Why and how to implement a flexible hotel pricing strategy?

Hotel guests want flexibility – it’s no longer a nice-to-have, it’s a dealbreaker. In fact, flexibility is now one of the top factors travellers consider when choosing a hotel. According to the latest Adyen report on 2024 customer expectations, over half of travellers (52%) say that being able to cancel their stay for free within 24 to 48 hours of arrival is essential.

In a competitive market where expectations are constantly changing, a flexible hotel pricing strategy is a must for increasing direct bookings and staying ahead. But how do you do it without opening the door to a flood of last-minute cancellations? Let’s break it down step by step.

In this article, we’ll break down why it’s so important, how to roll it out effectively, and how AI can make the whole process easier and more efficient.

Flexible pricing for hotels: what is it and why does it matter?

What does a flexible rate mean at a hotel?

A flexible rate lets your guests modify or cancel their booking for free – or with lower fees – up to a certain date before their stay. Unlike non-refundable rates, which come with lower prices but no wiggle room, flexible rates offer travellers more freedom.

Why does this matter? More than half of travellers say flexibility is a top priority. If you’re not offering flexible options, you could be turning away a lot of potential guests.

And that’s not all. Flexible rates don’t just benefit your guests – they bring real value to your business too.

Why should your hotel offer flexible pricing?

Here are the main advantages of a flexible hotel pricing policy:

• Improve your conversion rate: a flexible rate removes a barrier to booking, increasing your chances of turning a traveller into a guest.
  
  
• Increase your direct bookings and reduce your reliance on OTAs: by highlighting a flexible rate on your website, you can attract more direct bookings and lessen your dependency on third-party platforms.
  
  
• Adapting to new traveller expectations: since the pandemic, flexibility has become an essential criterion. Offering it shows you understand and meet the changing needs of travellers.
  
  
• Optimise your RevPAR (Revenue per Available Room): when managed well, flexible pricing can help you maximise your occupancy rate and revenue.

Now that you understand the advantages of a flexible rate, let’s talk about how to put it into practice effectively and strategically.

How to implement flexible pricing in your hotel?

It’s not enough to simply offer your clients a flexible price. It’s important to integrate it strategically to maximise the benefits.

Strategies to optimise your flexible pricing policy:

• Keep the flexible rate exclusive to your website: Want more direct bookings and fewer OTA commissions? Reserve this option for your own platform. By keeping it off third-party sites, you give guests a clear reason to book directly with you – saving time and money for both sides.
  
  
• Use a smart booking engine: A clear and user-friendly booking engine is a must for showing off your flexible rates. Make sure it’s easy to navigate, with flexibility options front and centre from the start – whether guests are booking on desktop or mobile.
  
  
• Give your guests multiple flexibility options: Offer options like a rate with free cancellation up to 48 hours before arrival or another with cancellation up to 3 hours before. This way, you cater to different needs – those who prefer more security and those who don’t mind a little risk for a better deal. It also helps you manage cancellations more effectively and keep your rooms booked. Simple, smart, and practical.
  
  
• Make the terms clear: Flexible rate terms should be simple and easy to understand. Let your future guests know exactly what to expect – like cancellation deadlines or any extra fees – so they can make informed decisions.
  
  
• Highlight your flexible rates everywhere, not just on the booking page: Make sure your potential customers know about them by mentioning them in newsletters, social media posts, and even during phone or online chats. Simple and clear communication across all channels can help grab their attention and drive bookings.
  

Using AI as part of your flexible hotel pricing strategy

Artificial intelligence can help you take your bookings further by automating the promotion of your flexible rates to the right customers at the right time. While having a well-optimised booking engine is important, it’s not the only moment to engage potential guests. You can grab their attention long before they even start the booking process. Here’s how:

Campagnes de widgets dynamiques sur votre site

AI-powered widget campaigns help you show relevant offers to your website visitors based on their behaviour.

For example, if a guest seems undecided after browsing several pages, a pop-up can appear with a message like: “Need flexibility? Take advantage of our flexible rate and book stress-free!”

It’s a small nudge that can make a big impact. Just like at the Elysée Val d’Europe hotel, which tripled its direct bookings by using HiJiffy widget campaigns to highlight the right offers at the right time.

Automated guest messaging campaigns

AI makes it easy to send personalised, automated messages to your guests, helping you promote flexible rates at any point in their guest journey – even after their stay.

For example, a guest has just checked out. You can automatically send them a message encouraging their next booking with flexible terms:

“Thanks for staying with us! We hope you had a great time. For your next visit, use the code REBOOKING10 to enjoy our flexible rate, including free cancellation up to 24 hours before arrival.”

It’s a simple, effective way to stay connected with your guests while driving repeat bookings.

The challenges of flexible pricing for hotels

While a flexible rate has plenty of advantages, it does come with some risks to keep in mind.

• Last-minute cancellations: Without a good strategy, this can impact your occupancy rate.
  
  
• Revenue management: Finding the right balance between flexibility and profitability is key.
  
  

How to reduce these risks:

• Offer alternatives like rescheduling stays: Let your guests adjust their booking dates for free instead of canceling. This keeps rooms filled while giving guests the flexibility they need.
  
  
• Set fair pricing: For example, consider making the flexible rate slightly higher than the non-refundable rate to balance the risk of cancellations.
  
  
• Introduce alternative free cancellation window: Offer free cancellation up to 1 week before check-in instead of 24 hours prior. This gives you more time to manage cancellations and plan room occupancy effectively, keeping things running smoothly for both your team and your guests.
  
  
• Stop cancellations before they happen: build better guest relationships. Sending automated pre-stay messages lets you connect with your guests early. A simple anticipated welcome message goes a long way – it keeps them engaged and less likely to cancel, especially when they’re deciding between multiple reservations.
  

Flexible rates are a must for attracting more guests and boosting your hotel’s revenue. Pair them with smart strategies and AI tools, and you’ll not only see an increase in direct bookings but also deliver a smoother and more enjoyable experience for your guests.

💡 Want to optimise your flexible rates? Book a demo with one of our experts and discover how AI can help you boost your direct bookings today!