Value Versus Rate

I am asked constantly what the is the driving force behind my client’s buying decisions and also what can they do to attract my attention, my client’s chief influencer.  A common misnomer is that the buying decision, even in this hardened economy, is solely about the best rate.  Rate is certainly a factor but the word that I like to use with bidding hotels is value.  The hotels who can demonstrate the best value are always going to be at the top of my list of recommended properties.

The Mandarin Oriental in Hong Kong, let’s suppose they are quoting a rate of $400 USD per night for their group room rate.  To simplify this illustration, let’s suppose the Best Western Kowloon is quoting a group room rate of $200 USD for the exact same time period.   If all other costs are the same (which they most certainly would not be), and the Four Seasons is more than twice as fine a property (which can really only be measured subjectively), then the Four Seasons, even at twice the rate, is the better value.  It’s the subjective piece that makes this impossible to calculate, but not impossible to justify.

Other things contribute to value however – let’s say two equal properties make two equal offers but one is slightly closer to the airport.  If transfers are important to the customer, the property that’s closer to the airport presents a better value because for the very same cost, that hotel provides a more convenient and perhaps less costly transfer.

And perhaps my best advice to hotels looking to attract attention with their bids – included added values in the offer.  When the client is paying for the meeting but passing the costs of the guest rooms to their attendees, the hotel should focus on adding value into the meeting package.  Include meeting room internet, comp rental, comp an AM break, throw in an LCD projector – any of these items will save the organization money to their bottom line.  If the organizations is paying for guest rooms – consider a better than industry standard comp policy, or guestroom internet, or upgrades.  Even when money doesn’t come down to the bottom line, there is still value in things like upgrades.  Flexible attrition or cancellation schedules?  There’s value there too.  Value is all around us.  Consider what’s going to be a competitive advantage and offer more than the next hotel.  It’s not always about the rate.

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