What is a common mistake in revenue management made by hotels?

Believing that discounting increases revenue is a common mistake in revenue management made by hotels because it reflects a misunderstanding of how pricing impacts long-term profitability. While discounts can attract more customers in the short term, they may not lead to increased overall revenue. Frequent discounting can devalue the brand and lead customers to expect lower prices, which can harm profitability in the long run. Additionally, heavy reliance on discounts may cause hotels to miss opportunities to optimize pricing according to demand, seasonality, and inventory levels, which are crucial aspects of effective revenue management.

In contrast, investing in marketing opportunities and enhancing customer loyalty programs can lead to sustainable revenue growth by building a loyal customer base and increasing repeat business. Similarly, pricing based on competition is a strategic practice that helps hotels maintain competitiveness in the market but should be balanced with their unique value propositions and market dynamics. Understanding the implications of discounting compared to these practices highlights why this approach can compromise a hotel's financial success.