Competing with hotels

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bbinnsitters

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If you feel as if your area has too many hotels and your business is being affected...
What are your local hotels charging? Let's say $70/night - if you were to drop your prices to theirs to compete wouldn't it be better to rent 5 rooms at $70/night than no rooms at $130? I think that is why some owners are catering to business people - having mid-week business at a reduced rate is better than no business at all. Or if you have 5 rooms all at $125 - $175 try dropping one to $80 to see what happens. It used to be that the most expensive rooms rented first, I have found that not to be true anymore.
I realize that you still have to take into consideration your cost - so add $10 for breakfast costs? You'll still be better off renting at $90/nite than no nights at all. Perhaps you'll also have to adjust your "gourmet" breakfast so it is not so expensive for you to serve.
I may be getting into all sorts of trouble for even suggesting this, but desperate times call for desperate measures.
 

YellowSocks

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Well, define desperate...
We have a DBCH (decent big chain hotel) here that has offered our (local large employer with frequent business guests) a rate of $65 per night. My rooms are $120, 110, 110, 95. I'll do 10% for pretty much whatever reason which makes them $108, $99, $99, $85.
We had guests visiting this facility who said that anything over $100 doesn't look good on their expense reports. But... did they book the smallest (cheapest) room? Oh no. I told them I'd give them a biz rate of $95 a night. Dh thought we should match the $65. I said no way.
Why not?
  • My breakfast alone is worth a minimum of $10.
  • Our overall ambiance (quietness, decor) is nicer.
  • Our amenities (HD TV, cable) are as good or better.
  • The DBCH has LOTS of rooms... I have four. They have economy of scale, I don't.
  • I still rent my rooms to business guests who appreciate us (even tonight I have 2 rooms, 4 nights for this same facility)
  • There's always the "you get what you pay for" mentality. I don't want to be cheapest in town, nor even close.
  • I believe my (not cheap) prices have helped to bring me a higher class of guest.
After all, even with my prices, those guests stayed here, didn't they? If the DCBH is full, then I get them. This is where another hotel coming in to town would impact me. In the meantime, when the DCBH fills up, then I get guests. And as they come and find out how wonderful we are, then we build a reputation and repeat customers.
Besides, as I started with, it depends on how desperate. In November or April, I might consider charging $75. But the rest of the year, why should I get up early for so little money when other guests will pay full price?
=)
Kk.
 

muirford

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There is also the question of what is your bottom line for expenses. There is a room rate below which my costs for renting the room are not covered. That's the cost of laundry, breakfast, housekeeping. Then there are fixed costs for your property which have to spread out. There is some rate - let's say $50 - at which it really isn't better to rent the room than to have it vacant. At $49.99, it costs me more to clean, fix breakfast, and do the laundry than I get for the room. That doesn't even include anything like a salary for me! Everyone needs to know what that number is for their own business.
 

YellowSocks

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There is also the question of what is your bottom line for expenses. There is a room rate below which my costs for renting the room are not covered. That's the cost of laundry, breakfast, housekeeping. Then there are fixed costs for your property which have to spread out. There is some rate - let's say $50 - at which it really isn't better to rent the room than to have it vacant. At $49.99, it costs me more to clean, fix breakfast, and do the laundry than I get for the room. That doesn't even include anything like a salary for me! Everyone needs to know what that number is for their own business..
muirford said:
There is also the question of what is your bottom line for expenses. There is a room rate below which my costs for renting the room are not covered. That's the cost of laundry, breakfast, housekeeping. Then there are fixed costs for your property which have to spread out. There is some rate - let's say $50 - at which it really isn't better to rent the room than to have it vacant. At $49.99, it costs me more to clean, fix breakfast, and do the laundry than I get for the room. That doesn't even include anything like a salary for me! Everyone needs to know what that number is for their own business.
You are absolutely right, and I confess I don't know that number. I think I'll know it by next year. In the meantime, I strongly suspect that $65 is at or near that number.
=)
Kk.
 

Don Draper

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Our first off-season here we had no idea what to expect and deep discounted rates to under $100/night. For us it was not at all about not covering costs, but about the kind of people we were getting at that rate...in short, the no-tell motel types were the ones who were finding us. Didn't respect us or the property. We found a middle ground, between our in-season rates and rock bottom where we are happy with the kinds of guests and still getting enough rooms to pay our bills.
 

