Post by account_disabled on Mar 10, 2024 5:39:54 GMT 2
Cornell, in collaboration with Smith Travel Research (STR), monitored over 8,000 hotels of different sizes (from 150 to over 300 rooms) distributed throughout Europe on a monthly basis. In fact, it is one of the few existing studies that have examined competitive pricing in the hospitality industry comprehensively, taking into consideration a wide range of countries and pricing segments. The research was carried out for four years, from 2006 to 2009, during which there were no substantial deviations from the results indicated above, which therefore remain valid both in economically prosperous periods (2006 -2007) and in moments of serious financial downturn (2008 – 2009) . Cornell scholars conducted the study by comparing and analyzing the rates, revenues, and occupancy of direct competing hotels in local markets.
The economic theory according to which hotels offering lower rates than Venezuela Phone Number their compset would see an increase in demand and therefore obtain greater total revenues is based on the assumption that the impact of rate movements on revenue depends on the "elasticity of market in relation to pricing" . Since in all the cases examined by Cornell, this phenomenon did not occur and therefore a lowering of the tariff did not lead to such an increase in demand as to compensate for the loss of revenue, we come to the conclusion that the European markets in the latter four years have not proven elastic . As can easily be seen from the table above, both in economically prosperous and negative periods, hotels that have applied an ADR even 15% higher than their main competitors have maintained a lower employment level than those who have maintained low rates, but achieved better RevPAR.
This type of trend occurred both for luxury and medium-scale hotels, while the situation seems more complex for budget hotels, where the relationship between occupancy and RevPAR has taken on a much more irregular trend, a sign of greater suffering on the part of the category. An incentive not to lower rates and maintain a valuable USP In light of these results, it is important that the hotel, even when competitors tend to lower rates, maintains its strategic pricing , but to do this it is necessary to offer customers added value, a clear and relevant Unique Selling Proposition . Differentiation strategies require the creation of value through a distinctive product and positioning, to be contrasted with low cost. Only experiences that match customers' lifestyles and brands that communicate customers' aspirations can allow the hotel to maintain pricing integrity. “ A higher rate associated with differentiation is necessary in order to cover the costs incurred to offer the same distinctive experience.
The economic theory according to which hotels offering lower rates than Venezuela Phone Number their compset would see an increase in demand and therefore obtain greater total revenues is based on the assumption that the impact of rate movements on revenue depends on the "elasticity of market in relation to pricing" . Since in all the cases examined by Cornell, this phenomenon did not occur and therefore a lowering of the tariff did not lead to such an increase in demand as to compensate for the loss of revenue, we come to the conclusion that the European markets in the latter four years have not proven elastic . As can easily be seen from the table above, both in economically prosperous and negative periods, hotels that have applied an ADR even 15% higher than their main competitors have maintained a lower employment level than those who have maintained low rates, but achieved better RevPAR.
This type of trend occurred both for luxury and medium-scale hotels, while the situation seems more complex for budget hotels, where the relationship between occupancy and RevPAR has taken on a much more irregular trend, a sign of greater suffering on the part of the category. An incentive not to lower rates and maintain a valuable USP In light of these results, it is important that the hotel, even when competitors tend to lower rates, maintains its strategic pricing , but to do this it is necessary to offer customers added value, a clear and relevant Unique Selling Proposition . Differentiation strategies require the creation of value through a distinctive product and positioning, to be contrasted with low cost. Only experiences that match customers' lifestyles and brands that communicate customers' aspirations can allow the hotel to maintain pricing integrity. “ A higher rate associated with differentiation is necessary in order to cover the costs incurred to offer the same distinctive experience.