Jul
14
One of the most frustrating things a hotel can do on the internet is to start a price war.
It does nobody any good.
It doesn't help the hotel - because you'll rarely get the additional business necessary to make up for the discounts you're offering.
It doesn't help the customer - because the discounted price means either they'll get bad service because you can't afford to staff the place properly, or because you're so annoyed they've bought "cheap" that you'll give them that grotty room next to the lift, on the top floor of the annexe with the banging fire door right outside - just like Thistle hotels did to me in London last year (not afraid to name names here - did I get a good nights' sleep? I think not.).
Suicidal discounting is not the way forward. Taks a look at Laterooms pages for any location where demand is weak and you'll see prices dropping like lead balloons. Yes, I know all about hotel rooms and their perishable nature. If you're promoting your rooms at crazy disounts it's because you've forgotten why people want to buy them in the first place.
It does nobody any good.
It doesn't help the hotel - because you'll rarely get the additional business necessary to make up for the discounts you're offering.
It doesn't help the customer - because the discounted price means either they'll get bad service because you can't afford to staff the place properly, or because you're so annoyed they've bought "cheap" that you'll give them that grotty room next to the lift, on the top floor of the annexe with the banging fire door right outside - just like Thistle hotels did to me in London last year (not afraid to name names here - did I get a good nights' sleep? I think not.).
Suicidal discounting is not the way forward. Taks a look at Laterooms pages for any location where demand is weak and you'll see prices dropping like lead balloons. Yes, I know all about hotel rooms and their perishable nature. If you're promoting your rooms at crazy disounts it's because you've forgotten why people want to buy them in the first place.
So. Why do people buy things?
People buy things to satisfy needs. There are all sorts of needs. The most basic are food, water and shelter. Do they sound like things hotels might provide?
They might select an option that is cheap. But they are not automatically in the market to buy the cheapest thing out there.
There is an old saying, "buy cheap, buy twice" - and a lot of people are prepared to follow that mantra.
People select based on their perception of the value they're going to get.
"Cheap" offers are motivated by the seller, because they have failed to deliver a strong enough value proposition to the market (potential customers). If you're perceived as too expensive, you're leaving a lot of scope for "cheap" to become an option for your potential customers. If your pricing is realistic, you leave them less scope.
Let me give you an example:
I went to Berlin recently. I flew by Easyjet because they had a direct flight from a Scottish airport to Berlin. I knew well in advance that I was going so I got a decent price from them. Had I waited a few weeks, my choice would have been between several operators and Easyjet would not have been the cheapest, but they would still have been the only direct flight.
The hotel I booked was not the cheapest I could have had. However it was near my arrival airport and right next to the S-Bahn station. No taxis, no lugging my bags around a city. Their price was fair. I bought location and ease of use. I didn't buy cheap. I could have bought cheap - I could have bought a room in a pension near Checkpoint Charlie. But it was miles away from where I wanted to go. The hotel offered me good value: Easy to use; easy to find - and importantly, they communicated those attributes online.
People want different things from hotels: Location; pleasure; convenience; service; image; parking; access; performance; child friendly and so on. If you don't appeal to their needs, they will automatically default to price. "If I can't get what I'm looking for, I'll just go for the cheapest thing I can find".
Lots of hotels are very poor at communicating what they do in terms of what people need. They also have a habit of holding out for rack rate, suddenly realising there is no demand at that price and dropping rate like a stone in order to try to stimulate some demand. That won't work - the people who are coming have already booked the better value propositions on offer. All you'll do is kill the profit you would have made from selling your few "late" bookings at a higher price.
It's a double whammy that really can do harm to your bottom line. You can see the prime suspects on the pages of websites like Laterooms, every day of the week.
People buy things to satisfy needs. There are all sorts of needs. The most basic are food, water and shelter. Do they sound like things hotels might provide?
They might select an option that is cheap. But they are not automatically in the market to buy the cheapest thing out there.
There is an old saying, "buy cheap, buy twice" - and a lot of people are prepared to follow that mantra.
People select based on their perception of the value they're going to get.
"Cheap" offers are motivated by the seller, because they have failed to deliver a strong enough value proposition to the market (potential customers). If you're perceived as too expensive, you're leaving a lot of scope for "cheap" to become an option for your potential customers. If your pricing is realistic, you leave them less scope.
Let me give you an example:
I went to Berlin recently. I flew by Easyjet because they had a direct flight from a Scottish airport to Berlin. I knew well in advance that I was going so I got a decent price from them. Had I waited a few weeks, my choice would have been between several operators and Easyjet would not have been the cheapest, but they would still have been the only direct flight.
The hotel I booked was not the cheapest I could have had. However it was near my arrival airport and right next to the S-Bahn station. No taxis, no lugging my bags around a city. Their price was fair. I bought location and ease of use. I didn't buy cheap. I could have bought cheap - I could have bought a room in a pension near Checkpoint Charlie. But it was miles away from where I wanted to go. The hotel offered me good value: Easy to use; easy to find - and importantly, they communicated those attributes online.
People want different things from hotels: Location; pleasure; convenience; service; image; parking; access; performance; child friendly and so on. If you don't appeal to their needs, they will automatically default to price. "If I can't get what I'm looking for, I'll just go for the cheapest thing I can find".
Lots of hotels are very poor at communicating what they do in terms of what people need. They also have a habit of holding out for rack rate, suddenly realising there is no demand at that price and dropping rate like a stone in order to try to stimulate some demand. That won't work - the people who are coming have already booked the better value propositions on offer. All you'll do is kill the profit you would have made from selling your few "late" bookings at a higher price.
It's a double whammy that really can do harm to your bottom line. You can see the prime suspects on the pages of websites like Laterooms, every day of the week.
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