Last-minute discounting is a double-edged sword for hoteliers. It can help fill unsold inventory, but it also carries significant risks that can undermine a hotel’s broader revenue strategy and brand perception.
From a revenue perspective, unsold rooms are a perishable asset, and this type of policy can be useful to sell those rooms. However, the costs and long-term implications of participating in these programs often outweigh the short-term benefits.
The primary issue is rate parity and price integrity. Today’s consumers are savvy and digitally resourceful, engaging with multiple touchpoints before booking. When guests discover that rooms are available at heavily discounted rates closer to check-in, it breeds distrust. This erodes direct booking efforts, pushes customers towards OTAs, and devalues loyalty programs. Moreover, frequent discounting can condition customers to delay bookings, expecting lower rates—a dangerous cycle for a hotel’s yield strategy.
Additionally, heavy reliance on last-minute deals increases dependence on OTAs, which already take a significant commission, further reducing profitability. Hotels also risk alienating early bookers and loyal guests who feel penalized for committing early.
A better approach might involve targeted, value-added promotions instead of aggressive discounting. Offering flexible booking options, bundling services can attract last-minute bookers without slashing rates.
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