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Effect of hotels’ price discounts on recovery after a crisis

When a crisis hits the hotel industry, such as a natural disaster or a recession, hotel managers typically default to discounts as a means of recovery.

However, Wesley S. Roehl argues that this tactic may actually be doing the opposite. Roehl and his colleagues found that while room discounts may help with alleviating total occupancy loss, they do not reduce cumulative revenue loss.

They suggest that in times of crisis, hotel managers should focus on other strategies such as strengthening relationships with consumers who are willing to pay higher prices and working with marketing and sales managers to create unique and customized packages for guests at a fair rate.