45 Edition 2020 FINAL

45th | Vol 30 | 2020 | www.hotelier-indonesia.com 15
Markets that source a large portion
of their guests from mainland
China, and other affected
regions like Korea, are being
most affected by the current
travel restrictions. However, as
no one can accurately predict
the extent to which the virus will
spread, hoteliers across the wider
APAC region are understandably
concerned.
So, what should
hoteliers consider
when seeking to
address the business
challenges posed
by the emergence of
COVID-19?
Firstly, hoteliers must avoid making
‘gut-instinct’ or emotional
decisions in the face of current
market uncertainty. Rather they
should focus on rational, analytical
and data-based strategic approaches
to pricing.
For example, when faced with a
high volume of cancellations or
low demand from countries affected
by COVID-19 hotels might
be tempted to offer short-term
discounts and to start relying
on more expensive distribution
channels to try and attract bookings
from other markets. While
this might seem like a good strategy
for the short term, it is a very
long road to recovery from these
decisions.
HOT SOLUTIONS
A key lesson learnt from previous
instances of market uncertainty—such
as the global financial
crisis—is that although price cuts
may deliver a brief spike in volume
in the short run for a hotel,
they can also result in long-term
pain for any hotel that pursues
this strategy.
Hotels that instigate aggressive
downward price action in the
face of market uncertainty tend
to face challenges when demand
picks up. These properties experience
resistance to any price
increases from customers who
have a lower reference point value
for a hotel’s rooms and services.