A hotel room has no value the morning after it went unsold, and that single fact shapes how the price behaves in the weeks before.
Unsold inventory expires completely
Unlike goods, a room cannot be held over and sold later. Each night is a separate product that ceases to exist at checkout time.
This pushes hotels toward selling rooms at almost any price above the marginal cost of servicing them, which is low compared with the rate.
The pressure grows as the date approaches and the remaining opportunity to sell shrinks toward nothing. Cleaning and servicing a room costs a fraction of a typical rate, so almost any booking beats an empty night.
Pricing follows an occupancy forecast
Revenue systems compare current bookings against the expected pace for that date and adjust rates when the two diverge.
A date filling faster than forecast sees rates rise, since the remaining rooms can be sold to later, less price-sensitive guests.
A date filling slowly sees rates fall, and the reduction deepens as the window narrows and alternatives disappear. The forecast itself is built from the same date in previous years, adjusted for whatever is known about the current one.
Local demand drives most of the variation
Conferences, sporting fixtures and school holidays move an entire city's rates simultaneously, and a hotel prices against that background rather than in isolation.
This is why the same room can cost several times more on one night than the night before, with nothing about the hotel having changed.
Checking whether a large event is scheduled explains most otherwise inexplicable rate differences within a single week.
Channel and rate type change the number
Hotels sell through their own site, through booking platforms and through wholesale channels, each with different commission costs and contractual conditions.
Non-refundable rates are cheaper because the guest absorbs the cancellation risk, which the hotel would otherwise carry and price for.
Loyalty rates, package rates and corporate rates each sit in their own category, which is why several prices for one room can all be genuine simultaneously.
Booking behaviour worth adopting
Booking a refundable rate early and rechecking later captures downward movement without exposing the traveller to a sold-out night.
The approach costs the difference between refundable and non-refundable pricing, which is small relative to the swings the system produces.
It works less well during a major local event, where rates rise steadily and rooms disappear rather than becoming cheaper. On those dates the earliest booking is usually the cheapest one available, which reverses the usual advice entirely.