A researcher at the Cornell hotel school thinks that cutting room prices during a recession is not such a good idea because of long term damage to a chain's reputation and therefore to business. In other words, the temptation of be the cheaper place to stay means that you've lost value for your core customer.
The article is here:
Worth a read.
Since growth in RevPAR is the key performance indicator, reduction in the standard room rate undermines overall business value. I like Marriott's approach. Marriott offers special discount rates from the standard room rate including government, AAA and Senior. The rate reduction doesn't make the accomodation 'cheap' but more affordable to specific demographics. Marriott also has the MeB rate for last minute weekend specials. These rates will slide upwards as the standard room rate grows.
The report comments favorably on, "using alternative distribution methods, like hotels.com" to drum-up business. The trend is very pronounced in several markets that are over-saturated with hotel offerings and price wars are equally evident. As mentioned in a previous post (SOAP), several Marriott properties are exploring Travelcoupons.com and RoomSavers.com. They're not cutting the standard room rate, they're couponing. Does couponing hurt the core shopper of Macy's or your local supermarket? I don't think so, smart shoppers like a sale.
Just like Award redemption, Marriott controls the level of couponing activity by Availability. The benefit is that the discount rate attracts new customers. Once in the door and they see the lobby, the pool, fitness area, comp internet, breakfast and parking - the prospect guest might be inclined to slide-up to the standard rate - on the second night.
Searching on TripAdvisor.com combining "Marriott" and "coupon" turns up a number of examples to illustrate the point. During a recession, affordability is a keyword whether it's cereal, apparel or a hotel, IMO.