At the recent Irish Hotels Federation Conference in Galway, March 2010, there was much talk about creating a value offer for your customers and using this offer to drive bookings.
What came out of the conference above all else was the message that discounting does not work and will not help hotels survive in these current economic times. Leading economist Dr Peter Bacon pointed out that in his opinion between 12,000 and 15,000 hotel rooms will have to be lost in order for the sector to remain viable and competitive. There was much debate at the conference as to whether this was a realistic option for the industry and whether it is or not is not the point here. At this point in time, it would appear that the hotel with the best chance of keeping its doors open are the ones that create a value offering for guests. Professor Cathy Enz of New York’s Cornell University pointed out that “Discount rates don’t stimulate demand. Creating both difference and value does.”
This is sometimes easier said than done with competitor hotels lowering rates daily. Prof Enz did offer some light at the end of the tunnel which says that discounting rates influences only three percent of hotel travelers according to a study by Maritz Inc. Given this, why are hotels still so focussed on price, therefore focussing the customer on price. Instead the hotels that will win out and win business are the ones who deliver clever and interesting promotional strategies which offer customers a clear value proposition. These would include offering an extra night free, including a spa package in the price, free breakfast or dinner or going that extra mile and offering guests an overnight stay with a show included.
We have seen from hotels using the iRes booking engine that the packages which sell the best, offers guests clear value for money and allow guests the opportunity to upsell themselves through the booking process by choosing ad on’s such as spa packages and allow guests to upgrade room types. If hotels are to stand out in the minds of bookers and guests, the focus needs to be on providing value and service to guests and not a focus cheap and discount rates.