How can you determine the ideal discount rate for a hotel room?
Discounting is a common strategy for hoteliers to boost occupancy and revenue, especially during low-demand periods. However, finding the optimal discount rate for a hotel room is not a simple task. It requires balancing the trade-off between attracting more guests and maintaining profitability. In this article, you will learn how to determine the ideal discount rate for a hotel room using some basic concepts and tools.
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Calculate break-even point:Understanding your costs is key. Calculate the minimum price needed to cover expenses before setting discounts. This ensures you're not losing money on deals.
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Variable cost coverage:Sometimes, covering just the variable expenses can offset overall costs and keep your staff engaged during slow times. It's a balance between short-term gains and long-term stability.