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Lowering prices is not the best strategy

I recently participated in one of the most important tourism conventions in Latin America, the Summit of the Americas, held in Puerto Rico between September 9 and 11. In one of the interviews I did, which should have been more inclined towards an analysis of the travel market in Latin America, a topic emerged that I would like to share with you.

The executive I was interviewing was from Rate Tiger, a company that produces online execution software for travel management. In the hospitality segment it is used for the management of a hotel to integrate all the web platforms it has, so if a property works with 10 or 15 different distribution channels, the software integrates everything in a single input, that is, a single channel.

But what is really important is the course that the interview took when the executive of the firm stated that the worst strategy that a property could adopt in times of crisis was to compete based on prices, for the simple fact that its competitors did it. The interviewee's argument was: "a hotel that lowered its rates indiscriminately during the time of crisis could lose many businesses when the recovery arrives, because it will have taken fame of a cheap or low-class property."

Later the interviewee said: "I do not think that lowering prices is the best strategy although everything can be considered. That depends on the strategy that the hotel has and if what you are looking for is to have more people per room or get the most benefit for that particular room. If a property works with 20 different segments, lowering the rates in each of them is a mistake, but instead the most important thing is to identify which is the segment that is giving the highest profitability so as not to lower the rates of that group. "

The conclusion of the interview is that it is not about lowering prices without control, but being sure of which segments are being served, which represent better figures for the property and how you can obtain greater benefit or at least maintain it with respect to that population group. The key is in the study and analysis of the reality of the hotel.

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