Hotel Industry Blog

Monday, January 26, 2009

Should you discount your rates in a downturn?

By making obvious cutbacks you will only damage your reputation with the people who matter most
Customers' expectation of price may change in a downturn, but their expectations of service levels don't drop. Lowering rates may be one response to weakening occupancy but the lower income generated may result in lower service levels which in the longer term can damage your brand - according to a recent article on Caterer Search on the pros and cons of lowering rates: "by making obvious cutbacks you will only damage your reputation with the people who matter most".

While many strongly advocate reducing rates, there are other avenues to explore.

It's all about value, not price
In discussions with our hotels, Bookassist has advocated the necessity to look at the mix in what you have on offer, showing more value, rather than across-the-board discounting of price which can damage not only an individual hotel brand but an entire sector. Hotels should "look at added-value options to hold price, such as including breakfast free of charge, and focus on increasing the overall revenue they get from clients during their stay", according to Caterer Search. Bookassist's advanced add-ons facility, allowing for upsell directly at the time of booking, is an invaluable tool for this approach to value rather than just price.

For a perspective from the British Hotelier of the Year conference, see: http://www.caterersearch.com/

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4 Comments:

At February 4, 2009 at 11:04 PM , Blogger Gradigio said...

Cornell did an interesting study after the 9/11 attacks in NYC, concluding that new consumers don't enter the market because of hotel discounting:

http://www.hotelmarketingstrategies.com/recession-proof-hotel-marketing-price-game/

Many of the hoteliers I talk to understand this theoretically, it's just a matter of having discipline to avoid quick-fix solutions in a slow economy.

 
At February 11, 2009 at 8:45 AM , Blogger dubdutch said...

Holding rates and adding value are all well and good, but when your competitors ae slashing their rates and undercutting your business, it's hard not to follow suit in order to claw something back.

 
At March 13, 2009 at 1:25 PM , Blogger KCollinsHRS said...

Discounting is a tool that when used effectively can create demand and revenue for your hotel. Like all tools it needs to be used properly. If discounting does not create demand than discounting should not be used, and value adds need to be looked at. The race no hotel wants to win, is the race of rate to the bottom.

 
At August 17, 2010 at 12:58 PM , Blogger Lincon said...

I think you are try new ideas, plans for your business. Thanks Batemans Bay Accommodation

 

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