Small hotels feeling the squeeze

Small hotels continue to be squeezed by larger ones due to “aggressive” discounting of room rates in order to attract guests.

And as the industry continues to struggle there is not much that can be done to stop such practice.

Chairperson of the Intimate Hotels of Barbados Renee Coppin told Barbados TODAY larger hotels here continue to lower their prices to a point where they were now competing almost on the same level as smaller properties.

This, said Coppin, was making it even more challenging for the more than 50 small hotel operators within the group who were already operating in a reduced market.

“We had a very challenging 2013. We are seeing consistent decline in numbers and that is impacting on our sector very heavily because people are discounting and they are suddenly in your competitive set where previously they would not have been, and that is what we are seeing happening increasingly,” said Coppin.

“Higher class hotels are now beginning to be so aggressive in their discounting that they are coming into our competitive arena. And if you are going to chose between spending $10 more per night or $20 more per night to stay at a three star or four star hotel as oppose to staying at a budget small hotel then that decision becomes a no-brainer,” added Coppin.

Despite this, however, she said small hotel operators were trying to stay focused on keeping their business viable by giving increased attention to customer service.

“We are trying to stay focused on service and service delivery, on maintaining our relationships with out clients and on building out, where possible, our product,” she added.

“We don’t have money to do a lot of renovations or refurbishments, but most of our members have been trying, where possible, to do work to keep their products as fresh as possible. Because it is our plan to be around when this recession is a thing of the past,” said Coppin.

Sue Springer, executive vice president of the Barbados Hotel and Tourism Association (BHTA), told Barbados TODAY she was aware of the practice, adding that it was nothing new.

She said, however, while the BHTA did not have the authority to tell hotels how to set their room rates, the association has been assisting the industry through aggressive marketing of the island.

“What happens is in a free market people do what they can to try and bring business,” said Springer.

“It is very much a consumers’ market and they are looking for the deal. So you will always have that. But once your island is doing well then the small hotels will automatically do better,” added Springer.

She explained: “The only thing that can be done is to make sure that our marketing efforts are being absolutely maximized whether or not it is using national packaging, whether it is doing niche marketing, using social media, that we will drive business and therefore prevent some of this heavy discounting. That is what can happen. It is a free market. I can’t go to a hotel and tell them they cannot reduce their rate below X.”

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