Hotel prices frequently soften in the final days before arrival, which is the opposite of the pattern most travellers expect from airlines. The difference comes from what an unsold room costs to fill.
A room is a perishable with almost no marginal cost
An empty room on a given night cannot be sold later. The revenue for that night is simply lost.
Selling it costs the hotel very little beyond cleaning and utilities, since the building, the staff and the debt are paid for regardless.
Any price above that marginal cost improves the outcome, which gives hotels a strong reason to discount rather than hold out.
Occupancy has effects beyond the room rate
Guests spend on food, drink, parking and other services, so a filled room generates revenue that an empty one does not.
Occupancy also feeds the performance measures the industry uses, which influence management contracts and financing.
Both push in the same direction, making a late discount more attractive than it would be if the room rate were the only consideration.
Airlines face a different constraint
A seat is equally perishable, but airlines hold late inventory for business travellers who book close to departure and pay considerably more.
Discounting late would sell those seats cheaply to people who were going to pay full fare, which costs more than flying with empties.
Hotels have a weaker version of the same customer, so they protect less inventory and release more of it into the discount channels.
Discounting happens out of sight
Rate parity agreements with booking sites limit how far a hotel can publicly undercut the rates shown elsewhere.
Reductions therefore appear through opaque channels where the property is not named until booking, through member rates behind a login, and through package pricing that hides the room rate inside a total.
Each of these lets the hotel sell cheaply without publishing a lower price, which is the constraint the structure is designed around.
When waiting fails badly
The strategy depends on the hotel having rooms left, and in a compressed market it will not.
Conferences, sporting events and holiday weekends fill a city's inventory, and late rates in those periods rise steeply instead of falling.
Waiting works in ordinary demand and fails completely in constrained demand, so the question is not when to book but whether the dates are contested.