Question

Discuss some of the price-segmentation strategies that can be used by hospitality and tourism firms.

Answer 1

Some of price segmentation strategies are -

Seasonal Pricing -Using a mix of pricing throughout the year to cover low, high, and shoulder seasons is a standard way for tourism businesses to cater for differing levels of demand due to the time of year. Typically these will be the same date periods each year but may also apply for school holiday dates and for local events where the dates vary each year.

Last Minute Pricing -A common method for accommodation suppliers to fill those last minute gaps in inventory availability, last minute pricing is basically discounting daily prices according to forward bookings and promoted on last minute booking websites.

Package Deals - Developing packages with complimentary tourism partners in your area or with value added components is a good way to stimulate demand without having to discount. Strike up deals with local businesses to provide a full package and share business with each other . Packaging can also be used to target niche markets effectively e.g golf weekend, food and wine tours, pampering packages etc.

Discounting - While discounting has it’s place, and often unavoidable in a competitive market such as tourism, be very wary about continually discounting your prices to stimulate demand – it can become a rocky road to reducing profitability or even missing that vital break-even point.