Real World Pricing Strategies – Hotels

May 12, 2015

 

Recently a late flight and missed connection meant an unexpected overnight stay in Philadelphia, and exposure to some well-implemented pricing tactics.

 

It was late and I grabbed a shuttle bus that serviced three hotels (all part of the same chain) near the airport. On the way I used the chain's app to check rates and availability (it's worth noting that this was the official app of the hotel chain, and not that of a reseller). One of the hotels showed $92 a night (the best I could hope for at that point) so I jumped off the bus at that hotel and made my way to the front desk.

I hadn't actually booked the room using the app, just checked prices and availability. When I asked the clerk for a room he explained that the walk-in rate was $115.

I explained I was hoping we could just do the $92 rate promised on the app. He apologetically explained that he could not do that – the best he could was the walk-in rate, and that was $115. He also explained that I could take advantage of the free wifi in the lobby to book online at the lower rate.

The hotel would make a profit on the room at $92, but they'd much rather sell it for $115. If they were going to give up $23 I was going to have to work for it.

That would involve jumping over a hurdle. It was late, I was tired, and if I wanted the discount I would have to delay the whole process while I booked the room with my phone.

I wanted to save the $23 so I stepped away from the counter to book the room through the app.

Now - getting that $23 involved something else too. Just booking through the app alone only got the price down to $105. To get it down to $92 you had to request the AAA rate and provide your membership number. This was another hurdle as it meant more money and more time. AAA membership is also often used as a way of profiling people that are serious about saving money and discounting to them accordingly.

It took a few extra minutes to book the room through the app, then start the check-in process over again with the front desk. It was well worth saving $23 to me but doubtless there would be many travellers that would happily spend the extra money, especially late at night, to save a little time and get to their room sooner.

It is a great model that gives the hotel every opportunity to collect more from the people willing to pay without losing sales to those serious about saving money.



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