Originally Posted by
IAN-UK
Well, that's your view, so fair enough. Though within the hospitality industry discounts certainly do stimulate demand: it's why room rates yo-yo up and down.
You may find it ludicrous to travel to Bangkok simply to benefit from a hotel room $50 cheaper than normal, but for someone in Kuala Lumpur the discount could be sufficient to trigger a decision to travel. The $50 drop in price will also attract people already committed to visiting the city to trade up to higher category hotel.
Just two examples of situations where a discount can generate a positive contribution from a product which would otherwise perish unsold, generating zilch.
Yes, but you cannot assume a priori what the outcome of that would be. If there is in fact relatively little elasticity and if lowering rates by 40% would only generate, say, 5% extra custom, it may not be worth doing it. I strongly suspect that the majority of posters here simply do not have sufficient information and detailed knowledge of the relevant market so as to make a firm judgment on this.