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Blog
Two-fers, Yikes!
November 17, 2008
Instead of cutting room rates, hotels everywhere are offering two nights for the price of one; three nights for two; and even four for three. And the beat goes on.
A press release just crossed my desk from The Plaza in New York City: The Plaza is offering “a complimentary third night when booking a three consecutive night hotel stay.” OK, this is confusing wording but it is exactly what the release says. It better be based on rack rate! The disheartening part is where it comes from—New York City, a town that saw rates way over US$1,000 a night not more than four months ago, and people were paying it.
A brand new Hotel Indigo in suburban Chicago is offering two nights for the price of one—plus a US$20 gift certificate at the restaurant. Similar deals are being announced everywhere at every price point.
My question is what is better: Cutting rates or two-for-ones? Is there really a difference? Is this what we face for the foreseeable future? Yikes!
Posted by Jeff Weinstein on November 17, 2008 | Comments (5)
In response to: Two-fers, Yikes!
Thomas Smit - President Waldeck Capital commented:
how is it possible to reduce the rate of a first class property? the property has not changed and neither has the menu, the room, the service or the amenties. OR....have they.reducing rates essentially tells the guest he has been ripped off during good times and now that times are hard, we give the guest the same of everything but at a lower rate. it is not possible to justify a reduction. however, fnding ways to ensure that the guest maintains his loyalty is the challenge we have to face as owners. i have not seen (nor heard) of a single example where it was possible to reintroduce the usual rate after 9/11, SARS virus, Gulf Wars I and II.
In response to: Two-fers, Yikes!
Thomas Smit - President Waldeck Capital commented:
how is it possible to reduce the rate of a first class property? the property has not changed and neither has the menu, the room, the service or the amenties. OR....have they.reducing rates essentially tells the guest he has been ripped off during good times and now that times are hard, we give the guest the same of everything but at a lower rate. it is not possible to justify a reduction. however, fnding ways to ensure that the guest maintains his loyalty is the challenge we have to face as owners. i have not seen (nor heard) of a single example where it was possible to reintroduce the usual rate after 9/11, SARS virus, Gulf Wars I and II.
In response to: Two-fers, Yikes!
whotheheckru commented:
The hotels have offered aggressive rates but it is clearly in the best interest of the consumer to look at the "value-add" offers closely. In many resort destinations this includes upgrades, inclusive meals, late-checkout and more. Yes, we know that many will shop by price but if you really do the math the value is in the slightly longer stay and value-added offer.
In response to: Two-fers, Yikes!
Madigan Pratt commented:
Whenever there is an economic downturn the lack of creative packaging in the hotel industry becomes both apparent and appalling. It's like the only tool hotels have in their marketing toolkit is price. Two-fers, Yikes is right! There is no difference between cutting rates 50% or offering a two-fers. Either way Tom is right - guests will think they have been ripped off during good times. The answer - creating a strong brand, offering a consistently good product and good value, staying close to your customer (database marketing with content relevant to the customer) and lastly creative packaging that creates perceived value to customers. Shave a little rate (not 50%!) and add amenities (spa treatment, free dinner, bottle of wine, more value with longer stays - you get the idea), name it and then market it. www.HospitalityMarketingBlog.com
In response to: Two-fers, Yikes!
darrelltanyc@yahoo.com.sg commented:
Giving free nights is better than cutting rates as it encourages the guest to extend his stay. A longer stay has a chance of higher F&B revenue. Of course, some may argue that discounting makes it more attractive but when the economy recovers, you may have a hard time trying to convince guests on why they are paying more. And agree that they may feel as if they were ripped off during the past.