Originally Posted by
antonius66
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I understand and agree with all of that. I just simply don't see discounting to families being any more intelligent or viable than any other multi-room discount.
http://en.m.wikipedia.org/wiki/Price_discrimination
Hotels and other travel industry providers offer their products at different prices to different customer segments to increase revenue while minimizing deadweight loss. For this to work efficiently price fences (eligibility requirements for discounts) are put in place.
Because families traveling for leisure tend to be more price sensitive than business travelers, a discount like this offers families booking multiple rooms more enticing rates. Business travelers and other segments of customers that are generally less price sensitive will continue to pay higer rates because they do not meet the requirements for the discount.
Price discrimination is also the reason that discounts like these are not widely advertised. Even within the same customer segment, some families that are less price sensitive will simply book two rooms at a higher rate, while others who are more price sensitive will dig and find discounts like this on the website (even though I knew about this offer I had to search quite a bit to find it on Hyatt's website).