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Discount Strategies In Hotels

I’ll guide you with the What, Why, and How of discount strategies in hotels. In addition, I’ll suggest the best times to run those deals, how to apply them, and everything else around it.

To begin with, let me tell you:

Why do hotels need to run discount offers? Well, hotels need to offer discounts and run promotions for the following reasons: 1.To promote their brand. 2. To increase repeat guests and attract new ones. 3. To boost room sales in weak seasons. 4.To ensure the highest value bookings in peak seasons.

Though, most hoteliers have the following concerns for their discount strategies: Will it cost them higher or hamper their sales, will they get enough bookings, and much more. In addition, offering a discount is a quick way to draw your guests’ attention. There are various types of discounts that you can run. Let’s understand them ahead.

Which types of discounts can a hotel offer? You’ll mainly see two types of discount strategies in hotels:

a. Promotional discounts: Promotional discounts are those which are offered on hotel rooms or any other services. Its main purpose is to attract your potential guests for purchasing something additional at your hotel. These discounts are usually offered through PROMO CODES.

 Few examples: 1. Get 10% off on one more night stay. 2. Pay for 1 night and get 1 night free. 3. Enter promo code “FLAT10” and get 10% off on the 2nd night.

 b. Package discounts: Package discount means a discount offered when a guest purchases room accommodation plus any extra service, activity, or a meal plan at your property.

 Few examples: 1. Stay for 3 nights, 4 days + breakfast . 2. Stay for 1 night, 2 days + Couple Spa. 3. Stay for 2 nights, 3 days + all meals at absolutely no cost. 

I’m sure this will help you decide on which type of discount you want to offer at your property. Just remember: Better the deals, higher would be your occupancy.

How can a hotel apply discounts? I know that in this tight competition, you want to outrank your competitors by having the best discount strategies at your hotel. But, you shouldn’t forget an important factor while doing that – HAVE PROFITABLE DEALS (for you as well as for your guests).

 Let’s find out how to apply discounts and when is the best time to offer them at your hotel:

a. How to apply promotional discounts at your property?

1. Night based discount: Many times, you might host guests that prefer to stay for a short period of time. They can be business travelers, localities and millennials. In such cases, you can offer a discount either on the first night or the last night of your guest’s stay. For example, if a guest books a room with you for 2 nights, 3 days; then give them a discount of 10% on either the first or the last night. Best time to offer: You can apply such discounts when there is a long weekend OR any festival coming up.

2. Discount on all nights: Some guests prefer to stay for a long period of time, either to relax or to take a break from their routine life. Here, you can delight such guests by offering a discount on their entire stay. For example, if you receive a booking for 7 nights, 8 days; then give either a flat amount of discount (15%) or % discount (10%) on their entire stay amount. Best time to offer: Run such discounts when you have either charged a higher amount on your room or when the guest stays at your property for a longer duration.

3. Frequency based discounts: This means, how often you want to offer discounts to your guests i.e. the frequency of the discount. You can offer such frequency-based discounts when you want your guests to stay for a longer duration (increase LOS). For example, offer 10% off every alternate day, or after every 3 days or on a particular set date. Best time to offer: This hotel discount strategy can be applied during a mass gathering or any event at your property.

b. How to apply package discounts at your property?

 Hotels can offer several packages to their guests. However, the below mentioned ones are the best ways to offer a package to them:

1. Basic package: These are deals where your potential guest makes a booking at your property and gets a discount on the entire stay package. For example, stay for 3 nights, 2 days + avail continental meal, and get 10% off on the entire package. Best time to offer: You can run such deals when the guest is about to make a reservation or when your competitor’s rates are higher than you.

2. Booking window package: A booking window is a particular time period when the guest has to make the reservation for a future date. Here, they can avail the discount (package) ONLY IF they have made the booking in the given time frame. For example, book for 3 nights, 4 days at amount before 30 June 2020, and visit us anytime till June 2021. Here, the booking window is till “30 June 2020.” Best time to offer: If we consider the current situation of the pandemic, then now is the best time to run this deal. Other than that, you can apply such offers when you’re having a low occupancy at your hotel.

