“At my hotels, that is a last resort,” says Giacomini, “but if the competition starts to cut prices drastically, then we have no recourse but to follow suit. I think we will see spot discounting. It won’t be across the board. Hotel operators will have unique valleys and will try to fill rooms with discounted room rates. It will be a bit of a poker match [among hotel operators].”
“Most of us will have rate integrity,” says Rauch, “but there will be some price-cutting. I am expecting flat rates for the next three years.” In days of yore, hoteliers figured that if occupancy dropped below 65 percent, the facility went into the red. Now that cutoff is between 55 and 60 percent, says Rauch, because owners have found ways to economize.
With lower attendance will come rate-cutting, and that will be followed by cost-cutting, and that will result in jobs being slashed.