Discount pricing is the strategy of offering customers lower room rates than normal, usually to increase demand. With most travellers focused on budget, a discounted price can be the difference between a potential guest choosing you over a competitor.

Discount pricing strategy comes in many forms, and a hotel also needs to consider how to promote discount pricing offers in order to reach the maximum number of relevant eyeballs.

Discounts for guests who book direct.

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Why is discount pricing used in hotels?

All hotels go through peaks and troughs throughout the year. While money is easy to make during high season, a hotel can’t rely on peak periods alone. In order to spur more interest in your hotel during quieter times, and secure more bookings, you might employ a discount strategy.

Price discounting is particularly effective at securing bookings during low season, when you first open your hotel, or when you offer a newly built or renovated room.

Advantages of hotel discount pricing

The main advantage of hotel discount pricing is that it helps you to secure more bookings. It can also help to enhance your reputation, as keeping your hotel full can hint at a great guest experience, and can induce FOMO in potential guests, making them more likely to book.

It’s important to note that price discounting is only a net positive if it ultimately generates profit: your discount pricing strategy needs to attract enough full-paying customers to cover for any rooms you might use as loss leaders.

Top 10 hotel discount pricing strategies

Looking for a bit of discount inspiration? Here are 10 of the most popular discount pricing strategy examples.

1. Quantity discounts

By booking in bulk, the likes of tour groups, businesses, families and event guests are easier and more efficient to deal with on a per guest basis, so many hotels offer bulk discounts that trigger at a certain number of rooms.

2. Length of stay discounts

Longer stays mean less work in terms of checking guests in and out and cleaning and resetting rooms. A length of stay discount can pay itself back through this extra efficiency.

3. Loss discounts

Loss leaders are rooms that are offered at a price below your breakeven point, in order to stimulate more interest in your hotel. Loss leader rooms can also become profitable through upselling and cross-selling.

4. Cash discounts

A hotelier may incentivise upfront payment by offering a discount on a room when a guest pays in full at the time of booking, particularly when that booking is for a date long into the future.

5. Community discounts

Your hotel might attract more local guests with a community discount – a special deal that incentivises locals to explore their own backyard.

6. Last minute discounts

An effective way to fill rooms that would otherwise be left empty, last minute discounts appeal to spur-of-the-moment travellers who may be tossing up whether to take a trip at all.

7. Loyalty discounts

Return customers are the best customers, and you can create more with loyalty discounts that reward those who stay with you regularly.

8. Seasonal discounts

While peak season bookings largely take care of themselves, low season and shoulder season discounts can be just the ticket to fill your rooms at quieter times of the year.

9. Trade discounts

Trade discounts are focused on B2B bookings. These can often be simpler to organise and more consistent through the year than private and tourist bookings, so may be worth attracting through a discount strategy.

10. Advanced booking discounts

Early bird discounts are a great way to fill rooms long before the stay. This form of discount grants you more time to focus on selling more profitable bookings.

Hotel discount pricing examples

Looking for some real-world discount pricing examples? While your own budget and financial considerations should always be taken into account, the three hotels below offer examples of how it’s done.

The Dylan Hotel at SFO

The Dylan Hotel at SFO, a boutique hotel near San Francisco Airport, combines the cash and advanced booking discounts listed above, offering a deal on all advanced, prepaid reservations.

There’s a wealth of upside for The Dylan. Bookings must be made directly through the hotel, which means they don’t pay the 15%-25% commission fees charged by OTAs, and the reservations are non-cancellable and non-changeable, so the revenue is locked in as soon as the booking is made!

Silavadee Pool Spa Resort

The Thai island of Koh Samui is a famously luxurious destination, but with its on-site day spa and private beach, the Silavadee Pool Spa Resort turns the opulence up to 11. What’s more, loyal guests enjoy all the perks of this stunning resort at a discounted price.

Silavadee’s Member Privileges program offers a range of loyalty discounts to participants, including a 12% discount on all rooms, a 20% discount on a la carte spa treatments, and free airport transfers.

Hotel Oderberger Berlin

Housed in a stunning 19th century building, guests want to soak in as much of Berlin’s Hotel Oderberger as possible.Happily the hotel understands the value of longer stays, offering discounts ranging from 12% for a flexible three night booking to 27% for a non-flexible seven night booking, provided the reservation is made directly through the hotel’s website.

By Dean Elphick

Dean is the Senior Content Marketing Specialist of Little Hotelier, the all-in-one software solution purpose-built to make the lives of small accommodation providers easier. Dean has made writing and creating content his passion for the entirety of his professional life, which includes more than six years at Little Hotelier. Through content, Dean aims to provide education, inspiration, assistance, and, ultimately, value for small accommodation businesses looking to improve the way they run their operations (and live their life).