Responding to discount requests when holiday letting

Written on January 19, 2012 – 4:32 pm | by Olivia Oom

The January peak holiday rental and cottage holiday booking season is under way and many owners are seeing an increase in ‘what is your very best price for’, ‘would you take £X amount for’ and ‘we only have a budget of £x’ enquiries – sound familiar?

I’m sure many owners have their own ideas on how they would like to respond to these enquiries – along the lines of “Dont ask for a discount if you are easily offended!”.

If you are new to holiday letting and don’t have the advantage of historical data on booking trends, it’s difficult to know when and when not to discount. Here are some ideas.

Discount culture

In the current economic climate many people think they can haggle on price and get a discount, especially the Groupon/Moneysavingexpert enthusiasts. Holidaymakers are clearly looking to get their holiday budgets to work harder for them this year, with price being one of the top holiday considerations.

Many holidaymakers send the same enquiry to multiple properties (this is an option on some rental websites) asking for a discount or best price. Don’t automatically offer a discount if it doesn’t suit your objectives to maximise occupancy/income.

Pricing

Competing on price only works if you can do volume. The basic laws of supply and demand apply to holiday rentals – there are only 52 weeks available to let in the year, less if your tourist industry shuts down out of season. Be careful about discounting peak summer weeks early on in the booking season that could potentially let twice over. Remember, historically July is also a peak booking season when holidaymakers are looking for last minute holidays, so don’t be too concerned if your property doesn’t book straight away.

This image from Google trends shows the demand for ‘cheap holidays’ searches peaks in January and July each year. The same trend applies to generic ‘holiday’ searches.

There is also another good reason not to compete on price (discount), research shows that people’s perceived value tends to increase for expensive items. You have to back this up though with your ‘high quality’ accommodation and service, though.

Many owners also have the opinion that ‘discounting’ attracts a different type of guests which require more work.

Rather than compete on price, an alternative is to highlight why you are different/better than your competitors. How will guests get better value? – free baby equipment/beach toys, free Wi-Fi, the best view on your complex, private parking or free health club use for example.

When to discount

Discounting is pointless if you make a loss or minimal return for the effort.

However, discounting can help fill vacancies in certain circumstances, for example; – offering a ‘late deal’ discount 2/3 weeks before the available dates; – to fill a booking gap; – for monthly winter lets; – discount a ‘hard to sell week’ that you know from experience is difficult to let.

If you do get ‘best price’ and ‘discount’ requests for popular weeks, a good reply is to advise that “you are welcome to contact us a few weeks before the dates and a late deal discount may be available, however the dates are unlikely to still be available due to demand”.

It would be interesting to know if agencies also get requests for discounts or is it just private/direct enquiries who ask/expect one?

How do you deal with discount requests?

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