Successful Tactics for Surviving an Economic Downturn: Results from an International Study
Kimes, Sheryl E.
A survey of 980 hotels around the world, conducted from December 2009 through February 2010, found that discounting was the number-one tactic used to offset the effects of the Great Recession of 2008–2009. At the same time, most respondents who cut their prices agreed that discounting was not particularly successful in maintaining revenue levels. Discounting is one of four categories of tactics applied to offset the effects of the drop in corporate and leisure travel. The other three categories, in descending order, were marketing initiatives, obscuring room rates, and cutting costs. Hotels that sought to attract new market segments reported reasonably strong success. Those that used rate-obscuring tactics typically assembled value-added packages, offered a free night with purchase, or made heavier use of opaque distribution channels. About one-quarter of respondents reported cutting costs, usually by closing facilities, taking the opportunity for renovation, or reducing operating hours. Asked for their recommendations for the next recession, the respondents said that they would avoid discounting and focus instead on market initiatives. For 2010, in addition to marketing programs, the respondents said that they planned to use rate-obscuring approaches, with an emphasis on value-added packages.
hotels; discounting; Great Recession; marketing programs; rate-obscuring; value added packages
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