With the right strategy, discounts and packages will benefit the hotel, not all is about lowering prices. Well implemented offers, with all their elements, will attract new demand without harming the average price. The secret is present offers that look credible.
Hotels with offers are more appealing; they act as a neon sign and make it stand out. In Spain there is only a handful of hotels that use this type of strategy and that is why they benefit from this extra attention. They will get more bookings than the other hotels, because they are leading the way.
In the long run, it is a sales strategy based on more than just low prices. The special offers programme we are proposing will help you to get more customers, but once they stay in your hotel, it is up to you to turn them into regular guests.
Don’t worry: Our offer strategy will not reduce your average price. We are not asking you to lower your prices with offers, we are just encouraging you to increase your range of services so your guests have something to choose from. Some will be special offers, others won’t; if you lose out on some, you will win on others. What we are proposing is a complete pricing structure that you will be able to apply in any season, not just during the low season or when custom is low.
Any type of hotel can generate successful deals. It’s not about pricing, but it’s about creating value at any level. If you manage to demonstrate that value, your guests will be happy with their buy, be it 50 Euros or 600 Euros per room. There is a potential market for every pocket.
Creating a system of effective offers is easy, you just need to think about some aspects and concentrate in designing well the different elements:
11. – Reference price: It’s the normal price, without any offer. Take into account the following:
- Users will read it as a way to judge your hotel: “A cheap hotel tends to be low quality.” “An expensive hotel is probably good. If it also has a special offer, then it’s a good opportunity.”
Conclusion: the reference price will define your hotel. Keep it relatively high. Only once your guests have stayed in your hotel, they will be able to judge by themselves if it’s good-value for money or not. Up to that moment, they will judge your hotel by the reference price.
- To add some credibility, change the reference price into a real booking option.
- And if you want to behave as the leading chains and airlines, name your reference price in relation to its positive feature, for instance, “flexible price” instead of Rack Price. In this way, you will turn it into an alternative that will even be attractive.
- The reference price doesn´t have to be fixed. The main thing is that, at every moment, its relation with other prices in your pricing structure maintains a logical order.
- Increase the reference price when you have made attractive enough and when you have also created other alternatives in the shape of special offers. You will balance the amount against the discounts on the special offers and your average price won’t be affected.
Before:
After:
2. – Comparison: On one hand you have the reference price, on the other hand the offer. For instance, percentage-like discounts work well because they are a comparison. Without a way to compare it, your offer would not be so strong.
3. – Proper offers and packages: This is the second element in the comparison and the most difficult part. You will need to know your market well in order to decide what offers to issue and find products that attract a real interest.
Deciding the types of rooms and the right offers available is a marketing decision that every hotel has to make. Unfortunately, most of the hotels in Spain just sell their usual rooms and do not present any offers or packages, with this they are losing the chance to “suggest” offers. When you issue special offers, you are explaining to everybody what type of experience they would be able to live in your hotel and, this, for the current customer means much more than just the number of beds they can book.
Restrictions, limitations and segmentation: Those are the tools to prepare your offers.
- Don’t be scared to the limitations: users will accept them well if they understand them. The limitation makes the offer credible and so, more attractive. The general idea is that the more commitment and restrictions you set, the price will be cheaper. The more flexibility and advantages, the price will be lower. That’s the same model airlines follow, and users are already familiar with it. You won’t have any problem for them to accept it.
- There are many different conditions that can be used to create restrictions. Most hoteliers don’t really know yet that they exist and that they can use them. Explore them and create combinations: the one that most people are familiar with is dates (high or low season, weekend, etc). Other possible combinations that are variable are: booking early, type of payment, number of rooms, duration of stay, cancelation policy, etc. Next month we will analyse many examples to give you a clearer idea.
- Write out restrictions in a positive way. Highlight the opportunities rather than the limitations or restrictive points.
- It’s always better to have 3 very restrictive offers, for instance, only accessible for 20% of your clientele, than an offer that is accessible to 60%. The smaller the market niche you specialize in, less competition you will find.
- Segmentation: Instead of having special offers based on the booking conditions, you could segment your customers dividing them in into categories. They have different needs, they behave in different ways and they will be happy to pay different amounts. If you want to reach the highest number of groups, you must offer them different products and conditions.
- Besides, client segmentation has another advantage: specific products tend to be more attractive than general ones. Users like feeling special, treated. For instance, romantic packages tend to work well even if they only offer a bottle of cava and a double bed. The bottle of cava is almost symbolic in terms of cost, the main thing is the message the hotel is conveying when it says that it’s ready to host couples and has something special for them. A “package” like that will create demand, as it’s demonstrated by the fact that the romantic package generates 25% of the bookings of some hotels.