3. Last minute deals: The name says it all. Last-minute travel is usually a journey taking place within 7-14 days of your guest’s booking date. These discounts are provided to push last-minute bookings. For example, a guest or consider business travelers booking for a quick stay; makes a booking on 15th June 2020 for 28th-30th June 2020. Then, here you can offer them a 15% discount on the booking amount. Best time to offer: Such deals can be best applied within 14 days of the guest arrival date.

4. Advanced booking deals: Advance booking allows your guest to book a hotel room at a discounted rate. Basically, it is a booking that is made at least 3 months prior to their arrival date. For example, consider someone booking for Diwali; stay for 3 nights, 4 days and get a discount of 10%. Best time to offer: Such discount strategies in hotels are most beneficial for festivals or vacations.

5. Pay and stay deal: In pay and stay deals, you offer your guests an additional stay of the same nights they’ve paid for. For example, pay for 1 night and get an additional 1 night free, or stay for 2 nights and pay for only one. Best time to offer: You can offer such deals either when your hotel rooms aren’t completely occupied during long weekends or holidays.

6. Minimum and maximum stay package: Minimum and maximum stay packages mean any guest arriving on a particular date range needs to stay a minimum or a maximum number of nights at your property. For example, a guest booking between 1-10 June 2020 has to stay a minimum for 3 days at a discounted rate. Similarly, for a separate time range, you can set the maximum night limit and offer a discount on that. Best time to offer: Minimum night deals can be applied best when there is a concert or any event at or around your property. (So, if the concert is for 3 days, then here you can offer a minimum stay package for 3 nights). And, if you have upcoming gatherings, you can apply the maximum night deals when your guests book a few days prior to those gatherings.

c. How to apply discount on promotions and packages at your property?

 In a very few cases, hoteliers offer this type of discount which is a combination of promotions and packages. For example, book for 3 nights, 4 days + get spa service, and an additional 10% discount on your booking. Best time to offer: This can be considered only when you are extremely low on bookings or are experiencing a downturn in your hotel’s occupancy. So, these are the various types of discounts that you can offer to your guests. Each of them has its own benefits and would vary depending upon your property type and requirements.

 Thus, before applying them make sure you analyze each of these in detail and figure out which works the best for your property.

Where can you offer discounts for your hotel? Offering discounts is an unfailing way to boost your occupancy and revenue. However, below are the best possible locations to run discounts. a. Discounts on O T As: O T A's or better known as online travel agents have become an impactful source of marketing for hoteliers. They allow hotel rooms to be sold to a larger audience, helping hoteliers to gain higher revenue. Often these O T A's run deals, offers, promotions, and loyalty or reward programs to acquire more bookings. Participating in them will help you to showcase the best deals to your guests. Here, on the OTAs, you can promote the various discounts that I mentioned above. Doing so will make your property preferable over your competitors.

b. Discounts on direct bookings: Even though O T A's are better accessible to guests, direct bookings take the cake when it comes to hotel revenue. Mainly because they help you save up on your hefty O T A commissions. So, encourage your guests to book with you directly by highlighting a good deal on your website.

c. Travel agent discounts: Travel agents are a source of acquiring bookings apart from the O T As, meta search engines and hotel websites. Getting connected with them will not only help in showcasing your presence to guests but also reap you more reservations. I’m sure you might have tied up with several travel agents already. Thus, do offer them something better apart from the discounts available on online channels. This will in turn get you more guests and help you up sell extra services at your property.

 When should a hotel offer discounts? Offering discounts is the best way to sell your property to a larger target audience. Below are the different times when you should do so:

a. Low season discounts: Without a doubt, the peak season is the best for hoteliers as you enjoy high demand and an influx of guests. Of course, it’s not that tough to achieve full occupancy during the peak season. For that reason, low seasons are what discounts are made for. Here, the first step you should take is determining when exactly your off-season starts and run the discount offers accordingly. A GOOD DEAL will definitely help your hotel increase bookings during such times. Moreover, you should encourage your guests to stay longer with a discount reminder, when they add their stay dates.

