It is not uncommon in this day and age for consumers to seek the best deals and the most value for their money. People seem to be wanting more for less and even try out different "hacks" on how to be able to achieve this.
The same goes for travelers looking to book a stay at your hotel. Although reducing your rates may be a good strategy to fill up your hotel's occupancy, constantly giving out discounts may have a negative impact on your business.
Price sensitivity is what happens when your guests feel that your rates have become unreasonable for your regular rates. The more you give discounted rates, the more guests will feel that the value of staying in your hotel is only worth the discount.
Guests will ONLY book your discounted rates
Your hotel's occupancy will only get filled up during seasons or months when you create a promo or discount. Guests will tend to wait a long time and only book when they can get to stay at your hotel at a fraction of the cost. This, in turn, will hurt your revenue for all the other dates that your hotel is low on occupancy.
Fluctuating rates are bad form
In the hospitality industry, trust between the hotel and guests is a big factor in having referrals and returning guests. Guests want assurance that the quality of service your hotel provides is consistent. Giving out frequent discounts gives the impression that the hotel isn't doing well and has to reduce rates to be able to stay afloat.
Guests may feel cheated
Guests who have booked using your regular rates way in advance may be disappointed and feel cheated if the find out that others have booked during the same dates of stay for lower rates. This comes across as unfair treatment and may cause you to lose loyal customers.
It is understandable that guests would want the best deal possible for their buck but, frequent discounting may cause problems to arise in terms of profit margin, customer satisfaction, and reputation. The best alternative to reducing your hotel rates is to be crystal clear and confident in presenting your hotel's value. When guests know that booking with you is worth every penny, your hotel will manage to have steady occupancy without having to sacrifice your rates.
There are other ways to increase the number of direct bookings and improve your hotel's occupancy year-round without reducing your rates. Request a free demo and learn what other ways your hotel can increase its revenue and reduce OTA commissions.