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Gabor Forgacs
Gabor Forgacs
Associate Professor Emeritus, School of Hospitality & Tourism Management, University of Guelph

The hospitality business is in a precarious situation when a downturn in the market is caused by global health emergencies like the current COVID-19 epidemic. The top two concerns are 1) Balancing safety without unlawful discrimination and 2) Start discounting or hold prices?

  1. Balancing Safety. There is a very delicate fine line to walk for hospitality operators. Businesses have to be welcoming to all guests but the safety of customers and associates should never be compromised. How can we screen guests and employees to find out who can be contagious? Do we have a ground to refuse serving or to work with people of a given nationality or place of origin? I don't pretend to know all the answers but I am prepared to say that every decision-maker in a hospitality business has to be ready to defend a safety measure, a refusal of service or an implemented restriction if its legality or ethical ground is challenged in the court of law at a future date.
  2. Hold the price or start discounting when business becomes soft and unpredictable? I offer a simple thought: would you consider booking a night at a destination where you have grave concerns about your safety or well-being just because a deep discount is offered? Would the half-price accommodation suddenly make the risks acceptable? So the logical answer to the issue of discounting is that if the demand drop is not price related, we can't expect to fix it with price adjustment. Should one consider other measures to create a perception of value? Absolutely: upgrading, free value-added items (in hotels: free breakfast, free parking, no-charge wifi, welcome cocktail on the house, couponing of attractions, complimentary sightseeing, etc.) may offer incentives without dropping rates. One thing to remember: pricing down is fast and easy but raising prices back again is always an uphill battle.

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