Loyalty Programs and/or Discounts

16 replies [Last post]
MountainMystery's picture
Offline
Joined:
02/23/2013

Hello all! So the small place I just took over as manager has a history of giving discounts to nearly everyone that walks in the door. The previous managers gave 10% discounts for AARP, military, police, fire, EMS, and also for "regulars". While training with them, we never saw them ask for cards or IDs when giving the discounts, but everyone seemed either old enough to be considered AARP or had been here at least once or twice over the past 10 years they have been with the motel. So they got this discount AFTER the managers also reduced their already low rate! Our rates are around $60-80 for standard rooms with king or queen beds and we're quite reasonably priced for the area.

Thing is, when people call for reservations, they all ask if we'll keep giving them the discounts & rates the previous managers have, "because we've been coming here for the past 14 years!" There's actually one woman who apparently refuses to pay more than $39 for any night and she comes a couple nights a year. The previous managers just accepted that- believing it was best to not upset her so she'll kept coming back. This seems ridiculous to me... 

We're loosing a considerable amount of revenue because of these discounted rates and percentages and I can't help but feel we're doing it needlessly. I want to stop giving so many discounts unless guests specifically ask at check in and can show AARP, police, fire, EMS or military ID. I want to create a loyalty program that rewards guests while not constantly undercutting ourselves. What do you guys think? Any suggestions? 

__________________

When life gets you down do you wanna know what you've gotta do?
-- Just keep swimming, swimming, swimming.

 

Offline
Joined:
10/07/2008

I think those who give discounts, like us who give $10 to book online, no matter who no matter when, have done that for a reason. People like discounts. If you are a hotel/motel they expect them even more!

Loyalty programs are a bit more work, and you may have some get annoyed by that. My mother did the book two nights for the third night free at a hotel chain recently and I got an earful when she found out she had to fill out this form and then print this off and bring with etc. I told her "Mom the reason is that most wouldn't do it and they end up dollars ahead" and that even made her angrier. So be careful if you are trying to institute something that is not the norm for a motel at that price range.

If you are the same whose first complaint was the Holy Bible on the nightstand, be careful. It is not that your ideas are not great, but they have been doing it THAT way for a long time, and so obv there is a reason they do. Did they hire you to "run" the place or to make improvements. I know how difficult it would be for me, I would be sitting on my hands, I would have one foot nailed to the floor! 

This is a B&B forum, so many of the things we discuss don't apply to your room rate there, and the owner probably won't understand our mindset. We do know, and will agree, that if the rates are too low then you will have an issue!

__________________

Gluten free is never free. - Joey Bloggs

 

OnTheShore's picture
Offline
Joined:
08/28/2011

We had a returning guest who, the first year that we took over the management, said she had always been given a discount equal to the taxes. Upon reviewing her past records, I agreed to go along. But her stay was during peak season when we could easily rent that week without giving a discount. The second year when she inquired to make her reservation, she didn't make any mention of the discount, so I didn't enter it on to her invoice. When she arrived, ready to pay her balance, she said, "Oh, what about my discount? I understand if you can't give it to me in the future..." So I recalculated her invoice on the spot, giving her the discount. The third year, she never inquired about a reservation, and "her spot" has been filled by someone else at the going rate ....

__________________

"where even time relaxes...."

 

Silverspoon's picture
Offline
Joined:
10/16/2011

We give a $25/night discount on the nightly rate for our cottage when it is booked for a weekly stay, which is what we hope for in-season.  Yesterday I had a call from a women who wanted the cottage for 5 nights at the end of August.  That is traditionally a slow week for us so I relented on our 7-night minimum, making sure she knew that she was paying the higher, nightly rate.  

Then she e-mailed requesting a late check out on a Friday.  When I declined she decided to book the extra night, giving her a 6-night reservation, AND she expected the lower, weekly rate.  Hmmmm, a pita in the works? The last I knew, a week had 7 nights.angry

We'll see....she and her partner are coming for the 6 nights at the full price.  I'm sticking to my guns. 

Moral to the story?  If we had given her everything she wanted we would have lost one night or several hundred$$.

__________________

Gardens are not made by singing "Oh, how beautiful" and sitting in the shade.
Rudyard Kipling (1865-1936)

 

OnTheShore's picture
Offline
Joined:
08/28/2011

By my calculations, 6 nights at your regular rate is $200 less than paying for a week! Tell her she can pay the weekly rate if she wants, and quote her the price for a full week (because that's what "weekly rate" means!).

