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Big hotel rate cuts still on to woo visitors

Published:Friday | February 19, 2010 | 12:00 AM

Three months
into the winter tourist season, hotel operators say they have been cutting rates by as much as 65 per cent to attract tourists and keep occupancy levels up. While occupancy and revenue figures were not readily available to assess the success of the discounting strategy, such measures are now par for the course in a still-depressed marketplace.

"I don't see the discount strategies changing, because it is very much market driven," Wayne Cummings, the president of the Jamaica Hotel and Tourist Association (JHTA), told the
Financial Gleaner
in an earlier interview.

"We are going to have a very lean year, no matter what the arrivals are, but it is a year we are going to be grateful for," Cummings summed up the mood of the local industry.

The industry spokesman said rate cutting averaged 30 per cent off normal prices.

Officials of the Sandals group said the chain had been offering discounts from 55 per cent to as high as 65 per cent at its resorts.

Rachel McLarty, group director of corporate communications at Sandals Resorts International, said the group has been applying the rate-slash strategy since the recession, which took hold going two years now.

"It has been that way throughout the recession," she said.

"It has not changed within the last six to eight months. It is just part of the strategy right now."

The level of discounting varied among the chain's resorts. For example, the lowest discount starts at 55 per cent for Sandals Grande St Lucia, with room costs starting from US$222 per night.

Here in Jamaica, discounts go up to 65 per cent at Sandals Grande Ocho Rios, where a room fetches as little as US$150 per night. Meanwhile, Sandals Negril was offering a 60 per cent special rate, with room costs starting from US$205 per night.

Successful strategy

McLarty told the
Financial Gleaner
that the strategy has been successful so far but did not give occupancy or sales figures.

"The hotels are at high occupancy this winter tourism season," she added. "The strategy is working. You can't get anything better than that."

Meanwhile, in Kingston, one of the newest entrants to the hospitality market, Spanish Court Hotel, admits to having had to join the low-rate trend. The hotel opened its doors last year in the height of the recession and its principals said it entered the market at the conservative pricing end.

According to Christopher Issa, owner of the 112-room hotel, he had no choice but to enter the market with lower rates.

Room rates were an average of US$145 per night. A check of earlier rates posted on the hotel's website showed that the prices have moved down from US$170 per night for deluxe rooms and between US$255 and US$200 per night for junior suites.

"We started last year in the height of the recession, so we started out at attractive prices," Issa maintained.

He said rates were heavily influenced by what was happening in hotels globally.

"Those prices abroad also pushed our rates down. We are, in part, a victim of that."

Issa, however, noted that his hotel, which is located on St Lucia Avenue, just across the road from the Trafalgar Road-based British High Commission compound, was doing well with an average occupancy level of 80 per cent.

But not all properties have had to hitch their fortunes to the low-price bandwagon.

Demitris Kosvogiannis, general manager of the new Fiesta hotel in Lucea, Hanover, said that while that Spanish-owned resort has been adjusting its price, it was not really applying a discounting strategy.

"Yes, price points have to be adjusted. We feel that our prices are competitive (with) good services, so if I'm providing the type of experience that warrants US$500 a night, I am going to charge it," he said.

Kosvogiannis, who has been in the job for the last six months, said the 1,056-room hotels, the Grand Palladium Jamaica Resort and Spa and the Grand Palladium Lady Hamilton Resort and Spa, had "maintained a mean average of our price" since opening in 2008.

"The industry has low seasons, softer seasons and we obviously have our main seasons. There are different price ranges," he added.

"We are not looking and depending on volume, strategies, special offerings and early bookings ... . We don't feel that the solution is discount, we feel that the solution is to upgrade your product," he said.