Why Discounting Doesn’t Work: The Dynamics of Rising Occupancy and Falling Revenue among Competitors - Sponsored Whitepaper

Our results show is that discounting for the sake of gaining occupancy has not been a revenue-enhancing strategy for the years 2001,2002,or 2003.This study also supports the position of those who faced owners’ concerns about declining occupancy concerns, but maintained rate integrity and Parity or higher prices had a higher RevPAR performance than the competitive set. It is our hope that by examining hotels that outperformed their competitive set, we can offer some sound data to inform those who are puzzling over the discounting debate.

This study shows that the industry’s long-held belief that discounting will build market share is absolutely correct. However, the belief that market-share increases will yield higher revenue is not supported here. Cutting prices means diminished revenue.