Crisis times demand switch in pricing strategy towards less 'discount-based' and more 'value-based' one;

The key to maintaining the levels of occupancy in crisis time is to retain your target market without backing up your finances. However, most hoteliers find it hard due to high pressure from competitors and tempting efforts to win the price game by discounts.

That is why rarely they see the huge opportunity in crisis management pricing policy: value over discounts, more service versus less price for the same service.

Hotels in crisis time are steady-ready to close half of their services (read: paid services) and take just any money from their guests for the same amenities (with the unchanging fixed costs amount). However, they rarely see the rabbit in the hole.

Providing more in general has a great psychological effect on anyone, not just the guest. Such policy already enforces higher guest conversion and increased customer loyalty: ‘while others don’t have this and this, they even thought of this service for me, so sweet’.

At the same time, hoping your guests don’t count their money while you count your losses is a total joke. They do, but crisis has changed their attitude towards many things, including their personal care.

Wise hotel managers (and especially those ones in sales) know how to demonstrate the guest they don’t lose money, they earn more value. One of these methods is to ‘hide’ the costs. Not every guest has the ability to quickly uncover your ‘secret’.

Most of them will be actively using your value-based services and enjoying them without even a trace of fear they lost a lot of money.

We discussed this issue with Mr Victor Bychkov, who has more than eight years of experience in hotel sales. And here is what Victor shared with us:

There is only one way for keeping the same revenue from selling room nights in crisis period. While most of hoteliers believe discounting is a solution to get volumes some wise managers understand that there is no additional business behind low rates. Besides discounting has bad influence over hotel reputation and might bring negative impact on long-term pricing policies. Therefore, the only logic way to explain your customers why your hotel holds the prices while all others discount is to add services to your traditional rate packages.

In this case it is essential that these added services were really needed by the guests, that the offer is interesting and ‘fresh’ to all our target markets. First, analyze which of your additional services (not included in your old rate) are most bought and make them free. That’s the 1st step to do before going any further and inventing new untested propositions. These additional ordered services might be transfer, early check-in or late check-out, paid Wi-Fi, additionally bought lunch or dinner, sport equipment rental etc. By including these services to your rate without increasing your price some guests may find your proposition more interesting than your competitors’ one who discounted.

The main idea is clear �" hide discounting by including customer-valued services into the room rate and sell them altogether with the room rate. By what to do, if you were not correct in predicting customer need for the additional services? If you special offer “Now you can get a HB for the yesterday’s BB rate” doesn’t work? The answer �" you can always make a choice of special offers each having a unique free additional service or propose your guest to choose themselves what they need.

Doing so you will never lose as much as you could by discounting for whatever service you add to the rate it’s cost will always be lower then it’s price. Your guest calculates his/her savings from normal market price of the service while hotelier loses nothing but costs.

If the first step is behind and you want to go further in searching new customer valued services to add to your package (rate) you can think of inventing something new. Traditionally hotels cater for accommodation and restaurant services and that’s what guests expect from hotels. But you should think wider if you want to be a pioneer. Your guests are human beings and not robots that only need to eat and sleep. They have a complex of needs from health problems to educative curiosity. While some of people’s needs are difficult to foresee, pleasure based services will always be requested. IMHO massages should appear as additional services even in business hotels.

So when looking for these ‘added value services’, try not to think in the terms of your old services and amenities. Invent something new and uncommon. Crisis erases standard thinking and demands more creativity. Use it and you’ll never get rid of happy guests!

Mila Petruk, CEO & Founder at Milina Outsourcing
Mila Petruk is a hospitality consultant and a founder of Milina Outsourcing which provides project-based consulting and outsourcing services including mystery guest audit, temporary staffing and training support. Being a hospitality industry enthusiast, Mila has a global insight into the developing trends of hotel and restaurant business all over the world. Having graduated from University Centre Cesar Ritz (Switzerland) in 2007 with MBA in Hotel and Tourism Management, Mila has obtained a rich international hotel work experience in Europe and Asia. Contact Mila at mp@moconsulting.com.ua or www.moconsulting.com.ua 

Mila writes a regular column for 4Hoteliers.com.