Hotel Sales Blog

Stop the Madness — The Madness of Hotel Rate Cutting!

August 4, 2009 at 2:16 am | Posted in Uncategorized | Leave a comment

Hotel sales and Revenue managers are under a great deal of pressure to generate more revenue and many in senior management beleive that cutting rates is the way to do it. They’re right — it does generate revenue for a very short time until the next hotel in the comp set that is monitoring rates in the market undercuts your rate and then the madness sets in!

Hotel foreclosures and ‘troubled assets’ are on the rise as the current madness of rate cutting doesn’t allow enough ‘flow through’ to pay the bills.

Rate cutting ‘madenss’ has also led RFPs to book out of their agreement as we have trained them to know there will always be lower rate somewhere in the market on the opaques and OTAs. Groups that are booking now look for the lowest rate the hotel has to offer and want a discount from that to book their future business.

Instead of moaning about how bad business is it’s time to look in the mirror and realize that the prolonged hotel recovery is our fault in many ways. Demand is beginning to firm up but profitability isn’t. STR anticipates that it will 4-5 years to recover the rates we were driving in 07.

Listen to the Michael Jackson song Man in the Mirror. Look down at your feet and if you see blood oozing out of your shoe, it’s because we have as an industry have shot ourselves in the foot!

Join us for the web cast on Friday August 7 on Social Networks as Sales Tools. Click onthe link below for more info.

http://www.carolverret.net/viral/readtopic.php?id=43

We are back with the blog. Many thanks to Rakesh from the Metro Interactive Agency who worked a small miracle with WordPress!