Usually, it makes sense to sell your rooms for the highest price possible without oversacrificing occupancy. Though hospitality at its core is about people, making money is essential to keeping your doors open and providing memorable guest experiences.
However, there are exceptions to this general rule—times when lowering your prices can serve your overall financial and guest retention strategy. When done purposefully, discounting can support your property’s long-term goals and yield strong returns. Scattershot markdowns, on the other hand, do not. Gut-driven discounting can reduce revenue without meaningful corresponding gains in occupancy, brand awareness, or guest relationships.
Here’s how to plan and time discounts that benefit your property’s future.
Targeted Discounts
Set goals for your property and understand how discounts for specific guest segments further those goals by incentivizing bookings. Keep in mind that not all discounts are effective for all guest types, so delve into your data beforehand and tailor discounts to the right audience.
WebRezPro enables you to offer password-protected rates through your online booking engine, ensuring only your preferred, targeted guests can access the discount. Because these rates are not available to the general public, they do not violate OTA rate parity agreements.
Shoulder Season Discounts
Shoulder season is the period when travel slows, usually during spring and fall. As of March 2022, over a quarter of US adults made plans to travel in July, while only five percent made plans for September. When demand drops this steeply, competition intensifies, and discounts are commonplace.
This is also a great time for giveaways that increase brand awareness without sacrificing rooms that would otherwise be occupied.
However, the ethos surrounding shoulder season is shifting with the rise of workcations and travelers looking to escape heat and crowds. As the planet warms, people proactively seek lower temperatures on getaways known as “coolcations.” In 2024, 82 percent of Virtuoso luxury travelers expressed interest in this kind of trip.
Travel patterns are evolving, so analyze your booking data to confirm your shoulder season dates before lowering prices. WebRezPro offers custom reports that empower you to dig even deeper into your reservation trends with parameters like specific rates and packages, length of stay, lead times, booking sources, and much more.
Loyalty Programs
Offering discounts to loyalty members and repeat guests doesn’t devalue your property; it values their continued business and the steady revenue stream it creates. In fact, a five percent rise in customer loyalty causes a corresponding profit increase of over 25 percent.
Competition for these profitable guests is fierce, with dominant industry players collectively adding over 500 million new members to their loyalty programs since 2018. To stand out, offer flexible rewards, experiential benefits, and personalized incentives based on comprehensive guest data. The more tailored the offer, the more likely it will be accepted.
If you use a points-based system, provide versatile ways in which those points can be used, from room upgrades to complimentary drinks. Smaller rewards are easier for the guest to redeem and play into their desire for instant gratification.
There’s space to be creative; the closer your loyalty program aligns with your unique selling proposition, the better. You can even tie into social responsibility initiatives—for instance, a pet-friendly hotel might allow guests to use points to donate to a local animal shelter.
Discounts for Corporate Clients & Groups
Because corporate clients and other event groups book in volume, it’s reasonable to offer lower rates. You’re trading ADR (average daily rate) for higher occupancy.
As well, groups increase ancillary revenue. For example, a conference may require catering, and attendees purchase extras such as spa treatments and room service. Business attendees can even become bleisure guests, tacking on extra nights and continuing to drive occupancy. In 2024, the bleisure travel market reached $430 billion.
These customers can also become repeat guests. If a company conducts frequent business in your area, they’re likely to return to a property they already trust.
Plus, their stays often fall midweek, filling dates that typically see lower occupancy.
Last-Minute Bookings
When availability is high, it’s better to lower prices than leave rooms unsold. Partial revenue is preferable to none.
To attract last-minute guests, advertise your vacancies on specialty OTAs such as HotelTonight, offer mobile-only discounts, and ensure that your booking engine is mobile friendly. Seventy-two percent of mobile reservations are made within two days of last-minute Google searches.
Length-of-Stay Discounts
Offering discounts that extend your guests’ length of stay improves your bottom line by increasing occupancy. While this isn’t appropriate during periods of high demand, it’s an effective tactic during slower times—especially right after busy periods.
For instance, offer an additional night at half the price following Labor Day weekend (or any other weekend to increase mid-week occupancy). Since guests are already planning a stay, it’s a convenient offer and doesn’t impact high-occupancy weekend rates.
This approach can also pay off after a local festival, event, or concert. Some of those Swifities may want to stick around and explore the city…
Direct-Booking Perks
While OTAs and GDS channels expand your reach, your best discounts and packages should be reserved for your direct booking channel. Not only does your direct channel eliminate commission fees, it gives you control over guest data, empowering you to build long-term relationships.
Though you do have to abide by OTA rate parity agreements, you can still add value through free perks. Common add-ons include free breakfast, activities, or parking. Ideally, the cost of offering add-ons for free should not be more than OTA commission fees, unless you’re primarily focused on collecting valuable guest data.
With WebRezPro, add-ons (both free and chargeable) can be offered within the online booking engine, convenient for both guests and staff.
Black Friday Discounts
There are certain times of year, most notably Black Friday, when guests are primed to expect discounts. It’s appropriate to create special promotions to meet that expectation.
In 2024, Black Friday shopping generated $10.8 billion online from US consumers alone. Draw these shoppers in with unique campaigns, urgency signals, and a seamless booking experience they can’t resist.
Compensation for Mistakes
When something goes seriously awry, offering a discount—or better yet a freebie—assists with service recovery. For example, if a guest is kept awake all night by a noisy neighbor (even after notifying the front desk), you could comp that portion of their stay.
Exceptional service recovery prevents reputational damage and can even turn a frustrated guest into a repeat visitor. Known as the service recovery paradox, this concept suggests that a well-handled failure can result in higher satisfaction than if that failure hadn’t happened at all.
Save Time with Automated Software
Room rates should never be set and forgotten but should fluctuate according to availability, demand, and other market conditions. This method of continually making adjustments, including discounts, is known as dynamic pricing. A revenue management system helps automate this process by analyzing granular hotel and market data and adjusting rates in real time.
In general, you should follow your revenue management system’s lead, however, there are times when overriding it may be necessary. For example, if demand increases due to fire, flood, or a similar emergency, the demand-based rates your system suggests may constitute price gauging. You’re the one in charge, not the algorithm.
When implemented strategically, discounting can be an effective way to boost both occupancy and revenue. Avoid knee-jerk discounts and instead base your offers on solid data. Leverage the tools in your property management system and revenue management system to better understand your target audience and time your offers effectively. With this approach, your discount strategies will pay off.
