Our opinion on... hotel pricing in times of crisis According to the basic principles of marketing, there are four “Ps” – product, promotion, place (which for hotels really refers to distribution – where customers can buy your product) and price. But somehow, in the rush to build the most boutiquey boutique, most luxurious luxury, most convenient convenient and most no-frills no-frills, these principles seem to have been forgotten. Specifically, “price” as a component of the marketing mix has wandered off like a lost sheep, gently meandering at will with no specific purpose in mind, and unaware of the harm it’s causing to the flock left behind (okay, lousy metaphor, but you probably get the point). Hotel guests are and would-be guests are constantly being exposed to pricing absurdities that confirm over and over again that there is no intrinsic value to a hotel stay – prices are random, unrelated and mean nothing. Therefore, price shopping is the only logical way of choosing hotels. On a recent trip to Mexico, staying in a hotel with an occupancy of around 10%, we asked to stay an extra two nights. The Expedia rate for the extra nights was approximately $320/night. The hotel quoted $450 per night. When we pointed out that we could save $200/night by walking across the lobby to the business centre computer and booking through Expedia they said (and I am not making this up) that they would not be able to match the Expedia price so we should book online. Which we did. We suspected (hoped) that his kind of silliness was the result of the economic trauma that Mexico was suffering, and that hotels in less volatile markets would be more rational. So, we checked rates in three hotels in Toronto (two of the properties were part of major brands and one was part of a small Canadian brand) at the same time for the same dates (two of the properties were part of major brands and one was part of a small Canadian brand). Here’s what we found:
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Protean Strategies is a Toronto based management consulting firm. Since 1997 we have been helping large and small companies convert brand value into higher margins and bottom line profits by understanding their stakeholders needs; building powerful strategies; and aligning business practices with marketing and sale to a common goal.