As the economy continues to wreak havoc on businesses across Canada, there’s been great debate in the hotel industry about the viability of discounting room rates. Some contend that hoteliers have no choice but to cut rates to fill rooms, while others claim discounting only prolongs the agony, as it can take years to return rates to previous levels.
But no matter what side of the debate you’re on, the economic turmoil of the past 12 months has had a devastating impact on the hotel industry. One need only look at the drops in occupancy, ADR and RevPAR this past summer to see the swath of destruction that’s ripped through regions across the country.
If hotel executives want to quickly re-establish the performance levels of 2007 and early 2008, they need to stop viewing the industry as a commodity-driven business and start creatively looking at new ideas to stimulate growth. One of the biggest problems in the hotel business is the pervasive “me-too mentality.”
No sooner does one hotel drop its rate, than another follows suit, despite the hard lessons learned through past recessions and calamities. Before falling prey to the obvious, hoteliers need to investigate more creative options. As an example, while many hotel operators were dropping rates this summer, a small, luxury operator in B.C. decided to take a different approach. In mid-July, the upscale Clayoquot Wilderness Resort caught the attention of guests and Hotelier by telling its customers to propose a deal to them. “Sure, it may be easier to offer everyone four nights for the price of three, or a big discount, but for many of our guests, a personalized value can make a difference on whether they come this year or stay at home,” said managing director, John Caton. “Money isn’t their biggest motivator, but additional experiences or making their trip easier may be.”
By listening to past requests from guests, the savvy hotelier was able to better shape the deals his resort offered. In some cases, families expressed an interest in bringing grandparents along to share in the experience. Clayoquot responded by saying, “bring them along and they can stay for free.” Others mentioned the flight to Vancouver was the main obstacle holding them back, so the resort offered to pay for those flights. And when guests couldn’t arrive in Vancouver early enough to catch the chartered float plane that would take them to the remote resort, Clayoquot offered to cover a night’s hotel stay in Vancouver.
While its rates are not typical for the industry (starting at $4,750 for a three-night, four-day experience), the bottom line is Clayoquot Wilderness Resort was able to maintain its clientele by getting creative instead of simply cutting rates. “Every traveller has their own idea of what will make them take a special trip this year,” says Caton. “Like every resort, we need to incent more people to travel to our destination. But we don’t want to presume there’s one particular magic-bullet offer that will make the phones ring, anymore than we presume to know the type of experience our guests will want before they get here.”