Cutting room rates not profitable
Hotels that attempt to boost occupancy by lowering room rates will not increase revenues according to a recent report.
The report found that although discounting rates does lead to increased occupancy, hotels that maintain their price structure experience higher revenues than the competitors that discount rates.
“These results suggest a preferred pricing strategy of holding rates constant when competitors are discounting, or even raising prices to a small degree”, said an author of the report, Professor Cathy Enz.
“By raising prices above the competition, a hotel will lose occupancy but make up for that loss with higher RevPAR. By offering a lower relative price, on the other hand, a hotel will gain occupancy but its RevPAR performance will be lower than that of its competitive set.”
Ms Enz was part of a team from The Centre for Hospitality Research at the US-based Cornell School of Hotel Administration. The report is available online at http://www.hotelschool.cornell.edu/chr/. It was carried out using data from 6,000 hotels over a two-year period.
Report by Ginny McGrath
Ginny McGrath
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
Global tourism exceeds 1.5 billion travelers announces UN-Tourism
Qatar Airways offers reduced timetable to over 60 destinations
WTTC global tourism reached record economic impact of 11 trillion in 2025
Hands In, UATP join forces for airline multi-card payments
Suspension of all regional trains in Catalonia following two new rail accidents in Spain