No one wins a race to the bottom

We can make 2010 a step forward on the road to recovery for the hotel industry if we embrace the notion that price is not the only important thing to consumers, and understand that racing to the bottom is not a productive long-term strategy for success.


As the hospitality industry continues to deal with the challenges presented by the economic slowdown, franchisees and franchisors alike are working hard to persevere, adapt and navigate through this unprecedented landscape. For some, it can be tempting to respond to low occupancy levels by not only cutting costs, but also reducing rates in an attempt to drive business to their specific hotel. This often then creates a downward spiral as other local hotels undercut rates in an effort to respond.

While this strategy may be the intuitive response in the face of what is proving to be a deep and persistent recession, market area and industry wide rate reductions do have a counterproductive impact. This situation is reducing industry and hotel revenues and is draining needed cash flow from hotels and the brands. The industry, owners, local governments, lenders and employees are all bearing the negative impact.

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