Giving away the store?

Virtually every lodging industry conference this year has had the same refrain when it came to discussing the stalling economy – operators urging each other not to discount during the downturn. Without price collusion – which is clearly illegal – it is hard to ensure such an outcome as it behooves operators to offer “bargains” in a bid to fill their rooms with customers who presumably don’t live in a time warp and are aware that demand exceeds supply.

The early empirical evidence points precisely such an outcome – yet again. The New York Times reports on a range of hotels in New York offering bargains. The report begins by noting that as “New York City’s economy starts to experience ripple effects from the Wall Street meltdown, visitors to the city might finally be getting the upper hand when it comes to overpriced hotels, overbooked restaurants and over-the-top spas, with prices being slashed and special deals suddenly being offered”. The industry’s oft-maligned third party websites have been quick to roll out offers to their consumers with sites such as “Orbitz.com offering as much as 20 percent off many New York hotels, including Le Parker Meridien, the Sheraton Manhattan at Times Square and the Westin New York. Quikbook.com, a New York-based hotel discount site, has been featuring periodic sales with rates for as many as 20 Manhattan hotels cut by 15 percent”.

Other cities are not far behind. The San Francisco Chronicle reports on a dizzying array of deals at Sin City that according to “rumors increasingly repeated about $400-a-night hotels discounting their rates, on occasion, to as little as $100”. Third Party resellers have predictably been active there too with “Hotwire.com published an offer of $119 per night midweek and $159 per night weekend for a five-star suite at the always elegant Venetian Resort-Hotel-Casino, on select dates from now until Jan. 25. Using Hotwire, you can snare the $119 rate on seven days in October, 11 days in November, 14 days in December and nine days in January. You get the $159 rate on at least three weekends in each of those months”.

While hotels nationwide are in for a rocky year (or longer) ahead, customers are likely going to see a surfeit of choices.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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