Prices Slashed! Join The Discount War

By Martin Kelly, Editor, Travel Trends

Have you joined the bloodbath yet? If not, maybe it’s time. Like everyone else, ignore the Churchillian statements from industry leaders to hold the pricing line and start discounting  – slash your prices before your business rival does.

We all know it’s already happening. Just look at the latest figures from STR Global which show that the average daily rate for major Sydney hotels during November fell 27% to A$110.70 (from $164.19). Occupancy also fell (though to a still healthy 84.8%) causing REVpar to plummet 32.6%.

A quick interpretation is that hotels have been quietly cutting prices – most likely direct and through Wotif.com etc – to stimulate falling demand and prop up occupancies, which are coming off unsustainable highs anyway (Sydney hotels ran at 91.3% during November 2007).

Until now, they have been discreet. Soon it will be out in the open. Just like the airlines, which are also suffering from falling demand and have clearly decided there’s no point flying with empty seats. Jetstar has had some amazing deals, both domestic and international, and they aren’t scared of telling people about them.

And neither should you. But remember, there are some basic rules for discounting. In particular, there is no room for subtlety. Be bold, be big, be crass. Garish colours – orange, yellow best – and price-based, time-sensitive messaging must dominate print ads. Shouting is a pre-requisite for radio. Avoid TV – who can afford it these days?

Be aggressive, push – as always look to the experts. But a word of warning! Do not follow the path taken by the discount masters – Persian rug retailers. The last thing you want is to have a closing down sale. Somehow, I don’t think that would work in travel.Travel Trends: January 21, 2009

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