There are many ways to incentivize people to book a room at your hotel or resort. One of the most common ways accommodation providers do this is through discounting. But is this really an effective way of marketing your hotel?
Discounting is usually implemented to create an increase in demand. While discounting can create a demand for rooms, it does come with some dangers that you need to be aware of.
Be Aware of Fixing your Room Value
Discounting can fix a value in your guests’ minds. For example, if Jim and Jane you’re your discounted rate of $155, they will be more reluctant to pay the standard rate of $170 the next time.
So, even when you put the prices back to standard rates after the discount is over, consumers still feel that the discounted rate is the correct rate, despite knowing that those prices were the discounted when booking. This can leave some resistance in the mind of the guest, the next time they go to book because they expect to get the same price. If they pay more the second time, they feel like they are paying too much.
Have a Marketing Plan
In order to benefit from a discount pricing strategy, you need to have a marketing plan around it. Most people don’t do this – which is a mistake. Without a marketing plan to attract the right amount of people, discounting will rarely be worth it, because it won’t attract the numbers to make the discount worthwhile. In order for the discount to be effective, you need to get more people through your doors.
Know Your Break-Even Point
Some hotels offer discounts without knowing their businesses’ exact costs of providing a room to a guest for the night. Without knowing your exact break-even point, a discounting pricing strategy can leave your balance sheet in the red faster than you can say “discount”. Only once you know your exact operating costs should you begin working on a discount strategy.
What are the Alternatives to Discounting?
Contrary to popular belief, most people aren’t actually looking for the cheapest hotel. If this were the case, everyone would be booking 1 star accommodation – which is simply not the case. People are looking for value for money.
Your hotel already has value – for example, its location, facilities and of course your friendly service. You need to communicate the benefits of your hotel to the consumer. You can do this in a number of ways. Firstly, having an enticing description on your website instead of just listing all of your hotel’s features, you should also include the benefits in staying there. This description can also be added to the various channels.
The amount of boring descriptions on hotel websites and channels is remarkable. For example, I saw a number of hotel descriptions that have bullet-pointed lists of features of the hotel. A hotel that was close to my home is across the road from the beach – but they had left that important fact from their hotel description. Another hotel omitted that they were around the corner from a popular landmark.
Include a list of features and benefits on your website and for advertising on the accommodation channels. For example: Ocean views (feature), that will allow you to relax as you overlook the most beautiful ocean views in Australia (benefit).
It is also a great exercise to ask some of your guests what they like most about your hotel. Believe it or not, some of the things that your guests love about your hotel might surprise you.
For independent hotels, having personalized service is very valuable. It is something that the larger brands try to emulate. Having a photo of yourselves can go a long way, along with a personal message about you and your hotel and what guests can expect when they go there. Tell them about the experience. Remember, many people have no idea what to do when they visit. Explaining your local knowledge is valuable. Nothing can beat the personalized touch. Allowing potential guests to get to know you can provide real peace of mind when booking.
The best strategy for adding value is to provide quality and friendly service. This can mean smiling at your customers, minding your manners and offering assistance where you don’t have to.
It is also great to anticipate your clients’ needs. For example, you might notice on your client’s booking information that it is their birthday. Leaving a cake and a card in their room can leave a great impression that will be sure to stay with them for some time! It pays to keep your eyes and ears open!
Increasing value is often a far better method of promoting your hotel, than discounting. Sure, it may be a slower strategy, but it will do far better in the long term and it is likely that you will get better online reviews as a result.
Special Note: In the rare circumstance when competitors rates and distressed, close to expiry inventory leaves you little choice but to discount a specific date range: “Make it a Special Promotion” with a specific themed purpose with limited numbers, not just a discount.