Static rates practices are incompatible to a dynamic revenue management. Negotiated and fixed way before the actual check-in, they are always a “sacrifice” for the hotelier. Few years ago, it was still possible to find travel agencies and tour operators operating with large Excels, just like the brochure used to be in the 80´s.
In theory, those rates are not an issue. They are meant to be distributed by few only and stay into a Closed User Group privileged environment. However, nowadays, it is very common to find those rates inserted into a database system and end up being digitalized, distributed to a larger scale.
Most global hotel chains got rid of static rates, but they are still facing issues at local level (property level). They are frequently confronted to static rates digitalization resulting into rate leakage.
Over the past years, two trends have contributed to a return into rate leakage by static rates:
- Covid – static rates were suddenly negotiated at local level to meet a desperate demand to fill in the property. However, this was a specific reaction to a crisis.
- Unilateral and exclusivity deals from global chains that have forced affiliates to search for alternatives by signing deals outside of the main frame.
Once a static rate is set-up, it can be distributed anywhere, at any time, disturbing completely the great revenue management strategy set-up for direct bookings. Not to mention, the confusion amongst guests canceling bookings done long time ago as they get cheaper rates alert suddenly.
When those juicy, cheapest static rates appear, they normally trigger many cancelations since modern algorithms, full of system alerts, advise guests of a change in price, if not the agency itself. Have you ever complained about those new tools created to cancel and rebook reservations when a price change is noticed?
How to handle static rates better?
Attach the static rates to a specific customer segment only. Just like the corporate segment is using negotiated rates for specific demand, static rates need to be attached to strict rules imposed by your revenue management itself. Rules like minimum length of stay, nationality, limited inventory, limited discount, minimum occupancy, or specific rooms can always help but most of all, it is better to not attach the best-selling product to a non-dynamic environment.