How Can Hotels Stay Competitive Without Slashing Last-Minute Rates?

“In the dynamic world of hospitality, pricing strategy often dictates success. However, a common pitfall is the reactive approach of relying on last-minute price drops. True revenue optimisation, conversely, demands a forward-thinking, long-lead pricing strategy built on meticulous planning and deep introspection. The fundamental question for hoteliers then becomes: do you want to follow the pack, or lead it?

The behaviour of a hotel’s management and revenue team directly impacts pricing outcomes. A hotelier focused solely on short-term bookings, looking only a few days out, will inevitably find themselves forced into last-minute price reductions due to limited reservations on the books. In stark contrast, a hotelier who meticulously analyses PACE (progress against preceding year or period), Same Point in Time (SPIT) data, and comprehensive competitor analysis across a longer booking window will consistently achieve higher occupancy closer to the day of arrival, often without resorting to panicked discounting.

Implementing a long-lead pricing strategy requires time and consistent management. It also necessitates a shift in human behaviour – both for hotel teams and for customers. Years of “lazy revenue management,” characterized by last-minute price cuts, have inadvertently trained customers to expect the best rates on or just before the day of arrival. This often leads to the dilemma: did a discount genuinely encourage a new booking, or did it merely provide an unnecessary reduction to a guest who was already committed to staying? A more assertive approach, where hoteliers are prepared to stand firm on their pricing, can reveal surprising results.

A crucial step in this transformation involves understanding the customer’s decision-making process. Engaging in conversations with guests to understand their reasons for travel allows for more informed pricing decisions. These insights can lead to strategic initiatives such as:

• Contracting corporate clients for consistent long-term business.
• Targeting long-lead group bookings well in advance.
• Implementing a range of “book now, stay later” offers that incentivise early commitments.
• Offering compelling long-stay discounts to attract extended visits.

Beyond the numbers, a successful long-lead strategy demands a strong value proposition. Hoteliers must ensure their website clearly articulates compelling reasons for customers to book, even if it means paying a slightly higher rate. This is where the synergy between sales, marketing, and revenue management becomes critical. Sales and marketing are just as vital as revenue management in shifting focus from reactive price drops to proactive, long-lead pricing. Their efforts in communicating value and creating attractive early booking incentives are instrumental in retraining customers to book further in advance.
Ultimately, by embracing a long-lead pricing strategy, hotels can move beyond reactive discounting, cultivate stronger customer loyalty, and achieve more profitable outcomes. It’s about leading the market, not just reacting to it.”

“It’s not something we really see that much of, being island resorts. However, I guess it’s about being adaptable while maintaining some level of discipline. We typically fence offers around the demand after looking at the data – flight support, seasonality, geographical source. We utilise dynamic pricing with floor rates to ensure we don’t under-price versus the value we offer.”

“To start with, booking lead times have changed drastically in recent years; they’re shorter now across most markets. In Indonesia, for example, we saw a very specific shift this year: the government significantly cut MICE budgets, leaving many MICE-driven hotels in Bali scrambling to fill rooms. So what did they do? They turned to the FIT market, dropping their MICE group rates into public channels like OTAs to drive volume.

But this had a ripple effect: with already softer Q1 demand and one of the worst rainy seasons in years, even non-MICE hotels started slashing rates to stay “competitive.” The snowball effect diluted value perception across the board. I recently spoke about this in a panel discussion in Bali, and one thing I highlighted was how having a strong product and being clear on your hotel’s USPs is a big advantage during times like these.

Not every hotel should react to last-minute rate drops in the same way. Here are a few things to consider before jumping on the discount bandwagon:

– Who is your customer at that time of year?
In low season, your audience may be more domestic or regional, and more price-sensitive. In high season, you’re likely attracting long-haul travellers with longer stays; who tend to book earlier and are less price reactive. One-size-fits-all pricing doesn’t work anymore.

– What’s your brand promise and positioning?
If you’re a premium or lifestyle brand, frequent last-minute discounts train guests to wait for deals and damage your perceived value. Instead, focus on added value, flexible conditions, or exclusive offers.

– Use data and segmentation properly
I always say this: revenue decisions should be backed by data, market trends, and a clear strategy. Use tools that help you see who’s booking last-minute (repeat guests, OTA bookers, mobile users) and set fences accordingly; like geo-targeted deals, mobile-only rates, or private member offers. You don’t need to discount everything. If your hotel works with groups, try locking in longer-lead bookings under a separate strategy. This builds a solid base and gives you more flexibility to optimise transient rates as the date approaches; without panic pricing. This also applies to geographic markets: while it’s important to maximise your current segments, it’s just as key to explore new ones – ideally through strategies like B2B or travel partnerships.

– Partner with marketing to drive long-term and direct business
Work with marketing to boost visibility, re-target past guests, and build packages that add value. It helps protect your ADR while still stimulating demand.

Ultimately, chasing short-term occupancy can hurt long-term profitability. A healthy pricing strategy should reflect seasonality, lead-time behaviour, and guest expectations – and be reviewed regularly. Last-minute rates can play a role, but they shouldn’t define your positioning.

Being competitive doesn’t mean matching the lowest rate. It means knowing your value, understanding your guests, and using the right tools to stay strategic – without discounting blindly!”