Silverspoon's picture
Offline
Joined:
10/16/2011

Well I gave her the 6 nights at our regular rate and decided to take a night off to give me some wiggle room in getting the place cleaned.  If we get to August and still need the $$$ I can fill the empty 7th Sat. night adding an additional $25 to the regular rate and still be ahead.  

Both of the guests are ministers....kinda hard to ask them to pay for staying on a Sunday when they have obvious obligations.  

seashanty's picture
Offline
Joined:
06/02/2008

 What are the terms of your contract as manager?

 heads in beds at any cost or to increase actual revenue? 

 have you spoken to the owners?

 true story - old innkeeper gave everyone discounts (really, you stayed with him and there was some kind of discount that applied to you).  everyone 'loved' him.  until his accountant / son said you are going to lose your home and your inn if you don't raise rates and stop giving all these discounts.  son helped him twice pay property taxes and utility bills but said ...i am unable to help any more.

faced with the truth, the innkeeper timidly raised his rates and stopped a number of discounts.  all those guests who 'loved' him did not care that he was losing money year after year, not taking a paycheck, owing staff money, behind on his second mortgage, etc. he told them, at length, the truth of his financial situation. did they understand and book a room?  no. did they still 'love' him? no. they complained and some were downright mean and hostile ... and stopped staying with him and went off to cheap hotels in the area or who knows where.  except for a few.

he battled his way back with lots of help with marketing and promotions and eventually got new guests coming in at the higher rates (which have been raised more since then). astounding to him, by charging a rate that made sense he did better financially with fewer guests.  he stepped aside as manager, finally retired as innkeeper, and left that to younger, FIERCE (he says) family. 

i recently saw a similar situation on one of those restaurant rescue shows. discounts and free desserts were driving the people out of business.

i had one guest who demanded (seriously ... demanded) a crazy cheap rate.  she refused to stay with me because she said she 'always' paid that and never more at a b&b. and i said no.  i think she called me five or six times to try to book at her 'special rate' each time after not getting a room at her price someplace else.  boy was she angry!

i guess i am saying all this because i believe you should charge what is fair, not what has been charged in the past and not giving all those discounts.  you are running a business.  but this approach may be very hard as you will likely lose a lot of your repeat guests.  at first.  good luck.

 

 

Joey Camb's picture
Offline
Joined:
04/02/2010

Don't get me started on that one! PO's here were like that - everyone loved them but no money! "oh but Po always did it at this price" and so on, I have spent 4 years weeding out virtually every single one of them! meant that their mailing list/good will was virtually worthless - plus most of the ones that stayed with them were what I call lame ducks, very high maintenance and wanted to pay penuts!

__________________

Don't mess with me today or I will kill you!!!!

 

Generic's picture
Offline
Joined:
02/24/2011

There are a few forces here.

You cannot rent a room under costs. I know people do it, but it's not a good idea. So the $39 lady needs to find a new place to stay or pay a reasonable rate. Tell her you love her to death, but the salaries have to be paid and she isn't covering your costs. You aren't authorized to sell below costs. You appreciate her business, but that in order to ensure that you can continue in business that you need to make a reasonable profit after paying salaries.

Discounts should be based on something and off of something. There should be a cut-off line. For example, 10% off the best rate online. Or 20% off of rack rate. There is no discounting beyond that rate. Make them work for the discount. For example, a code that has an expiration. A code they get in email that is personal and expires, but they can give to ONE friend if they aren't coming. But that after used by one person, is no longer valid (so they can't post it for others to see.) And that can only be used if booked directly on your website. Or a special rate that has special conditions, like it needs to be fully paid in advance to be valid.

Draw a line in the sand. Figure out the costs for the room, the reasonable profit and then that is the baseline. Nothing, absolutely nothing can be done below that line, because then you are paying the customer to stay with you.

__________________

Permission to quote in whole or in part, other than usage on this forum, is entirely forbidden.

 

Madeleine's picture
Offline
Joined:
09/29/2011

I agree with all of it except explaining your costs. That is irrelevant to the guest. Which is why I put it in terms of other things have changed price and she pays those things.

I once mentioned something like that on PAII and had my head handed to me. Basically told if I can't afford the guests to just shut down because guests should not be dragged into my money management problems.

