Hotel Pricing and Distribution


It is difficult for a hotel to exercise differential pricing except for certain specific purpose. These may typically be differentials in tariffs and prices during the peak and lean seasons; group rates; contract rates for airline crew; special conference rates or special concessions to attract customers etc. However, by and large, hotel pricing tends to follow or conform to pricing standards applicable to the particular city area or resort, to competitive hotels, to the amount of traffic being generated in the hotel location, tourist location, international or national conference venue, and so on. Nevertheless, hotel pricing also suffers from a degree of lack of flexibility, although to a lesser extent than that of the hotel product.

The depreciated valuation of the hotel property, its financial management efficiencies, credit policies and other factors, specially cost of empty room-nights, fixed overheads, also have a bearing on tariffs and menu prices.


Hotel distribution relies on interdependence with other industries serving travelers and tourists such as the transportation industry (airlines, railways, roadways, shipping lines), travel agents and tour operators, national and state tourism organizations, shopping and entertainment providers. In sum, those services which provide certain other facilities to the traveler or the tourist which are bought when accommodation and food are assured.


This element of the hotel marketing mix is the most important one as it is directly responsible for bringing customers to the hotel. Hotel marketing communications are either direct or indirect. The direct communications are through personal selling, advertising, sales promotion and direct mail. Appropriate messages are conveyed to those who are potential buyers of the hotel product and those who directly influence decisions to buy the hotel product. Personal selling of the hotel product is effective when long-term relationship between the hotel and the customer is sought. It is also required where the level of business per customer is likely to be significant. Indirect marketing communications for hotels include public relations and publicity, both of which may and may not form a part of the hotel’s marketing communication programme but may function independently. The major elements of the hotel communication mix thus are – mass media advertising, direct mail, sales promotion, public relations, and publicity.

The Industry

It is quite accurate to refer to tourism and travel as an “industry”, because it produces, markets and provides ‘products’. 

However, many different business activities are involved in this industry, some of which might at first sight appear to operate independently of others. In reality, different types of activities depend upon and must interrelate with each other for success, and however diverse they might be, they must be coordinated and must operate in harmony in order to provide the full ‘tourism product’.

For example:-

# Transport (both international and local) and accessibility are essential to tourism.

# Accommodation and catering of different kinds and standards are vital.

# Both small and large scale entertainment and sporting facilities need to be provided as the attractions to draw and attract tourists to a destination.

# Leisure and holiday centers, sports resorts, sea cruises, fly-drive holidays, coach and motoring, railroad, and walking holidays are organized and run by many different businesses, some small and some very large.

# There are individuals and businesses engaged in promoting, marketing and selling the tourism products: tour operators, advertising and publicity specialists, printers and, of course, the “retailers”: travel agencies, travel websites or web stores, and similar.

# In addition, many “support” or “ancillary services”, such as guide or courier facilities, travel insurance, foreign exchange, travelers cheques and credit facilities, are required to ensure full “customer satisfaction” with the actual tourist products provided. 

Not every type of business within the tourism and travel industry is necessarily involved in every tourist product, of course; but generally a number of quite different ones are involved. And it is essential that those “mesh” smoothly together, to ensure a trouble-free trip or holiday/vacation for the client - the “consumer”.

In very many instances the client - the tourist - should not even be aware that the holiday/vacation involves numerous distinct business activities; he or she might have purchased the product as a ‘package’. That might include transport, accommodation, catering, entertainment, sporting activities, etc. Nevertheless, separate activities are involved, and it requires considerable skill and experience and good “behind the scenes” organisation to ensure that they are efficiently coordinated.


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