It seems hotels that have adopted dynamic pricing models felt too confident in doing so because they were swayed by their post-covid results. I think the slow-down seen in some destinations/properties are having hotels re-think and question this strategy. At least, this is what I have been told by a prominent Japanese development company and hotel owner directly, noting cooling numbers.

It's baffling why luxury niche hotels with limited rooms would opt for AI-driven 'dynamic pricing', especially when it results in favoring potential future guests over current loyal ones. Experiencing a sudden surge of 30%-50% in rates after just one room is booked is not welcomed by long-standing clients and feels like exploitation, regardless of their financial capacity. Where hotels used to plan for realistic annual revenue goals (10% or so YoY - covering expenses such as wages, inflation, and renovations), it's now difficult to justify the staggering 150%-200% increases, especially when service and product are lagging behind. The idea seems to be, expensive, for the sake of being expensive.

Ah, but perhaps the hotels brilliantly factoring in the heavy cost of marketing to expand their direct-to-consumer (D2C) business via the wonders of social media advertising. Splurging on compensating affiliates, influencers, and every social media ad platform under the sun—because, you know, that always works wonders for the big players i.e. Marriott, Hyatt, Four Seasons... Forgive my skepticism, but I can't help but chuckle at the thought of this being a well-informed approach for the smaller, boutique, high-end luxury hotels. Who needs loyal clients or trusted advisor partnerships when you can aim for just one goal: revving up the ads, AI pricing, and pack those rooms to the rafters with the masses?! Now that's luxury!....

This whole pricing frenzy at its core seems to be driven by low hanging fruit strategies to appease investors hungry for more growth, but at what expense? The long-term client, perhaps? Left with a sour taste in their mouths and pushed away to explore other options...