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Demystifying Hotel Room Pricing

We have all been there: finally getting to the point of booking THAT TRIP. You’ve scoured Instagram, prioritized your bucket list, and you’ve finally landed on the destination. You’ve worked out the financials. You’ve taken time off work. You’re this close to scheduling your spray tan. It’s time to book the damn thing.

But just as the travel planning high makes it way to the final descent, you hit some turbulence—the painstaking process of booking a hotel room (hey, we can’t all book Clooney’s villa on Lake Como). As it turns out, 72% of travelers book their flights before their hotel, and it’s not surprising to see why: millions of reviews to sift through from Couch Hoteliers and Karens, and the realization that you’re just too old for a hostel, to name a few.

You’ve short-listed your choices and checked your budget—it’s booking time. As you scroll through clickbait offers from hotel marketing teams begging you to PICK ME, you find yourself wondering: Are hotel rooms really $300 a pop on a weeknight? Do I need to shave off a day from my plans in order to afford this thing? How is it possible that a hotel with a shared bathroom is going to cost me $1,000 for four nights? For a $50 resort fee, is someone coming to feed me grapes and tuck me in at night?

After decades of the hotel business and hoteliers defining unique experiences—from check-in desks with fresh baked cookies to live mermaids in a tank—why are hotel pricing models still stuck in the past?

Leslie Lew has entered the chat. VP of Revenue Management and Distribution he is, an office bot-number cruncher he isn’t. Leslie is a deep thinker, driven by deliberate and decisive action. Leading with his heart, rather than his keyboard, Leslie is working on defying the boundaries of hotel revenue cycles and transforming the game to change the way we price and sell hotel rooms.

We sat down to demystify the hotel booking process, talk about the future of pricing, and how hoteliers are, well, terrible retailers. Just don’t tell Isadore Sharp.

 

PH: How do you set the perfect hotel room price?

LL: First, you reject the norm culture of benchmarking prices of other hotels. If you price the hotel like a commodity, you become a commodity. Setting the perfect hotel price starts at the hotel design phase. You have to ask, why does this hotel exist and who is the traveler it serves? By defining your audience of travelers who will appreciate the product, amenities, and your hospitality, you establish a price point for people who want to buy.

PH: Why is it so hard to book a hotel room?

LL: Hotel distribution technology is extremely complex and the people who understand it are the ones left with designing the hotel booking experience. Hoteliers are incredible experience makers, but terrible retailers. Hoteliers have locked out retailers, along with their expertise and technology, from the hotel booking experience. To make the hotel booking experience easy, hoteliers need to become retailers. 

PH: What’s the future of hotel pricing? 

LL: The future of hotel pricing starts with fundamentally changing the hotel product to be shippable so that travelers can buy hotel products and experiences more frequently and at price points that meet their needs. A hotel stay is generally very expensive. $300 a night, $600 for a weekend. This rigid pricing model underserves too many travelers. Hotels need to ship their products and experiences to reach travelers where they are. Travel should not be a barrier to hospitality. By creating shippable products, hotels unlock infinite price points to travelers.

After the past year, one thing this world can agree on is that travel is more important than ever to our mental health and connectivity. In fact, there was a 200% spike in international travel when travel bans were lifted in 2021. The time to change the way we price and manage hotel inventory is now, and we’re grateful for Leslie, who at 33 made the decision to pick up running for the first time in his life and run the Boston Marathon, lacing up and leading us to greener pastures. It’s that kind of gumption that our business so desperately needs. Pioneers who will rethink an outdated system, bend and break it so that it appeals to everyone, not just an elite few. Now if you’ll excuse us, we need to go dust off our running shoes…

For more from Leslie Lew, watch the interview on IGTV.