Variable Pricing Arrives at Yellowstone Hotels

Variable pricing, also known at demand-based pricing, is coming to Yellowstone hotels, as the National Park Service is allowing Xanterra to alter its pricing structure at Old Faithful Inn, Lake Yellowstone Hotel and Canyon Village.

Demand-based pricing is exactly as the name implies: the greater the demand for a hotel room, the higher the price. In the past, the cost of a Yellowstone hotel room was the same from the beginning of the season to the end, no matter the demand, and tied to the price of a room in gateway communities.

But at Old Faithful Inn, Lake Yellowstone Hotel and Canyon Village, that pricing structure is changing this year and through 2022 under the terms of a new deal. There’s still a cap of sorts on the variable pricing: the Yellowstone hotels pricing can be only 33 percent higher than prevailing prices. The stated goal: to see if Xanterra will use the additional money to improve guest services. It also raised the cap on how much Xanterra could spend on facilities: $173.8 million, up from $134.5 million. From the Bozeman Daily Chronicle:

If it went well, the change would bring in more money for both Xanterra and Yellowstone, which collects franchise fees from the concession company. Last year, the park collected about $6.5 million in franchise fees from the company, [Zach Allely, Yellowstone’s director of business and commercial services] said.

The construction projects are part of the Concessions Facilities Improvement Program, which was agreed to in the 2013 contract with Xanterra. It directed the company to work on about a dozen projects, including upgrades to hotels and employee housing.

Several of the projects ended up costing significantly more than park officials expected, quickly erasing Xanterra’s spending authority. Redevelopment at the Canyon Area cost more than $96.3 million — well beyond the 2013 estimate of $70.5 million. Upgrades to employee housing at Old Faithful cost nearly $9 million more than expected.