Morticia

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Hotels here charge $300+ in the summer. They charge $59 in the winter. Now if I could GET $300 in the summer, I would drop my prices to $59 in the winter. Guests who will give HGI $300/night for just a room for some reason do not think a B&B should be charging that price and will not pay it. Last year I had guests calling for graduation weekend who were telling me all the hotels in the area were full. Basically they were desperate. I told them my very reasonable price (half what the hotels filled up at) and they turned me down. I was not desperate, so I did not come down to the price they wanted to pay. In that case, holding out worked.
Now, IF I decided to give your theory a try and lower my rates to what the hotels are charging and all the other B&B's kept their rates high, what is the perception? The perception is that we do not value our product and that our product has no value. The perception is that we're desperate. What that gets is not a flock of guests but callers wanting a deeper discount. Or, no callers at all. ("There must be something wrong with that place." And believe me I have heard that comment often enough when a guest wants to pay me $100 and I tell them which places charge that. "Why? What's wrong with it?")
I think you said that B&B people are B&B people. Well, hotel people are hotel people. We have converted our fair share to the idea of trying B&B's, but we don't convert them all. If they are happy at the cheap hotels, lowering my prices to be cheap does not guarantee a happy guest.
We have had some hotel folks stop in 'just to see what it's like' and not even ask the price. They look around and say, 'This is very nice looking, but this is not what we want.' They want to be in a hotel.
If B&B people are B&B people, then they know what B&B prices are and why. It may be a bit of a shock to some who are used to very low B&B prices where they happen to live, but they know what they will be getting for that price.
 

EmptyNest

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Our first off-season here we had no idea what to expect and deep discounted rates to under $100/night. For us it was not at all about not covering costs, but about the kind of people we were getting at that rate...in short, the no-tell motel types were the ones who were finding us. Didn't respect us or the property. We found a middle ground, between our in-season rates and rock bottom where we are happy with the kinds of guests and still getting enough rooms to pay our bills..
I agree with you, lowering your price just to compete with hotels and get heads in the bed gets you the WRONG kind of people. I for one would rather be empty than give away my rooms. But then again, I was lucky. I only had 3 rooms and was not counting on them to pay all my bills.
 

seashanty

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in the 'shoulder season' or anytime it got dead ... and i mean dead ... i ran a special to lower my rates. that was because without some income i'd not be able to pay the electric bill and feed myself. and it was always some amazing special ... focused on the foliage or one week only or whatever i could come up with ... i did it because i needed some income. i looked around and found deep deep discounts at other places in the area and they had bookings. this is when i also used the much maligned hot deals on bandb.com and on the state tourism website.
it has to be carefully done to avoid looking like you are the bargain basement place to stay .....
and more like 'wow! i have found a great deal for a limited time only' like .... autumn leaves are falling and so are our prices ... week of oct xyz only ...
i dated a man who loves loves loves to look for the deal, the special, the discount ... everywhere he goes, everywhere he stays. there are a lot of people like that. and they are encouraged by the media to look for the deal. it's the SALE sign at the store ...
yes, you absolutely do have to come up with a dollar amount below which you are losing money.
 

JBloggs

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and let me paraphrase what was said on another thread "Bargain shoppers are not second hand citizens"
I just booked my getaway with the 4th night free. I looked as I know the off season has more promotions and I found 30% or 4th night free. Am I a bad guest? NO WAY IN THE WORLD.
Let us be careful not to call those who try to shop conservatively cheap or hotel people (I know the thread was about hotels...so I can hang with that). As far as I know, the sticker dicker is on high end vehicles as it is on Hundais.

I will say what I always say, it is the working class who stay with me who tip, who are appreciative, who love everything. In other words - the best guests. I'm jus' sayin...
 

YellowSocks

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and let me paraphrase what was said on another thread "Bargain shoppers are not second hand citizens"
I just booked my getaway with the 4th night free. I looked as I know the off season has more promotions and I found 30% or 4th night free. Am I a bad guest? NO WAY IN THE WORLD.
Let us be careful not to call those who try to shop conservatively cheap or hotel people (I know the thread was about hotels...so I can hang with that). As far as I know, the sticker dicker is on high end vehicles as it is on Hundais.

I will say what I always say, it is the working class who stay with me who tip, who are appreciative, who love everything. In other words - the best guests. I'm jus' sayin....
Joey Bloggs said:
and let me paraphrase what was said on another thread "Bargain shoppers are not second hand citizens"
I just booked my getaway with the 4th night free. I looked as I know the off season has more promotions and I found 30% or 4th night free. Am I a bad guest? NO WAY IN THE WORLD.
Which is why the whole point is not to simply match the hotel prices, but to run specials and promotions that are deals, and can be perceived as a very special deal... that is, that our B&B's are the wonderful, fabulous places they are and worth a pretty penny, but because of economy/season/whatever, for a very limited time, a deal can be gotten.
=)
Kk.
 

Don Draper

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and let me paraphrase what was said on another thread "Bargain shoppers are not second hand citizens"
I just booked my getaway with the 4th night free. I looked as I know the off season has more promotions and I found 30% or 4th night free. Am I a bad guest? NO WAY IN THE WORLD.
Let us be careful not to call those who try to shop conservatively cheap or hotel people (I know the thread was about hotels...so I can hang with that). As far as I know, the sticker dicker is on high end vehicles as it is on Hundais.

