The Adrian Loveridge Column – A Time to Discount!
Discounting has always been a sensitive subject in the tourism industry and I seriously doubt that will change in the foreseeable future.
As a British based tour operator for twelve years our company never discounted a single holiday, except as an incentive to encourage early booking and even more important, early payment.
We are talking about a time when commercial bank lending interest rates were hovering around 17 per cent per annum, so we would offer a ten per cent discount of published price, providing the customer paid in full a year ahead of departure date.
Our thinking was that the most important clients were the ones that were willing to commit themselves way ahead of time, giving us the benefit of greater controlled planning and cost savings.
We used the advance payments to lower bank borrowing interest rates, enabling us to purchase our own luxury Kassbohrer Setra coaches, which have always been considered as the Rolls Royce of mass passenger transport, in terms of safety and comfort and to help grow the business.
No holidays were discounted for late booking and the fact that our clients were fully aware of this fact, helped us grow an incredibly loyal following.
Likewise in the 25 year’s operating our small hotel, the policy remained and frequently guests would leave having already paid a 7 night deposit for the same room during the next year and sometimes the year after.
To a certain extent, the market conditions have dramatically changed with late booking discounts universally practiced across the industry.
In many cases, it is rare that even in an identical row of airline seats in economy, or even business, you would have paid the same fare as the person next to you.
Likewise, with barely indistinguishable hotel rooms on the same floor!
It gets even more complex with car rental, where it is commonplace that some major international brands adjust the rate offered dependent on which country you reside.
My own thoughts are that the most important customers or guests are the ones who remain loyal to you, year after year.
And if anyone is going to be ‘rewarded’ it should be them. After all, you have not had to invest a significant amount of money into marketing or promotion to attract replacement ones.
For larger hotels, it is understandably more complicated, but the same basic criteria can be applied, irrespective of size.
Many of our hotels are tour operator or online travel agency (OTA) dependent, at least to a sizeable proportion of their total room stock. But they can still drive more direct bookings by introducing little early booking incentives that make the individual guest feel extra special.
With the substantial trading margins adopted by most tour operators and OTA’s, it is clearly in the interest of the individual tourism partner to attract the highest percentage of direct bookings and payment.
In fact many might argue that due to our current economic state, that it is our national interest.