharges to other occupancies. A triple room, for example, maintains the same surcharge in both high and low season. The result is a rigid structure: during periods of high demand, the hotel sells below its potential value, while during periods of low occupancy, the final price becomes uncompetitive and reduces conversion rates.

The second level introduces granular or dynamic management. Here, surcharges are adapted to the market context: they can be reduced to stimulate bookings during periods of lower demand or increased when occupancy is high to maximize revenue. This adjustability allows the direct channel to react more quickly than online travel agencies, improve conversion rates, and capture additional margin without altering the base rate. For many hotels, this point represents the balance between operational efficiency and profitability.

The third level corresponds to full automation. In this model, a revenue management system calculates the exact price of each occupancy using predictive algorithms and distributes it to all channels. While this is the ideal scenario, it requires complete technological integration between systems and extremely precise data management, which increases its operational complexity.

Competing without lowering prices

One of the main conclusions is that competing with online travel agencies doesn't necessarily require lower rates. By maintaining parity in the base price and applying smart surcharges, the hotel can create a "technological disparity" in its favor. In low demand, the direct channel can offer a more attractive final price by adjusting surcharges, while in high demand it can capture margins that other channels fail to leverage due to their more rigid rules.

This approach allows you to sell at a lower price to the customer while simultaneously generating higher net revenue thanks to reduced intermediary costs. The key is to modify the surcharge, not the main fee.

The role of technology

When a hotel constantly needs to double its rates, spends hours checking exchange rates, or notices discrepancies between configured and published prices, the problem is usually not the sales strategy but the technological infrastructure. Profitability ceases to depend on the revenue team and becomes dependent on the system's limitations.

Modern revenue management focuses on managing margins as quickly as demand changes. The future lies not only in dynamic base rates but also in flexible surcharges, controlled by the hotel itself and capable of adapting to each market context. At this point, technology ceases to be merely an operational support tool and becomes the primary revenue driver.