I will say what I always say, it is the working class who stay with me who tip, who are appreciative, who love everything. In other words - the best guests. I'm jus' sayin....
Joey Bloggs said:
and let me paraphrase what was said on another thread "Bargain shoppers are not second hand citizens"
I just booked my getaway with the 4th night free. I looked as I know the off season has more promotions and I found 30% or 4th night free. Am I a bad guest? NO WAY IN THE WORLD.
Let us be careful not to call those who try to shop conservatively cheap or hotel people (I know the thread was about hotels...so I can hang with that). As far as I know, the sticker dicker is on high end vehicles as it is on Hundais.

I will say what I always say, it is the working class who stay with me who tip, who are appreciative, who love everything. In other words - the best guests. I'm jus' sayin...
THe big difference is people who are happy to get a discount versus people for whom discount is the first and only word out of their mouth...the second are the ones we have found to be the least suitable for us.
 

happykeeper

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Right - Wrong- or In the Rain- We are VALUE ADDERS. We use our sliding rate scale that gives people a value and gives us longer stays- but we do not give people discounts for nothing in return. What we have noticed is that we have gavitated to a higher end guest ( they are looking for value too) and the end result has been very positive. If we would have tried to compete with the less expensive properties, we would have lost these folks. It isn't for every situation, but it seems like it could work in many situations. For sure, what something seems like can be illusionary and a world removed from what we know, so take it with some salt.
 

seashanty

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You can try things for a week, two weeks. Not change your rates but change out how your listings read, change your specials ... see how it goes.
 

Morticia

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I just added one of the bb.com last minute things.
This will, I hope, give everyone a chuckle...I just had a call from the road and I quoted the woman a 'walk-in, last minute' rate. She hung up on me, after asking for a AAA discount, too. So, imagine my surprise when she rang the bell 20 minutes later. She looked around, really liked the place (except lack of TV in room, but was willing to 'settle') and so we started to take care of biz. Well, then she hemmed and hawed and thought she might want to look at some other places first. OK by me because I know the TV was still an issue. No, forget the TV, she could watch in the living room.
Back to checking them in. I filled out a reg card and told her the total with her last minute discount and tax. She practically jumped off the couch (where she was watching TV already) and wanted to know how the price had gone from $89 to over $300 (2 nights)???
We were both shocked as there is no way she talked to me and was told $89! She left.
So, there's a moral in here somewhere about value. Oh yeah, she STILL wanted to continue looking even for $89 and having the TV and fireplace all to herself. As she was walking out the door she told me the place was lovely and she hoped where she was going (for $89) was nice. And, no, I was not going to offer to discount any lower than I already had. She was going to be much happier with a TV and an $89 room.
 

bbinnsitters

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I just added one of the bb.com last minute things.
This will, I hope, give everyone a chuckle...I just had a call from the road and I quoted the woman a 'walk-in, last minute' rate. She hung up on me, after asking for a AAA discount, too. So, imagine my surprise when she rang the bell 20 minutes later. She looked around, really liked the place (except lack of TV in room, but was willing to 'settle') and so we started to take care of biz. Well, then she hemmed and hawed and thought she might want to look at some other places first. OK by me because I know the TV was still an issue. No, forget the TV, she could watch in the living room.
Back to checking them in. I filled out a reg card and told her the total with her last minute discount and tax. She practically jumped off the couch (where she was watching TV already) and wanted to know how the price had gone from $89 to over $300 (2 nights)???
We were both shocked as there is no way she talked to me and was told $89! She left.
So, there's a moral in here somewhere about value. Oh yeah, she STILL wanted to continue looking even for $89 and having the TV and fireplace all to herself. As she was walking out the door she told me the place was lovely and she hoped where she was going (for $89) was nice. And, no, I was not going to offer to discount any lower than I already had. She was going to be much happier with a TV and an $89 room..
Yeah, I'm thinking you were just as happy to see her out the door (and don't let it hit you!) some people just can't be pleased and you would have been stressed the whole time she was there. She will end up in a motel room by herself and end up paying just about as much as $300 till she buys herself breakfast - for 2 mornings!
 

