What Happens When Demand Surges and Your Hotel Rates Don't Keep Up?

Unexpected demand can be brilliant for business. But only if your pricing can react quickly enough to capture the opportunity.

Imagine it's 11pm on a Tuesday evening.

Unexpectedly, Oasis announce an additional concert date in your city. Within minutes, tickets are being snapped up and people are looking for somewhere to stay.

Your hotel starts receiving bookings…lots of them…..and then some.

Brilliant news!

Well, yes. Until you arrive at work the following morning, discover you've sold most of your available rooms at your usual Tuesday night rate, and realise what those rooms could have been worth.

So while you have filled the hotel, a major revenue earning opportunity has been lost in minutes.

And that's the problem with unexpected surges in demand. By the time you've spotted what's happening, the opportunity to respond may have already passed.

Surges don’t always come with warnings

As revenue managers, we spend a great deal of time looking ahead.

We monitor booking pace, analyse demand, track local events, review competitor pricing and try to anticipate what might influence our business. But even with the best forecasting tools and most experienced commercial teams, we can't predict everything.

A concert announcement might suddenly send hundreds of people looking for accommodation. Cancelled flights could create an unexpected rush of bookings at an airport hotel. A major sporting event might generate demand that simply wasn't there a few hours earlier. We are all too familiar with them.

Sometimes, there doesn’t seem to be any obvious explanation at all.

Something changes, booking activity accelerates, and suddenly your hotel is selling rooms much faster than expected.

The challenge in the moment isn't necessarily understanding why demand has changed – its to identify that change quickly enough to do something about it.

The Difference Between Knowing and Acting

Let's say your hotel would normally receive two or three bookings over the course of an evening.

Suddenly, five bookings arrive within a matter of minutes.

That might not sound particularly dramatic. But depending on your property, your usual booking patterns and the date in question, it could be the first indication of a significant shift in demand.

Now if that pattern continues…..by the time someone reviews the reservations, spots the surge, checks what's happening locally and decides whether to adjust rates, another 20 rooms may have been sold….or more!

And that's assuming someone is actually monitoring the bookings at that particular moment!

For independent hotels, where commercial teams are often small and people are juggling multiple responsibilities, it's simply not realistic to expect someone to be watching every booking, every hour of the day for trends and unexpected patterns.

The real opportunity isn't just spotting unusual demand. It's being able to respond while that demand is happening.

…and that’s where Surge Pricing come in

This is exactly why we've developed our new Surge Pricing functionality.

It's an additional layer of intelligence within Right Revenue, designed to identify unusual booking activity and adjust pricing automatically.

Rather than relying on someone to notice that bookings are suddenly arriving faster than expected, Surge Pricing monitors reservation activity for unusual patterns.

And when the right conditions are met, it can take action immediately!

That might mean:

·       Increasing rates to a preset level.

·       Adjusting prices to a multiple of your rack rate.

·       Setting a specific selling rate.

·       Closing selected distribution channels to protect availability and reduce your commission fees! 

The hotel remains in control of its pricing.

Right Revenue can automatically detect unexpected surges in demand and respond dynamically, using pricing levels agreed with the hotel in advance. Alternatively, hotels can define their own thresholds for what constitutes a surge and when a pricing response should be triggered.

Either way, the hotel decides the pricing parameters, while Right Revenue takes care of spotting the opportunity and responding quickly.

And as all this is automated, it can happen within minutes…. even when nobody is sitting at a desk watching the reservations come in.

It's Not Just About Concerts and Major Events

It's easy to associate demand surges with concerts, festivals and sporting fixtures.

And of course, these are all situations where hotels can experience a sudden increase in bookings.

But one of the things I particularly like about this functionality is that it doesn't depend on knowing what has caused the demand.

It’s triggered and responds to what is actually happening within your hotel's booking activity.

If flights are cancelled and stranded passengers are suddenly booking accommodation, this surge in booking pattern is picked up and the pre set auto pricing adjustments are made.

Just as if demand increases unexpectedly for a particular date several months in the future, it can identify that too.

It's looking at the behaviour of your bookings.

That distinction matters because not every commercial opportunity can be anticipated through an events calendar or demand forecast.

Another layer of revenue protection

I often talk about revenue management as being about much more than simply increasing rates - it's about understanding demand, making informed decisions and ensuring you're achieving the best possible return from the business that's available to you.

Surge Pricing adds another layer to that process. It doesn't replace your revenue strategy, your forecasting or the judgement of your commercial team.

But what it can do is help protect your hotel against those moments when demand moves faster than a person can reasonably respond….almost like another set of eyes on your booking activity, even when your team is busy doing something else.

Only this time, those eyes can also take the action you've agreed in advance.

When demand surges, every minute matters.

As much as we love to see a full hotel, if those last 20 rooms at were sold at £120 when demand might have supported £180, that's a potential £1,200 revenue opportunity we've missed.

And that’s what makes this so valuable - it's about recognising when something unusual is happening and having the ability to respond before the opportunity disappears.

Often the difference between a good night's revenue and a great one isn't the demand  generated…it’s how quickly you reacted when that demand arrived.

Discover Surge Pricing from Right Revenue

We're introducing Surge Pricing to help hotels identify unexpected changes in booking demand and take faster, automated action.

If you'd like to understand how it works for your property, or discuss the pricing and availability rules you'd want to put in place, speak to your Right Revenue Customer Success Manager.