Hotel Discount Pricing Strategies For Small Hotels

In the cutthroat hospitality industry, standing out can be a daunting task. But don’t worry! A well-devised hotel discount pricing strategy could be your golden ticket. Lowering room rates, even slightly, can dramatically increase demand while piquing the interest of budget-conscious travellers and setting you apart in a crowded market.

This strategy is not just about slashing prices;  it’s about smart pricing that can ultimately reshape your business approach and give your hotel a competitive edge. Let’s dive right in and discover how you can make this strategy work for your hotel.

Advantages of Hotel Discount Pricing

Before we delve into the specifics of a discount pricing strategy, it’s worth noting the numerous benefits it can offer.

  1. Drive Demand: Offering discounts and specials will attract more guests, giving your hotel increased occupancy rates and more customers overall.
  2. Increase Revenue: By playing around with pricing strategies, you can increase the revenue generated from each guest. For instance, you could offer attractive packages combining discounted room rates with other services like spa treatments or restaurant vouchers to boost profits.
  3. Increase Loyalty: Attracting new customers is important, but often the most profitable customers are repeat guests. A good discount pricing strategy can incentivise people to come back and create a loyal following of patrons who become regulars at your hotel.
  4. Promote Brand Awareness: Strategic discounts offer an opportunity to get the word out about your hotel and build your brand. Offering discounts through third-party sites, newsletters, and social media will help to draw attention to your hotel and create more awareness of your business.
  5. Secure More Bookings: People are always on the lookout for a bargain and discounts can help to drive more bookings – especially in low periods. Offering discounts on slow days or periods of the year could give you an advantage over other hotels in your market, and provide a steady flow of business.
  6. Improve Reputation Through Increased Occupancy Rate: Having a higher occupancy rate will have a positive impact on the overall reputation of your hotel. A good discount pricing strategy can be an effective way to boost bookings and raise the profile of your hotel among customers in the market.
  7. Inducing FOMO: An effective discount pricing strategy can also induce FOMO (fear of missing out) in your customers. Offering a limited-time promo or an exclusive deal can encourage guests to book quickly and take advantage of the special offer before it’s gone.
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Top 15 Hotel Discount Pricing Strategies

Now that we’ve established the advantages of discount pricing, let’s explore some specific strategies you can use to promote your hotel.

Quantity Discounts

Offering bulk discounts is a strategic move that can attract larger groups such as tour groups, families, or event attendees. The more the merrier, and in this case, more economical too!

These discounts are triggered once a certain number of rooms are booked, incentivising guests to bring along more people or book more rooms. This not only fills up your hotel faster but also increases overall revenue.

Length of Stay Discounts

Offering discounts for longer stays can be a win-win for both the hotel and guests. For the hotel, it increases operational efficiency as resources like housekeeping and check-in/out processes are used less frequently per guest.

For the guests, it offers the opportunity to enjoy a prolonged vacation or business trip at a reduced cost. This strategy not only improves occupancy rates but also enhances guest satisfaction.

Loss Leader Discounts

Sometimes, it can be strategic to offer rooms below the break-even point to generate interest and attract more guests. This approach, known as a ‘loss leader’ strategy, is typically used to stimulate demand during slow periods.

However, these loss-leading deals can still be profitable through upselling and cross-selling strategies. Once guests are attracted by the discounted room rates, they may be willing to spend on additional services or amenities such as spa treatments, room upgrades, dining, and more, ultimately turning a potential loss into profit.

Seasonal Discounts

Hotels often experience fluctuating demand throughout the year due to changes in the seasons. During off-peak seasons, when tourist traffic is low and there are fewer bookings, it can be beneficial to lower room prices to attract guests.

Offering seasonal discounts can help maintain a steady cash flow and occupancy rate, even during slower periods. This strategy not only attracts budget-conscious travellers but also encourages guests to visit during less crowded times, providing them with a more enjoyable stay.

Last Minute Deals

Hotels often employ a strategic approach of offering enticing last-minute deals to fill unbooked rooms close to the date. By doing so, they can maximise occupancy and revenue, especially during off-peak periods or times when unexpected availability arises.

This carefully planned strategy not only guarantees that our rooms are always occupied, but also gives our guests the chance to indulge in an unforgettable stay at a special discounted rate. It’s a win-win situation for both our hotel and the travellers, creating an experience that’s truly memorable and enjoyable for everyone involved.

Package Deals

Package deals are an effective way to enhance guest experience and increase revenue. By bundling rooms with other services like meals, spa treatments, or local tours at a discounted rate, hotels can provide a more comprehensive and appealing offer to potential guests.

This also helps create an enticing and enjoyable experience for guests, ultimately leading them to spend more quality time indulging in the hotel’s amenities and services.

Direct Booking Discounts

Encouraging guests to book directly through your hotel’s website rather than through third-party platforms can be beneficial for both parties. Hotels can avoid paying commissions to third-party booking sites, and in turn, they can pass some of these savings onto the guests in the form of direct booking discounts.

