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Rate Discounting: Delving Beyond the "Good or Bad" of It

Debiprasad Sarangi
Debiprasad Sarangi

Rate Discounting: Delving Beyond the

As a property-owner, it is very likely that you have come across the issue of rate parity, particularly if you have been distributing your room nights across multiple sales and distribution channels. A common issue most property owners or managers face is making their discounting targeted and ensuring that it doesn’t compromise the brand’s credibility.

Ideally, Rate Discounting can yield highly sustainable and significant returns both in terms of higher reservations and increased guest loyalty as long as you can apply it strategically. If you don’t understand the dynamics of Rate Discounting, the impact can be detrimental to your revenue and occupancy goals! Before you adopt Rate Discounting, there many aspects of this slightly-confusing aspect of hotel rate management that you need to understand.

Here, we will try our best to address how Rate Discounting can actually benefit you, why selective Rate Discounting is recommended and try to provide a clearer picture on Hyper-selective Rate Discounting. 

Getting Started with Rate Discounting Basics:

  1. Does your business need it? Unless you are floating in an ocean of overwhelming bookings and reservations are literally pouring in, you need to seriously consider discounting.
  2. Can you use Rate Discounting at any time? Basically “YES”, you can but you shouldn’t. This sounds a bit confusing but the fact remains that Discounting is used by smart hoteliers in patches (tactically) during times when their bottom-lines need a serious kick or they are expecting lower-than-usual booking during a season. Most hospitality businesses suffer from seasonality. This is when Rate Discounting can be used as a tool. Having your rooms on discount throughout the year isn’t what you should be gunning for. This is why hotel industry experts use the term “Hyper-selective Rate Discounting”.
  3. Does Rate Discounting need management? It would be an understatement of epic proportions if we said “NO” to this. Just think of the number of room distribution channels you have to handle—you are most likely to be distributing your room nights across a few hundred OTAs and booking portals at most times.  Consider the vast customer segmentation you need to address. You cannot offer a similar kind of discount to every kind of customer. Manually managing your rack rate, discounted rates, last-minute discounts, seasonal discounts and special packages can be an overwhelming task. You need a dependable, automated interface that can manage your Rate Discounting in an unfussy and profitable manner.

Is rate discounting always about the Price?

Shockingly, “NO”! This might seem like misinterpreting the question but rate discounting has a larger application, often beyond lowering your room rates. For instance, all leisure customers cannot be lured by discounted rates alone. If you can combine amenities like free Wi-Fi along with seasonal discounts, you have just become more appealing to them! If your hotel is located in a sea diving destination, rate discounting applies to more than room rentals. You can also offer discount on the equipment rental that divers need to pay for.

In the follow-up to this article, we will put forth more information about Hyper-selective Rate Discounting. However, we would like to point out that your choice of PMS dictates to what extent Rate Discounting is challenging or easy for you. In the Hotelogix PMS, the fully-automated Channel Manager makes is extremely easy to publish discounted rates or special packages across different channels. Using Hotelogix, you can create customized packages effortlessly and publish them across multiple channels simultaneously!