Does lowering prices really increase bookings?

Bookings slow down and the first temptation is to cut prices. It's instinctive: if it's cheaper, more people will book. Sometimes it really works. But often the cut brings fewer extra bookings than you hoped, at a price that earns you less.

Let's look at when lowering hotel prices really helps, when it doesn't and how many more rooms you need to sell not to lose out.

The maths few people do

If you lower the price, you need to sell more rooms to take in the same amount. But how many?

With a 20% discount you must sell 25% more rooms just to match revenue. And each extra room has variable costs (cleaning, breakfast, linen, commission), so to earn the same you need to sell even more.

If the discount goes through an OTA with commission, the effect is amplified. See Genius discounts and Booking.com promotions: how much does the hotel keep?.

When lowering prices works

• the price really was out of line with comparable competitors;
• demand is price-sensitive (low season, last minute, guests who compare a lot);
• the cut is targeted: on specific dates, specific room types, with conditions;
• visibility is good: people see you but choose others on price.

When lowering prices doesn't help (or makes it worse)

• the problem is visibility: if nobody sees you, nobody sees a lower price either;
• the problem is website conversion: slow, confusing, untrustworthy;
• the problem is reviews or the product;
• demand in the period is low for everyone: cutting shifts little and reduces value;
• guests learn to wait for your discounts.

Before cutting, diagnose. See how to tell a marketing problem from a pricing problem.

The hidden risks of price cuts

• perceived value: if you cost 80 today, 100 tomorrow looks expensive;
• different guests: discounts attract price-only guests, with more complaints and less extra spend;
• guests already booked: those who paid more feel penalised;
• price wars: competitors respond and nobody wins.

Alternatives to a general cut

• discounts with conditions: non-refundable, book early, minimum stay;
• added value: breakfast, parking, dinner, late check-out;
• packages that can't be compared directly;
• reserved promotions: newsletter, past guests, companies;
• more visibility: OTA profile, Google, targeted campaigns.

See how to promote a hotel offer without attracting only bargain hunters.

If you decide to cut, do it properly

1. on specific dates, not the whole season;
2. with a floor you won't go below (your cost per room plus a margin);
3. measuring before and after: bookings, revenue, net revenue;
4. for a defined period, then reassess.

Frequently asked questions

How much do I need to cut to see an effect?

It depends on market and period. Small, targeted adjustments often work better than big blanket discounts. Measure the response before going lower.

Is a discount or an included service better?

Often the included service: it costs less than its perceived value and doesn't lower your public price.

If competitors cut prices, should I follow?

Not automatically. Consider whether your guests are the same and whether your value is different. Sometimes following price cuts is the fastest way to lose margin.

Want to know whether price is really the problem?

With our free marketing audit we analyse your hotel's pricing, visibility and conversion against competitors and tell you whether to touch prices or work on something else.