b. Event-based discounts: Events are the best time to apply discount strategies in hotels and attract more guests. These events may be festival celebrations, parties, conferences, seminars, concerts, or some fun workshops. Showcase some great deals when you have such events coming up in or around your property. And, DO make sure to keep the most attractive offers in the market; such that your guests choose you and no other property. Start by offering early bird discounts, and then move to provide group discounts to attract more guests. Show off your discounts like a “FLASH SALE” to make your guests aware.

c. Guest-based discounts: Hotels tend to provide discounts based on the guest type. You must also have various types of guests visiting your property. Set up discounts for all such types of guests viz. business travelers, leisure travelers, VIP guests, repeated guests, and so on. These guests might turn out to be great at word of mouth recommendations and improve your hotel’s reputation. For the most part, you can consider offering weekday discounts for business travelers, and weekend discounts for other guest types. Moreover, you can offer them free or nominal costing recreational activities to improve engagement and guest experience.

d. Referral discounts: A referral discount is for bookings made because of a recommendation or through a secondary business source such as cab drivers, shop owners, and vendors. Such collaborations are always beneficial and work in a win-win strategy, benefiting you with bookings, the opposite party with a commission, and the guest with a discounted stay. This would help you build better relationships with your guests as well as your business sources; thus enhancing bookings.

e. For desktop and mobile users: This is a newly added discount type where you can offer your guests to either do a booking through the desktop/tablet/mobile and get a particular amount of discount on it. For example, often Amazon, Flip kart, or such delivery giants provide app-only deals or discounts. You too can offer similar deals for your property. Moreover, you can also collaborate with some well-known brands and accordingly apply discount strategies that benefit them as well as your hotel. I am sure, you must be pretty clear by now, as to when you can offer a discount. So, let’s move forward and understand the factors you need to look into before running any promotion at your property.

 Which factors to consider while running discount strategies in hotels? Promotions work great when they are targeted to the right audience, in the right way, at the right time. However, before running any discount offers for your hotel, there are several factors you need to keep in mind. Let’s understand each of these in detail here.

a. Target audience: Primarily, identify the target audience you want to cater to. Is it business travelers, honeymooners, vacationers, or millennials? Do keep an eye on your competitors’ target audience as well. Sure, I know, not every customer is a good fit for any hotel discount strategy that you offer. Not all might need discounts to book with you, whereas some might request for a tad bit higher discount. So, don’t push the same offer to all. Rather, choose your target audience wisely and set your discount offers on the O T A's, website and meta search engines in accord.

b. Overall goal: Discounts are terrific, but offering them without any goal or purpose is just meaningless. Thus, before you implement or offer any discount make sure you are clear about why you want to do so? Is it to:

 1. Gain more guests? 2. Achieve full occupancy? 3. Enhance sales? 4.Win over your competitors? Well, once you know the reason, we are sure, offering discounts and making the most of them would be pretty much easy to achieve.

c. Terms and conditions: Determining and mentioning your hotel’s terms and conditions while availing any discount offer should be clearly stated when a guest makes a booking. These can be like:

 1.Discount valid up to {Date}. 2.Avail {10%} discount via {SBI} card only. 3.Free WiFi access. 4.Early check-in option available. 5. Pool access. Having transparency about such things will instill faith in the Booker for your hotel to make the booking.

d. Cancellation policies: Proper and fool-proof cancellation policy is MUST before rolling out the discount offers on your website as well as other connected channels. Be careful while forming your cancellation policies and don’t miss out on anything important.Try not to be over flexible as well as ultra-strict with it. This will help you to get more confirmed bookings as well as reduce your cancellation ratio.

 d. ROI on discount offers: This will help you to analyze the expense or loss incurred in discounts against the bookings and revenue you earned. You need to focus on this aspect because you are lowering your room rates while offering discounts. The more you lower them, the higher maybe your cost incurred. And, it is done with an aim that the guest would make use of the extra services at your hotel thus balancing the cost of your room. So, once you offer discounts, make sure to analyze its ROI against the bookings that you earn.

 

Here’s a formula to calculate the ROI:

 (ROI of the bookings = Cost incurred to acquire those bookings / The revenue earned from the bookings). Once you analyze the above factors, the next step that you need to focus on is, the different ways to promote your discounts and make your guests aware of it.

How to promote discount offers?

 

 

Content created and supplied by: HotelierForum (via Opera News )

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