Hotel Sales Blog

Guerilla Pricing — Revenue Managers In the ‘War Zone’

March 16, 2010 at 1:21 pm | Posted in Uncategorized | 1 Comment

In an excellent article that appeared in HotelMarketing.com, Brij Cahkra of Preferred Hotels referred to the vicious cycle of rate cutting as Guerilla Pricing.

“In guerrilla pricing, hotels try and do price cuts in short window to pick up additional market share however if done too often this can lead to a dilution of revenues,” said Chachra.

In the battle for increased revenue and market share, Revenue Managers often have no choice but to engage in guerilla pricing within their comp set. But increased market share in a guerilla pricing war at best yields increased market share for maybe a weekend. The increased revenue is consumed by the cost of distribution and/or it is insufficient to generate enough flow through to be worth it.

Gureilla pricing becoems like an addiction from which RMs find it difficult to break free. RMs are under pressure froms senior management to engage in the ‘game’ — to generate revenue and to increase market share.

Everyone loses, noboby wins.