balloons with percentages printed on them reflecting potential discount pricing strategies

Discount pricing is a strategy in which you offer your hotel rooms at a lower price to draw guests, boost demand, increase sales volume, or decrease perishable inventory. This pricing strategy can be applied temporarily for promotional purposes or over an extended period to help position your hotel.

NB: This is an article from Mews

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The most common types are percentage discounts, fixed amounts, discounts for bundled services like a package, or seasonal promotions.

There are many benefits of implementing discount pricing strategies – let’s explore them in more detail:

Increased occupancy 

During low season or periods of low demand, discount prices can help motivate guests to visit your hotel. Since hotel inventory is perishable, discounts can help fill rooms that would otherwise stay vacant. Implementing this pricing strategy can drive in more revenue and increase occupancy rates in off-peak periods or slower days. 

Staying competitive 

Discounts are a wonderful way to remain competitive, especially with cost-conscious guests. By offering a price lower than your competition, you can entice guests to choose your hotel instead of another one in your comp set. 

Reaching new segments 

Discounts are an excellent way to attract new guests and appeal to segments you’ve never reached. If your prices tend to be high, cost-sensitive guests will not stay with you. Temporarily changing your prices can help these customers understand your value proposition, allowing you to bridge the gap between segments and ensure more loyalty. 

Increasing the ROI on your marketing 

Discounts are an excellent way to drive conversions in your marketing campaigns because price is one of the most relevant factors that motivates guests to book. By applying discounts, you can increase the return on investment by creating targeted marketing campaigns, which can help create a buzz around your property. 

Building loyalty 

One of the most challenging parts of the lead generation process is converting leads into customers. With this pricing strategy, there is less barrier to entry, which ultimately helps build your loyal customer base and drive repeat business.

Keeping cash flow stable year-round 

Due to the perishable nature of hotel inventory, discounts can help generate revenue to maintain cash flow and cover fixed costs. This approach leads to financial stability year-round. The seasonality of the hospitality industry implies finding ways to bring in guests year-round, and discounts are a terrific way to boost profitability. 

Boosting revenue 

Discounted rates may mean your margins are lower but think of it as a means to an end. If you’re increasing occupancy by offering lower rates, you might contribute to higher overall revenue. Once you get guests through the door, you can encourage them to spend on services and amenities using upsell software.

Read the full article at Mews