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Discounting Prices in Hotels. Research Essay

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Updated: May 14th, 2022

Discounting is an intricate factor in adjusting hotel prices. It factors out customers’ conflicts related to price discrimination by providing concrete explanations. Lockyer (2007) identified the discrete sections that complement discounts. In Lockyer’s research, four distinct types of discounts were distinguished. Discounts related to period of stay appeared to present a critical consideration in this research. Companies were able to exploit this opportunity by booking many rooms for a long period. It is logical to stipulate that people/companies who/that wish to book for longer periods warrant the hotel’s occupancy for that period. Apparently, the hotel is assured of continued income from foods and beverages in addition to the revenue attained within a single transaction. Consequently, the results of this research have a strong basis because they described that most hotels had the tendency to offer discounts to partners booking for long. Concurrently, there were evidences that depicted the necessity of discounting during the low sessions. According to Lockyer (2007), it was identified that discounts are related to seasons with their distinct demands. During high seasons, the occupancy of hotels raises and calls for increment on revenue. For this reason, discounts become obsolete due to the rapid variations of room prices. Therefore, it is a rare incident to find discounts offered during the high season. However, customer loyalty is always appreciated in most hotel businesses. The discounts offered to these customers were independent. The loyal customers had cheaper access than the rest. Why was this more evident in Riyadh than the other two cities? Apparently, when we compare Mecca and Riyadh, it is noticeable that Riyadh hotels rely on many and different types of customers. Contrary, the hotels located within Mecca target Ramadan for full occupancy. Customers who do not visit regularly for various occasions within an year might find it hard to show their loyalty. Additionally, customers attending Ramadan might depict an occasional atmosphere with many customers’ repeats since it happens once. Therefore, discounting could happen to almost all individuals.

The research performed by Gurbuz found that discounts have the role of attracting customers during the times of low demand. This research approves the articulation by identifying that discounts lead to high occupancy which in turn improve the overall hotel revenues from other sources than rooms. Earlier researchers had identified this strategy where customers use occupancy to improve the hotel revenues earned from other activities such as swimming, drinking and eating. However, we must take into consideration that some customers are willing to pay more for the hotel’s services (Li, 2011). Therefore, it is crucial to take caution and monitor the goal of YM to increase revenue by all possible means. In fact, Li (2011) had noted that hotels were squarely eager to exploit the advantage of a 100% occupancy.

The results depicted inverse proportionality between hotel occupancy and amount of discount that was offered. During high demand, customers are available and occupancy is self sustaining. At this point, no attraction is necessary, hence no discounts are offered. On the other hand, low demand calls for competition and necessity for attracting the customers. This leads to implementation of discounts that offer customers prics less and affordable prices. For these reasons, the discounts are limited and controlled by the level of demand. Lastly, it is vital to acknowledge that discount play a role in adjusting price in accordance to demand. Proper YM strategies are potential driving factors for successful, acceptable and revenue regulating results.

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