Morticia

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I just added one of the bb.com last minute things.
This will, I hope, give everyone a chuckle...I just had a call from the road and I quoted the woman a 'walk-in, last minute' rate. She hung up on me, after asking for a AAA discount, too. So, imagine my surprise when she rang the bell 20 minutes later. She looked around, really liked the place (except lack of TV in room, but was willing to 'settle') and so we started to take care of biz. Well, then she hemmed and hawed and thought she might want to look at some other places first. OK by me because I know the TV was still an issue. No, forget the TV, she could watch in the living room.
Back to checking them in. I filled out a reg card and told her the total with her last minute discount and tax. She practically jumped off the couch (where she was watching TV already) and wanted to know how the price had gone from $89 to over $300 (2 nights)???
We were both shocked as there is no way she talked to me and was told $89! She left.
So, there's a moral in here somewhere about value. Oh yeah, she STILL wanted to continue looking even for $89 and having the TV and fireplace all to herself. As she was walking out the door she told me the place was lovely and she hoped where she was going (for $89) was nice. And, no, I was not going to offer to discount any lower than I already had. She was going to be much happier with a TV and an $89 room..
Yeah, I'm thinking you were just as happy to see her out the door (and don't let it hit you!) some people just can't be pleased and you would have been stressed the whole time she was there. She will end up in a motel room by herself and end up paying just about as much as $300 till she buys herself breakfast - for 2 mornings!
.
No, I know where she went. I directed her to it. And she'll get a great breakfast in the morning, included. And a TV.
 

bbinnsitters

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I just added one of the bb.com last minute things.
This will, I hope, give everyone a chuckle...I just had a call from the road and I quoted the woman a 'walk-in, last minute' rate. She hung up on me, after asking for a AAA discount, too. So, imagine my surprise when she rang the bell 20 minutes later. She looked around, really liked the place (except lack of TV in room, but was willing to 'settle') and so we started to take care of biz. Well, then she hemmed and hawed and thought she might want to look at some other places first. OK by me because I know the TV was still an issue. No, forget the TV, she could watch in the living room.
Back to checking them in. I filled out a reg card and told her the total with her last minute discount and tax. She practically jumped off the couch (where she was watching TV already) and wanted to know how the price had gone from $89 to over $300 (2 nights)???
We were both shocked as there is no way she talked to me and was told $89! She left.
So, there's a moral in here somewhere about value. Oh yeah, she STILL wanted to continue looking even for $89 and having the TV and fireplace all to herself. As she was walking out the door she told me the place was lovely and she hoped where she was going (for $89) was nice. And, no, I was not going to offer to discount any lower than I already had. She was going to be much happier with a TV and an $89 room..
Yeah, I'm thinking you were just as happy to see her out the door (and don't let it hit you!) some people just can't be pleased and you would have been stressed the whole time she was there. She will end up in a motel room by herself and end up paying just about as much as $300 till she buys herself breakfast - for 2 mornings!
.
No, I know where she went. I directed her to it. And she'll get a great breakfast in the morning, included. And a TV.
.
Well, you are very kind! Hopefully the place returns the favor someday when someone is looking for a nice B&B in town!
 

JBloggs

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I just added one of the bb.com last minute things.
This will, I hope, give everyone a chuckle...I just had a call from the road and I quoted the woman a 'walk-in, last minute' rate. She hung up on me, after asking for a AAA discount, too. So, imagine my surprise when she rang the bell 20 minutes later. She looked around, really liked the place (except lack of TV in room, but was willing to 'settle') and so we started to take care of biz. Well, then she hemmed and hawed and thought she might want to look at some other places first. OK by me because I know the TV was still an issue. No, forget the TV, she could watch in the living room.
Back to checking them in. I filled out a reg card and told her the total with her last minute discount and tax. She practically jumped off the couch (where she was watching TV already) and wanted to know how the price had gone from $89 to over $300 (2 nights)???
We were both shocked as there is no way she talked to me and was told $89! She left.
So, there's a moral in here somewhere about value. Oh yeah, she STILL wanted to continue looking even for $89 and having the TV and fireplace all to herself. As she was walking out the door she told me the place was lovely and she hoped where she was going (for $89) was nice. And, no, I was not going to offer to discount any lower than I already had. She was going to be much happier with a TV and an $89 room..
Bree, you know you are loving her first impression of her no tell motel when she walks in and sees the difference! That is priceless!
 

Joey Camb

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When it comes to hotels the way to compete on the ways in which we are not hotels. For example we don't charge for our wi-fi (it doesn't cost us anything) where as the big hotels round us charge up to $30 a day just for that. We complete on that we cook breakfast to order and you get exactly what you want. Our parking is free (in some places it can be $20 per day) and there is always someone here to help you. We also specialise in local knowledge which is invaluable. We try to make it feel like you are staying with family. As one of the other posters said we are competing on added value. We charge our rates depending on the week (ie busy charge more quiet charge less) but you have to know your costs we have to cover, gas, electric, chamber maid, laundry, business rates, council tax etc when you know your fixed costs + a breakfast you can more easily set your rates to make sure you are making a profit. Also if you go too cheap people think that there is something wrong with you so it is looking at a balance. I look myself at the online websites to see what my competition are doing to help with prices. (Also I always think if they get somewhere much cheeper than I am then it will be horrible so they get what they deserve!)
 
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