Use promotions to increase your hotel's revenue

Features | 5 Jun 2023

Discount and offers aim to increase your hotel reservations. However, if used incorrectly, they can damage your brand and even scare off guests. Here's how to avoid this and get the most out of promotions.

When it comes to promotions and special offers, the options are endless. From early booking discounts and last-minute offers to preferential rates for certain source markets and mobile reservations, the sky is the limit!  


But as you can imagine, there is little point in applying discounts randomly without giving them any careful thought. A clear strategy and goals are required.  


Marco Baurdoux and Elisha Schoppig from Hotel-Spider invited Elisabeth Hörtnagl, Connectivity Business Manager at Booking.com to discuss this in our livestream.  


The main talking points are summarized in the blogpost below. 


Keep reading to find out what you should do before even considering promotions, how to identify the right approach for your hotel and some alternative options on Booking.com.  


Laying the right foundations 


The main aim of discounts is clear: to boost business, increase occupancy and generate revenue with preferential rates. Although this sounds fairly simple, it does take some groundwork. 


"Even the most well-thought-out campaign is only effective if the foundations, essentially your rate strategy, have been properly laid,” says Elisabeth.  


This means that you need to start by establishing your base rates for all room categories. Specify prime rates with and without free cancellation, early booking rates for longer than average lead times (e.g. 7, 14 or 21 days) and possibly also rates with and without breakfast.  


"A clear structure is important, as this will enable you to apply discounts to your base rates in a targeted way. As a result, potential guests will be able to compare rates directly and identify special offers,” Elisabeth continues.  


So what promotions are right for your hotel? 


Unfortunately, there is no clear-cut answer to this question.  


The discounts you should offer depend on two things: 

  • What you want to achieve with your promotion. 

  • The target audience you want to attract. 


In order to find the ideal solution for your business , we therefore suggest the following five steps: 


Step 1: Define your objective 

An important question is whether you want to attract more guests in the short or long term. You should also consider whether your objective is to increase sales or profits. The direction you want to go will influence which strategy is the best fit for you. 


"If you want additional reservations in the short term, e.g. to improve business during the low season, mobile rates or special rates for certain source markets may be helpful. These will directly increase your visibility and can bring in new reservations quickly. But if you want more reservations in the long term, consider loyalty programs or options like Booking Genius and Preferred Partner status," Elisabeth explains. 


When it comes to revenue vs. profit, it's a similar story. Generous discounts can get you more reservations in the short term and boost your revenue. But be careful, because a fuller hotel doesn't automatically mean your profits will increase at the same rate. If your goal is to keep your ADR (Average Daily Rate) high, too many discounts will be counterproductive and could even have a negative impact on your position.  





Step 2: Identify your target audience 

Discounts are a revenue management tool designed to help you generate demand when guests are price sensitive. Consider which people you can really make a difference to by offering lower rates. This could involve a specific source market, age group or category, such as families, couples or solo travelers.  


Step 3: Consult the data 

Get a picture of booking behavior trends for your hotel. Booking.com Analytics, for example, can provide answers to the following questions:  


  • On average, how far in advance do travelers research and book their destination? 

  • Which source markets are currently searching? 

  • How long do they plan to stay? 


You can also use platforms such as Google Analyticsto gain deeper insights into the search and booking behavior of your website visitors. Does the data match the data from Booking.com? Are there any additional source markets you should be targeting? 


Business intelligence tools and industry reports such as those offered by STR also provide important information about demand trends in your region and indicate which promotions are worthwhile for your property.  


Step 4: Select and implement discount promotions 

With a target in mind and armed with more knowledge about current booking behavior, you can now decide what exactly you want to offer. All you need to do is set up and activate the discount, and it will be ready to be booked by guests. The best way to do this is through your channel manager, to ensure that your special promotions are equally available on all portals.  


Check your top channels now to make sure that the advantageous conditions and prices are clearly displayed. This will attract travelers' attention to your offer and make its benefits immediately clear.  


Step 5: Evaluate results 

Once your promotions have been running for a while, you can evaluate your data to see the results of each offer. For instance, check how they have affected your occupancy and/or sales targets. You can also compare the results of the different promotions to see which one paid off the most.  


"Think about what you could do differently for your next promotion to get even better results. There are various parameters to adjust, such as the discount amount, the quality of your website or OTA profile, or even the communication methods used for your promotion,” suggests Elisabeth.  




Promotions and rate parity: a balancing act 


No matter which discounts you choose, it's important to have similar offers on all channels. Otherwise, direct bookers could be at a disadvantage, and that must be avoided at all costs. Additionally, there is the threat of being penalized by limited visibility on the disadvantaged OTAs.   


"One way to prevent this is to set, activate and manage your promotions centrally via a channel manager such as Hotel-Spider . This ensures that they are equally available on all channels, as long as the OTAs support the offer format," Elisha explains.  


However, this consistency is not only important on OTAs. "Your offers should definitely be bookable on your website as well. This will help you maintain rate parity and avoid guests finding better deals on OTAs than when booking directly. And once again, it helps to have a channel manager who communicates discount promotions on all channels," advises Elisha.  


Additional sales through discounts and guest communication 


Discounts are somewhat discredited by many hoteliers, as they feel like they are giving away some of their revenue with every reservation. However, the question here is whether the guest would have booked at the normal price and whether the room would have sold without the special promotion. If not, the promotion actually resulted in an increase in sales. This makes discounts a valuable revenue management tool that you can use to influence occupancy, revenue and profit in a targeted way.  


Furthermore, each additional guest also brings you opportunities for additional revenue in departments such as F&B and the spa. In this way, discounts can have a positive impact on your overall revenue," Marco interjects. "You can support this even further by staying in touch with your guests throughout the guest journey, targeting them with information about your additional services." 


More visibility with discounts? That's what the numbers say. 


"Special promotions and participation in promotional programs can greatly increase your visibility, particularly on OTAs. The reason for this is that accommodation with promotions shows up in search queries much more often than hotels that only offer base rates. Although you could lower the base prices, this would not have the same effect on reach as a discount," Elisabeth specifies. 


The mobile rates on Booking.com are a good example of this. Guests who book on their mobile device get at least a 10% discount.  


"Overall, we see click-through rates on mobile devices increase by 22% once hotels enable mobile rates. Considering that 80% of travelers use a mobile app when researching and that between 70% and 80% of searches on Booking.com are currently performed using a smartphone, it stands to reason that mobile rates will boost reservations and revenue", Elisabeth added. 


The Genius program from Booking.com also demonstrably increases visibility. "Our Genius Hotel partners are about 70% more likely to show up in search results than other properties. They also achieve a global average of 45% more reservations and 40% more revenue through Booking.com," she reveals.  


By now, one thing should be clear: Discounts can boost your occupancy and revenue.  


However, before immediately starting to unlock new offers, take a moment to pause and think about your strategy and goals.  


At this moment, what's more important - filling your hotel, even if that means lowering prices a bit, or increasing ADR with higher rates?  


And what does your data tell you - where might it be worth offering a discount? 


This will determine the right approach for you.. This might be a mobile rate, a country-specific offer or simply your normal price.  


Try out different things and analyze your results. Step by step, you will learn what works for your hotel and your target group. This will make special promotions and discounts another tool you can use to skillfully optimize your sales.  

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