What causes fluctuating hotel prices?

Why does the hotel you stayed at in November cost twice as much in May?

You may not find it surprising that hotel industry rates work on supply and demand. To have an accurate idea of this demand, hotels collect their own data and data from nearby hotels about their

occupancy rates, or in other words, exactly how many rooms they’re likely to sell for any given day of the year. In November, for example, a hotel in Cancun, Mexico, may have a tendency for low occupancy, but in May, the same hotel is nearly full. This pattern creates what the hotel industry calls high, mid, and low seasons. In Cancun, the high season is December through Spring Break, largely because it’s cold in most of the US and Europe but still sunny and warm on the Caribbean Sea. Mid-season tends to be over the summer when people have the time to travel, but it’s much warmer in other parts of the US, Canada, and Europe, so Cancun is lower on everyone’s destination list. Cancun’s low season hits in September due to kids being back in school and the possibility of hurricanes.

While occupancy data is the most common factor for fluctuating hotel prices, there are others. Sticking with our Cancun example, if a hotel has a large group occupying 50% of their rooms in August, the remaining rooms may be sold at a slightly higher premium than their normal mid-season rate. Most hotels have systems that automatically raise the rates as the hotel fills up. If a large group books a portion of the rooms, the rate online will automatically increase for individual travelers. While these rates often increase in slow increments as individuals book rooms, you may have seen an instance where the jump was substantial from one day to the next. Chances are, a group contract was signed the day before.

Check it out for yourself! Look at your favorite hotel’s rates at different times of the year to see how much you can save. Visiting a hotel in the off-season often means lower rates, smaller crowds, and still plenty to see and do.

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