Why You Shouldn’t Sell Rooms for $7 on Hotel Tonight
This Thanksgiving holiday in the US was an eventful one for the hospitality industry. What got my attention was the Black Friday offer of $7 rooms on Hotel Tonight (my favorite mobile travel app). Important: Before you read this – No matter who got paid how much in the end or what the real breakup of advertised rate versus actual payment made by Hotel Tonight was was like. The fact is that the guest paid $7 for booking those hotels and that is what he/she will remember.
Hotels all over the US participated in this spectacular deal. Based on my zip code, Hotel Tonight sent me an email informing me that the following hotels in the Midwest were participating:
- The Godfrey Chicago
- The Edgewater Madison
- The Kinzie Chicago
- The Pfister Hotel Milwaukee
- The Hotel Minneapolis (a Marriott "Autograph Collection" hotel)
All were all offering a $7 rooms for a limited time starting at 7 am.
In general, discounting your rooms is not a great idea. But this super-aggressive deep discounting is a whole new dark territory. It's not a good place for the industry to be, especially at a time when hotels and brands are struggling so hard to define their value thanks to hyper-successful travel startups like Airbnb. This is scary on many levels. I am talking Wes Craven* and Eli Roth level scary.
*Sam Shank, Founder & CEO of Hotel Tonight, was an assistant to Wes Craven on the film Scream.
No matter how bad the market is, I am not a fan of discounting and never will be. Sure, discounting will fill your hotel…but at what cost? Who is this guest checking into your hotel for $7? What happens to your value perception? The fact is that you are better off giving away a free room instead of attaching a $7 rate to your product. Hotels dropping rates might appear to be winning the occupancy battle, but it pretty much ends there. When it comes to long-term profitability, GoPar and RevPar growth favor hotels who protect the value of their product.
A Great Win for Hotel Tonight
As far as creating buzz, this was an absolute win for Hotel Tonight. Sam went all the way to CNBC with his amazing "Get your $7 hotel room now!" segment. Kudos.
I'm sure Hotel Tonight reached several hundred thousand new people who now know about their wonderful deal-generating, money-saving, last-minute booking app. Are they the "enemy" for promoting themselves? Absolutely not. Likewise, I have always admired OTA's for focusing their efforts where it truly matters: Online. Besides, anyone who is making travel better and easier for customers is in my good book.
Hotel Tonight has indeed taken mobile usability and distribution to a new level; none of the established hotel brands like Marriott, Hilton, Starwood etc. have even come close. I strongly encourage everyone in the travel business to take note of how well the Hotel Tonight App functions.
