Manage daily room rates dynamically within these parameters, establishing rate structures for different times of year and days of the week. Adjust rates frequently based on changes to market demand, competitor pricing, price sensitivity, occupancy, and booking pace. This will help maximize revenue during peak times while attracting guests during slower periods.

If you’re on pace to meet revenue objectives, discounts may not be necessary. However, smart discounting can help exceed targets.

12 Hotel Room Discounting Tips and Strategies

To maximize the effectiveness of discounting activities, consider the following tips:

• Maintain a variety of rate plans. Diversity in rate offerings will help attract a broad range of traveler types and budgets. Open discount rate plans when demand is soft and close them when demand is strong.

   

• Plan ahead. Familiarize yourself with demand patterns throughout the year, offering special rates well in advance to bolster occupancy during slow periods, such as early-bird and non-refundable rates.

   

• Monitor competitor rates. Use competitor rates to gauge market demand and pricing, adjusting your rates to remain competitive while also maintaining value. Even a small pricing differential may help tip the scales in your favor.

   

• Target underperforming areas. Rather than discount all room types in similar amounts throughout the week, restrict discounts to room types and days of the week that aren’t selling well and deluxe rooms and suites that yield higher rates.
    
• Set restrictions. For each discount rate plan, specify eligible booking periods, stay dates, minimum length of stay, and blackout dates. Tighten restrictions during busier times to ensure discounts are available only when you need a boost.

   

• Factor costs into pricing. Different rate plans and distribution channels have different costs of acquisition and servicing. It’s important to factor these costs into rate decisions to ensure you’re not over-discounting.

   

• Use percentage discounts. Percentages are more flexible than fixed amounts. For example, a $20 discount on a standard room may be significant in low season but negligible for a suite in high season, whereas a 10% discount will adjust proportionately to the base rate.

   

• Offer value-adds. As an alternative to price reductions, offer inclusions like a free upgrade, welcome amenity, or breakfast to maintain higher average rates.

   

• Be selective with OTA promotions. OTAs offer all sorts of promotions to help drive bookings, but they come at a cost in lower rates and incremental commissions. Calculate net rates before opting in, ensuring they advance your revenue objectives.

   

• Use opaque channels. OTAs like Hotwire and Priceline allow hotels to sell discounted rooms without publicly advertising the lower prices, helping to protect your rate positioning.

   

• Offer loyalty discounts. In addition to offering discounts to incentivize guests to come back, for added visibility consider participating in OTA loyalty programs such as Booking.com’s Genius.

   

• Offer packages. Bundle accommodation with meals and activities to increase on-property spend. According to Expedia, package bookers stay longer, book earlier, and cancel less than those booking individual trip elements.

Promote Your Special Offers

It’s not enough to offer attractive discounts and hope that travelers will discover them. You’ll get more mileage by actively promoting them, such as by featuring a pop-up on your website, sending an email to select segments in your database, and allocating a small budget for cost-per-click ads on Google, Facebook, and Instagram.

Continuously monitor the performance of your discount strategies, adjusting them as needed based on how well you are achieving your revenue objectives.