So in terms of the guest who doesn't think she should pay the going rate or near to it, it has to be explained, if explained at all, in terms of making the guest's life more enjoyable.

However, for some people that's just getting the cheapest rate possible and laughing about it.

We just did the reno that removed a bed from one guest's favorite room. If she comes back, and she's been coming back for years, she'll need to take a much more expensive room. I know this and she knows this and she's 80 years old. I told her I would do the more expensive room for the lower rate one time next year.

And maybe that's the spot the OP finds themselves in. The previous manager liked everyone and thought enough money was being made with the status quo. Why rock the boat?

Could be that's why there is a new manager, too.

__________________

Everyday, for good or ill, we intersect with some else's story and become a part of it.

 

Generic's picture
Offline
Joined:
02/24/2011

The only reason I would mention that it's unprofitable, or doesn't cover costs is that it's a discussion cliff.... It becomes a retort to everything they say. "Oh, do this just for me, I won't tell anyone!" So, who's going to pay for the housekeeper, the front desk, the laundry, the heating, the amenities in your room, the water, the power, property taxes, etc. 

They have no idea what costs are. They are price vampires. But it's pretty damn hard to argue that you should subsidize them and their vacations. For that, there is couchsurfing. 

The exception to this is when your T/A listing is clear and indicates a real problem that you can't address, you won't address or worse, the owner refuses to address. In that case, there are website that sell hotel rooms opaquely. The hotel in the bad location, the hotel where the owner has decided to see if they can squeeze out the last dollar by not doing necessary repairs, the hotel next to the noise or crack den, bad part of town, staff that doesn't care, etc. In that case it's heads in beds that counts and you sell at any damn price. (You know that 2* in a major city for $43 a night that includes free parking, free internet and breakfast, when all the decent rooms in town are $99 a night and still charges for parking, breakfast or Internet. And people still book!)

white pine's picture
Offline
Joined:
02/02/2010

Dead on!  Today everyone is asking for a discount, it is encouraged everywhere. Love your term "price vampires".    I agree no need to subsidize.   DH wanted to give a discount to some nice folks who stay here every year and hit a casino near by.    OK  save here to blow the money there?

__________________

"Only philosophers and fools try to know the unknowable" Nero Wolfe

 

Generic's picture
Offline
Joined:
02/24/2011

Price vampire.... they just suck the lifeblood out of you.

Offline
Joined:
10/07/2008

white pine wrote:

Dead on!  Today everyone is asking for a discount, it is encouraged everywhere. Love your term "price vampires".    I agree no need to subsidize.   DH wanted to give a discount to some nice folks who stay here every year and hit a casino near by.    OK  save here to blow the money there?

White Pine! That is their choice, if you want to reward them for being loyal customers then I think that is nice. They stay every year and you don't want to give them a discount? Meanie. cool

white pine's picture
Offline
Joined:
02/02/2010

Never said I was NICE!  They get an online booking discount even tho they never book online, and they get an additional discount for staying three nights....and DH wanted to give them more!    NO MORE!!!  I say!

Madeleine's picture
Offline
Joined:
09/29/2011

Always a tough one to take over from someone else. Most of our guests understood we were not the same owners but some did not. We changed the discount program from one that honored stays of more than 3 nights with a discount to one that honored repeat guests with a discount after 3 stays.

Some people refused to stay if they didn't get their discount immediately.

For the one who won't pay more than the rate she paid 14 years ago you'll have to ask her if she still pays $1 for a gallon of gas because you don't and prices have gone up everywhere.

Sometimes you have to fire guests. But it's a learning process.

What does your website say about discounts?

If you are now in charge of pricing you may want to layt out what you think is fair.

Our prices are a lot higher than yours but you need to go with the local pricing. We find that saying we'll give $10 off for AAA seems to work. But we don't discount for everything. Everyone here qualifies for AARP. I'd go broke!

If you have good records and can prove guests have been coming for years then pick a discount and stick with it. We always have to tell people no double discounts. They want a discount for AAA and AARP and whatever else.

If you think you can bring in a while new crowd at the higher price point then ease into it.

Repeat guests used to get $15 off/night.We've stopped that for new guests, but old ones are grandfathered in. New guests get a gift.

OnTheShore's picture
Offline
Joined:
08/28/2011

As manager, presumably you report to an owner? What does the owner say about the discount program?

If you make a change that upsets regular returnees, how confident are you that you could fill the vacancies that would be created if they didn't return?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.