Hilton’s new pricing structure will see corporates pay for flexibility

Hilton will roll out a new global pricing structure, which it is referring to as “customer-centric pricing”. The new structure will see the introduction of tiered pricing with flexible, semi-flexible and non-refundable advance-purchase rates.

During the announcement of the group’s Q1 2018 results, Hilton president and CEO, Christopher Nassetta, said the new pricing structure would provide “added flexibility for those who want it and cost savings for those who don’t”.

“We anticipate this new pricing model will reduce the number of last-minute cancellations and maximise the number of guest rooms available. Customer-centric pricing will be available at all properties globally later this summer,” said Nassetta.

In response, the local corporate travel industry has raised some concerns about just how customer-centric the new pricing structure really is.

Euan McNeil, GM of FCM Travel Solutions South Africa, said while the company was supportive of any truly customer-centred innovation, there were concerns that Hilton’s proposed structure could actually result in less flexibility and greater expense for corporates who will now be forced to book the higher, more flexible rate for their travellers, as this was the nature of corporate travel.

“At the end of the day, the market dictates what rate the hotel offers and this is driven by volume commitments by the corporate, TMC, general market conditions and occupancy rates. It will be interesting to see how this initiative takes those factors into account,” added McNeil.

He said in light of this, it was important for corporates to work with their TMC to manage their hotel programme so they got the best benefits from the hotel’s yield management practices, whether the hotel followed BAR, dynamic pricing, a negotiated rate, or a combination of all these.