When a Bed Is a Bed is a Bed

Posted: 29 Jul 2009 | 6:50 am

I was recently reading comments from an industry magazine on the issue of a hotel owner complaining why rates at his hotel which were over $100 dollars a year ago, and are now just $60 dollars. It's interesting to view the upscale and midscale hotel performance of the past 6 months in Phuket and see the dramatic discounting of hotels which have created chaos in hierarchy or little differentiation between standard of hotels. Rates rule and travelers are shopping like never before for the cheapest prices or best deals.

Conclusions reached by the writer were that while brands, architects, designers and operators all look to create DNA (differentiators, nuances and attributes) for individual hotels, that at the end of the day rooms are commodities. A hotel bed is a hotel bed, like it or not and while travel remains high on peoples agenda, rates sensitivity is on the rise. When a commodity pricing philosophy is adopted, it not only affects the hotel room you are selling but the entire market of hotel rooms.

In a protracted downturn as we are currently experiencing the domino theory of pricing impacts rates starting from top to bottom could not be more evident when viewing the current results of Phuket's hospitality assets. Unfortunately as we are moving into a high season horizon, feedback from many hoteliers and sales executives point to sentiment by wholesalers and individual bookings asking for highly discounted prices. For now, hotels look to be stuck on a ledge of commodity pricing which will undoubtedly reach far into 2010.

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