The pricing algorithm
How does the Atomize algorithm work?
The Atomize algorithm responds based on demand forecasts, pickups vs expected, competitor price drops, the hotel’s occupancy and cancellations pace versus expected and continue to work on finding the optimal price.
How does the pricing algorithm behave when the market suddenly drops?
With minimum pricing and a price hierarchy in place, rates will never go below a certain rate chosen by the hotel. As the algorithm moves towards a new, lower, reference point, lower price points are assessed.
This is repeated, and historical reference values and their performance are assessed versus the new reference value. If the drop in demand is so significant that the reference value drop does not result in a change in performance, the system will understand, stop reducing rates and place the price point "in the middle" of the comp set while waiting for new data points (e.g. pick-up) before the testing sequence above is repeated. This hinders Atomize from creating a downward price spiral in this scenario and ensures rates are protected.
Should I override system recommendations and price manually with low demand?
In this case, we advise you to rely on the prices provided and/or set by Atomize even though automated pricing can be switched off. In the current situation where there is low to no demand, pricing will not save you. Instead, other strategic actions, such as changing the distribution strategy by focusing on your local segments and targeting this segment with attractive local staycation offerings will make a bigger difference.
Also remember, to dump prices is rarely a good idea, it takes a second to lower them but it can take years to get back to the same price level and you may risk to hurt your brand along the way and attract guest segments.
Before overriding rate recommendations, ask yourself what decision you could make in the current situation that is smarter than system suggestions. Would you increase the price? If so, why? Would you lower it more, if so why?
How do Atomize use and interpret historical data in relation to COVID-19?
Historical data can normally be used as a good initial guess for the future, but the belief about the future must always be updated as new data comes in. Atomize has a flexible system that can be fed with prior knowledge about the world. We see clearly in our customers data when the effect of Covid-19 started and the model will automatically be provided with this information.
Atomize is closely following the development of the social distancing measures in each country. For the near future Atomize will by default follow the conservative strategy to keep the normal pricing and not follow any races to the bottom. Further into the future our model will assume that things will eventually go back to normal, but this belief will of course be updated as time goes.
Atomize can also help the hoteliers to adapt the model if they want custom adjustments to the pricing strategy during these times.
How to handle the impact of COVID-19 on your hotel property
If you want to dig deeper into the impact of COVID-19 on the hotel landscape we have put together educational recorded webinars with the most common advice for hoteliers on how to handle the corona-crisis.