In times of slack demand companies with perishable product (hotels) are often quick to offer discounts in an effort to stimulate occupancy. But is this the right marketing strategy?
Large hotel chains with sophisticated revenue management systems can surgically modify pricing months in advance to minimize the disruption discounting can cause on the bottom line. But what if you are a small luxury hotel?
The biggest problem with discounting is that it is the easiest strategy to copy. Your competition discounts and you follow suit. It’s a lose/lose situation. Hotel rooms are only one part of the travel experience and discounting may not stimulate the added demand need to offset the price reduction. In the end RevPAR suffers.
What do you think? Safe travels – Madigan Pratt