If you’re looking for a Booking Engine that allows you to collect bookings direct from your hotel website, sign up for Preno’s 7-day free trial today.

Loyalty Program Discounts

Providing special rates or rewards for repeat customers is a great way to foster loyalty and encourage repeat business. Loyalty program discounts can range from discounted room rates, free upgrades, to complimentary services, which all serve to enhance customer satisfaction and retention.

Non-refundable Rate Discounts

Offering lower prices for non-refundable bookings can help hotels ensure a certain level of occupancy and cash flow. While this type of discount carries a risk for guests due to its inflexibility, the lower price can be a significant draw for those confident in their travel plans.

Event-Based Discounts

Lowering rates around specific events or festivals in the area can attract event-goers looking for convenient accommodations. This strategy not only fills rooms but also associates the hotel with popular local happenings, potentially boosting its reputation and visibility. To set this up, you could look to partner with local event organisers and venues for extra publicity.

Partner Discounts

Collaborating with local businesses or attractions to offer combined discounts can be a win-win situation for all parties involved. Guests get to enjoy a wider array of experiences at a discounted rate, while the hotel and its partners benefit from increased patronage.

Advanced Booking Discounts

Offering early bird discounts for guests who book their stays well in advance is a smart strategy for hotels. This approach incentivises potential guests to finalise their plans earlier, giving the hotel a clearer picture of its future occupancy. The advantage for guests is the reduced rate, while for the hotel, it provides more time to focus on securing higher-profit bookings.

Furthermore, this strategy helps to improve cash flow, as payments are often received upfront. It also allows more time for upselling additional services closer to the guest’s stay, increasing overall revenue.

Cash Discounts

Cash discounts serve as an effective tool for incentivising upfront payment, particularly for bookings made well in advance. By offering a reduced rate to guests who are willing to pay in full at the time of booking, hotels can secure immediate cash flow and reduce the risk of cancellations. This can attract budget-conscious guests and also helps to free up cash flow for the hotel.

It’s important to note that while this is a great way to secure immediate cash, it may not always be feasible due to payment restrictions in certain countries. It’s best to check the local laws before offering this type of incentive.

Flexi-Date Discounts

Hotels can attract a unique segment of travellers by offering flexi-date discounts. These are lower prices offered to guests who have flexible travel dates. This strategy helps hotels to manage their room inventory more efficiently, filling rooms during off-peak periods or when there’s unexpected availability.

For guests, it presents an opportunity to secure accommodations at a discounted rate simply by being flexible with their travel dates. This discount is particularly appealing to leisure travellers, retirees, or digital nomads who have more control over their travel schedules.

Corporate Rates

Corporate rates are a strategic approach employed by hotels to offer discounted rates for business travellers or companies. These special rates are designed to attract regular, repeat business from corporations that frequently require accommodations for their employees.

This strategy not only ensures a steady stream of guests but also helps in building long-term relationships with corporate clients. Additionally, it can lead to positive word-of-mouth within the industry, potentially attracting more corporate clients. For businesses, these discounted rates help in managing travel expenses effectively, making it a mutually beneficial arrangement.

Youtube Video: Last Minute Pricing: A Complete Guide to Preno’s Dynamic Pricing Tool

Tips For Hotel Discount Pricing Strategies

Discount pricing is all about getting creative and tailoring it to suit your property and clientele. Here are some tips for making it work for your hotel:

  1. Research the Competition: Understanding what other hotels are offering is essential when making pricing decisions. Staying one step ahead of your competitors can help you gain an edge in the market and make sure your discounts remain competitive.
  2. Offer Loyalty Programs: Rewards programs, loyalty points, or membership cards are all great ways to offer discounts to regular guests while incentivising them to return.
  3. Promote Your Discounts: Make sure your discounts are well-publicised both online and offline to ensure maximum reach and visibility. Social media channels, email campaigns, and strategising with local partners are all great ways to spread the word about your discounts.
  4. Track Results: At the end of it all, tracking the performance of your discounting strategy is key to understanding its effects on your bottom line. Using data analytics, you can monitor the success of each discount and make adjustments as needed for future promotions.

By following these tips and staying mindful of discounts’ effect on your revenue, you can effectively use pricing strategies to maximise occupancy while keeping guests satisfied with their booking experiences.

In conclusion, discount pricing is an effective strategy for small hotels to attract guests and drive occupancy while managing their room inventory efficiently. However, it’s important to ensure that discounts don’t lead to a significant drop in revenue. By following these tips and keeping track of your discounts’ performance with data analytics, you can make sure that your pricing strategies are working for your hotel in the most profitable way.

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About the author

Preno's Marketing Campaigns Manager, Scott Martin, is a Kiwi marketer with experience in the hospitality sector in NZ & AUS. His industry knowledge is put to good use here at Preno, working alongside hoteliers to showcase ways technology can make their lives easier. He is also a passionate videographer, with a slight sausage dog obsession.

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