Fierce competition for business travel share means hotels are often torn between adding value or risking brand damage by discounting. Catherine Chetwynd reports
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DURING THE WORST of the recession, hoteliers worked hard at adding value rather than slashing rates. But because the downturn has lasted considerably longer than anyone anticipated, pressure to fill rooms has led to online discounts, use of vouchers – Groupon, Amazon Local and so on – and pretty much anything else that appears to work. There is also a considerable disjoint between London, which still has high occupancies, and the rest of the UK, which is struggling, in varying degrees, to fill beds. “Hotels in London are not having to add value at all – rates are high in negotiations for 2013,” says Tom Stone, director of the Sirius consultancy. “A lot of [other] hotels do discount tactically, and things they would have charged for, like wifi, are seen as a given from a corporate point of view; but at the luxury end of properties in London, they are holding out and seeing it as a cash cow. “Corporates have always been quite good at looking for added value when they are driving rates – getting last room availability [LRA], parking, breakfast and so on. They drive for reduction in unit cost and if they
cannot get savings, they will go for cost avoidance and grab that rather than end up with nothing.”
FLATTERING TO RECEIVE Many hotel deals work on a similar principle to the voucher arrangements offered by restaurants but, whereas most of those apply to the entire chain, hotel companies have to be careful not to put their entire inventory on offer. Instead, they treat people as loyal customers (even when they are not) as a cunning way to generate interest and, effectively, flatter them. Travelodge’s £19-a-night deals are a good example. “They dress it up as ‘get in quick, we are offering this to you because you are one of our best customers – and it is not going to be available for long’,” says hotel industry consultant Melvin Gold. “It sounds as though they are only doing it for you, but there are usually well over 100,000 room nights involved. Premier Inn and Accor do something similar – book three weeks in advance and you get a special deal.” Gold also believes there is a second
agenda. “In the budget end of the market, they hope you will buy one in case you need it,” he says. “I would
have thought there is a reasonable number of people who are enticed to take up the offer and then if they are not free, don’t go.”
PRESERVING INTEGRITY Preserving brand integrity is also a priority, which is why some offers come from an anonymous supplier, and the buyer is assured that the property concerned is of a particular star rating and worthy of recommendation – but customers don’t find out where they have booked until they have paid. “This preserves integrity, and it does not affect online, corporate or other rates,” says Gold. Recent research undertaken by Micros shows 83 per cent of hotels surveyed were using special offers on the homepage of their websites to convert visitors into guests, and of those, 65 per cent had imposed a time limit on the promotion. In addition, 41 per cent allowed the researcher to sign up to a newsletter, which often included information about offers and promotions.