Then vs. Now: How Two Decades of Change Have Redefined Hotel Pricing and Price Sensitivity

Hotel Pricing Didn’t Just Evolve — It Fundamentally Changed

Twenty years ago, hotel pricing was built for a different world.

Demand patterns were more predictable. Booking windows were longer. Competition was easier to track. Revenue management systems focused on optimizing rates within relatively stable conditions.

That world no longer exists.

Today’s pricing environment has been reshaped by technology, transparency, and traveler behavior — and price sensitivity has changed right along with it.

Then: Pricing for Predictability

In the early 2000s, pricing strategies were grounded in stability. Teams relied heavily on historical averages, fixed seasonal patterns, and limited competitive visibility. The assumption was that demand behaved in a relatively linear way: raise rates too much and you’d lose demand; lower them and volume would follow. The goal was to find the “right” price and hold it.

Revenue management reflected that mindset. Price changes were largely driven by observed occupancy levels rather than forward-looking forecasts. When rooms filled, rates went up; when demand softened, rates came down. Pricing worked not because it was predictive or precise, but because the market itself moved slowly enough to absorb reactive decisions.

Now: Pricing for Volatility

Fast forward to today, and nearly every assumption has changed.

Demand now fluctuates rapidly, influenced by macroeconomic shifts, consumer confidence, major events, and even social media. Booking windows compress and expand without warning. Competitive pricing is instantly visible across channels, leaving little room for delayed reactions.

Modern price sensitivity is no longer uniform or static. It varies by segment, shifts based on context, and changes over time. A price point that suppresses demand early in the week may be perfectly acceptable later. A discount that drives bookings in one segment may erode value in another.

Because of this, pricing decisions today must continuously balance multiple, often competing inputs:

• Real-time pickup and booking pace
• Competitive reactions across channels
• Channel mix, length-of-stay behavior, and segmentation
• Customer willingness to pay — by segment, not on average

This is the reality revenue teams now operate in.

Why Legacy Models Fall Short

Many legacy pricing approaches struggle because they were built for “then,” not “now.”

They rely on static inputs, delayed reporting, and historical assumptions that don’t hold up in volatile markets. As variability increases, these systems don’t just become less effective, they become riskier. The outcome is familiar: missed revenue opportunities, overreactions to competitor moves, and discounting that quietly erodes long-term rate integrity.

Price sensitivity today can’t be managed with blunt instruments. It requires precision.

Now Requires a Different Pricing Philosophy

Modern hotel pricing isn’t about setting a rate and moving on. It’s about managing tradeoffs continuously.

That means forecasts must adapt as demand shifts. Optimization models need to balance multiple objectives, not just occupancy or rate. Most importantly, pricing teams need the ability to evaluate tradeoffs continuously as conditions change.

The hotels that succeed today don’t chase every signal the market throws at them. They interpret those signals intelligently, understand where price sensitivity truly exists, and act with purpose.

Looking Ahead

Price sensitivity will only become more nuanced. Travelers are more informed, more flexible, and more value-conscious — but that doesn’t mean they’re always more price-driven.

The hotels that win won’t be the ones with the lowest rates or the most aggressive discounts. They’ll be the ones with the clearest understanding of demand, value, and timing.

Pricing has changed. The question is whether your approach has changed with it.

Want to explore what this shift means in practice?

Download our eBook, The Next Generation of Hotel Pricing: How to Win in a Dynamic, Uncertain Market, for a deeper look at how leading hotels are adapting their pricing strategies.