Originally Posted by
iahphx
You know, I kind of wonder about the value of this promotion to LHOTW.
Like I've always been aware of the "chain," but if you had asked me my opinion I would have said "Very nice collection of hotels that are at a price point I'm not willing to pay."
Now, because of the promo, I'm more familiar with their hotels, but I'm even more convinced that the regular room rates they offer are stratospheric.
In other words, how does it boost sales to advertise to people who won't be buying their luxury product unless it is bargain-basement priced? And is anyone who actually pays $20/night likely to be a repeat customer at $500/night?
They're hoping this gets picked up by the wire services and this gets them free publicity. They may only be able to convert 0.1% of free riders to regular pricing, but they will get free media exposure and they've determined it's worth the room giveaway. Besides, the room they are giving has a low COGS (ie cost to them) if it is not rented. So, assuming the room will be empty, what is the loss they incur if they give it away? Housekeeping and laundering costs? Wear and tear? Utilities? All these are less than the $20. The fixed costs (debt service, taxes, etc) don't go up if they give you the room for $20.