High price = quality? A “tall tale”

We had left ourselves by answering the first of the three questions to try to dismantle the beliefs of the “enemies” of Revenue management.

Namely: does price influence demand?

The (predictable) answer was “yes”.

However, it is now time to answer the second question: do price and quality always go hand in hand?

This time, the answer is “no”.

And how could one expect any different?

Yet for years – and unfortunately, in part, even today – high prices have always been synonymous with quality.

In reality, this notion has all the makings of a tall tale, but it has made the fortune of many a hoteliers, especially at the high-end of the market.

At least, until the arrival of the Internet.

Today, things have changed.

Quite a lot, even.

But, unfortunately, not for everyone.

While in the recent past it was still necessary to rely on trade magazines, a few handbooks or word of mouth restricted to a (restricted) circle of friends, today the rules have been overturned by the web: a comment on a social network – for instance, Facebook – is read by thousands of people.

And they can make (or break) the fortunes of a given facility.

This is precisely the point.

Today, more than ever, the quality of an accommodation facility is not defined by its prices, nor by the biased opinion of its manager: the level of quality is determined by the customers.

Who in turn influence, with their judgment, not only their friends, but also the much wider circle of virtual acquaintances.

Forget about high prices!

Not only do they not determine quality, but they actually drive customers away.

Because they know that they can find even better deals at lower prices: on the web, offers spring up like mushrooms.

All the more so, seeing that with Revenue Management one can apply truly affordable rates at certain times of the year.

But here we touch another raw nerve, another warhorse (battling windmills, actually) of certain hoteliers for whom low rates mean low-level customers.

At which stage they begin to point an accusing finger at those who presumably devour gargantuan breakfast meals, or against clothing deemed too casual.

Or, again, they create legends according to which these low-season customers bring supermarket-bought water to their rooms.

A sort of creeping racism, a class-conscious attitude that clashes with today’s reality.

In certain hotels some are still struggling to understand that, more often than not, Internet users are individuals with a medium-high cultural level.

They are quite comfortable using their credit card to make reservations (or purchases), but above all they are people who, before choosing a room, carefully assess the market, requesting feedback from the many members of virtual communities, until they find a truly convincing proposal, capable of best combining quality and price.

Continuing to snub this clientele means marching your facility towards an inevitable decline.

So, to recap: price does not make quality.

A short visit to any social network should suffice to realize this: in the rankings of popular hotels, famous or five-star hotels never occupy the top positions.

Food for thought.