A recent article in ehotelier.com decried Starwood Hotels recent price cuts as “short term slash-and-burn approach … causing long-term damage to its brand and our industry.”
I find it laughable that many in the hotel/hospitality industry continue to hold onto the good old days and spout such theory that “we must hold our pricing.” Isn’t this the industry that fueled such brand protectors as Expedia, Hotels.com, and TravelZoo? We are in an unprecedented economy and Starwood is recognizing that the value equation has changed. The nouveau riche customer of 2006 that fueled higher demand is gone. Some upscale properties can remain inflexible on price because they are appealing to a demo that is still unaffected in terms of travel spending. But, for group, most events and many transient guests- cost and budgets are now higher in the equation. So, adjustment of pricing to fit the 2009 Value Perception is necessary. That does not mean starburst “buy one get one free” ads that look like a furniture liquidation sale.
As the agency for the Ritz-Carlton advertising program for a number of years, promotions, local events, filling low occupancy periods at the property level were a regular part of our program. Is this discounting or price adjustment? In the literal sense, yes. But it was couched in the language and attitude of the brand and more importantly was presented in a way that was relevant and appropriate to the intended target. We understood who was the “zealot” for the Ritz-Carlton Hotels and structured all marketing – communications, promotions and delivery -accordingly.
Today, our firm continues to build programs from the perspective of “zealots” – those who are passionate about your product/service and what will accelerate referral. Pricing is almost never the primary driver. Adjusting pricing is a basis of supply/demand at some point. It is not a marketing panacea. But, neither is it destroying the Starwood brand or the industry.