Wednesday, March 21, 2018

What do you think of the following business name: ''Last Room Club'' for a business selling hotel rooms for the same day with significant discount?

It's as good a name as any for something that there's already dozens of out there, and that even hotel operators who deal with them deal with them at all only because they feel like they have to, lack enthusiasm for, and even resent a little. (Actually, I like the name better than many that I've seen for deep discount online travel agencies.)

As names go, worse can be had, I suppose. Most of the ones I can think of for deep discount OTAs aren't suitable for use in polite company.

Image result for online hotel discounts

A few things that drive us nuts:

We don't like dumping our rooms cheap because we can't find a way to rent them for a decent price. If we can afford not to, we won't. I'd rather let a few $140-per-night rooms stand empty than to rent them to people who, if I let them have it for $75 one time, will get spoiled and never again see them as worth more than $75. Letting you sell our $140 a night rooms for fifty bucks, and making it too easy for too many people to get them at that price, doesn't exactly enhance the perceived value of our product — why should anyone want to pay even a hundred bucks a night for something you can get for fifty bucks? And when we have to because we can't afford not to, it makes us sick. If you're just doing it because you need the money, you may be relieved to getthe money, but it still makes you feel like a loser.

Cutting prices — on any product, not just a hotel room — isn't a marketing policy it's a pricing policy. If I mess with Hotwire or Priceline at all, it's only because I need the quick cash, and even then it's going to be done with a view of turning their customers into my customers. (If they're customers I even want. The relentless, predatory bargain hunters who book rooms only on deep-discount OTAs and concern themselves only with price regardless of what you can offer, can sleep in the street for all I care, pay nothing at all, and thus get the ultimate bargain that they deserve.)

I'm always going through this with salespeople. I want to bring new business into the hotel, but I much prefer any new business that gets brought in be people who don't mind paying. I don't just ask of my salespeople that they enlarge my customer base, I also want them to shape it, and people who don't want to pay don't need to be part of it. There's always going to be that element among any customer base that is always looking for bargains and doesn't want to pay full freight for anything, but people who don't want to pay a fair price is not the kind of business I pay — or even want — them to go out and get. That's not marketing, that's liquidation. It's what you do when you're holding a bankruptcy sale, and all you're asking of what's left of your business is to come out of it with a few thousand so you can get out of town and start over again in the next place, and 'move on with your life'.

Every hotel must have a 'lose it' rate, a price point at which they have to put their foot down and say 'this is it, we can't go any lower, good luck to you, I hope you find something that'll work for you'. We're going to set our 'lose it' rate at a price where we're still getting a decent rate.

That said . . . We have to put up with so many people who offer marketing schemes that amount to nothing more than handing out discounts like candy, and we get tired of hearing from them. Even franchise organizations, that we rely upon so heavily, with whom we have a relationship that really needs to be more of a partnership if we have to deal with them at all, are always looking for a way to undermine our prices. It's not only depressing, it gets tiresome.

I don't mind giving up discounts if it'll get me good paying business in the future, or assure me that I can get lots of room-nights out of it and make it up on volume; but I want people who can help me get the best possible return on my investment, and communicate and make the most of the value of my product, selling my rooms.

If you want a 25% discount (or anything else) out of me, I may give it to you, but only if I feel that you're doing something for me that will make it worth doing. We do give discounts for various reasons — actually we're quite generous with them, my personal pet peeves about hagglers, skinflints and deep discount bargain hunters notwithstanding — but one thing I demand of each of those discounts is that they benefit the hotel in some way in return (other than merely renting the room at a reduced rate, and being grateful for what little money we were able to get out of the person demanding the discount). That's why I'm lacking in fondness for 'entitlement rates' like AAA and AARP. (Michael Forrest Jones' answer to What is a rack rate and why do hotels have it?)

Price point and perceived value is precious to a hotel, and we don't want ours messed with, even if we have a few rooms left at the end of the night that we didn't unload. This is true even at the economy tier — the Super 8's, the Red Roofs, the Econo Lodges. If you have an older, 100-room economy property, you're much better off renting only 60 of your rooms at $80 a night then you are renting 80 rooms at $60 a night. Either way you're getting the same $4,800; but if you rent fewer rooms at a higher rate, your variable costs go way down, about 25%.

You don't have as many people using up your electricity, your water, your heat or your complimentary food and coffee, and you don't have to pay housekeepers to clean up after them or maintenance guys to fix the things they break. Your property will be a safer and more peaceful and pleasant place to stay, because cheaper, older, more run-down competing properties will draw off riff-raff that would cause you problems and drive your good guests away if you rented to them (Michael Hraba's answer to I am a hotel owner. I sometimes have . . .). And the value of your property itself is 33% higher, because you're getting 33% more for your rooms.

I don't mean to discourage you. Somebody, somewhere, appreciates what you want to do: otherwise Hotwire and Kayak wouldn't be able to make any money doing it. And there are a lot of old outdated Quality Inns and Days Inns and Ramadas that were built back in the days when 130 rooms was a pretty average size for a hotel, and they now have what they see as a vacancy problem.

But to us — even if we're stuck with empty rooms and have to deal with you — you're a vulture. :-)

Is price discrimination good or bad?

Would you recommend using to book a hotel room? Why or why not?

Why does the price of hotel accommodation increase over time? With time the hotel's owner's mortgage costs him less. Renting his rooms costs him less, so as time goes he shouldn't have to increase his prices. inflation does not compensate for the smaller cost of the mortgage loan . . .

Originally appeared on Quora

No comments:

Post a Comment