The research showed that just 2.6 percent of customers chose hotels based on "free room" type offers. A more traditional focus on "previous favorable experiences" (11.6 percent) as well as the impact of regular room rate (15.1 percent) and location (27.7 percent) were highlighted amongst the most influencing factors.

"Although such offers can be lucrative, they most likely will not impact hotels' occupancy and profitability in the long run, or even in the short run," said Rohit Verma, an associate professor of operations management at the University of Utah's David Eccles School of Business.

"Free rooms will only make a very small impact," Verma explained. "In the long term, it will be customer service that brings improvement (in occupancy)."

The findings were welcomed by Matthew Maxwell, CEO of Amateo, developers of the world's first Guest Relationship Optimization system specifically for the hospitality sector, who said that the findings came as no surprise:

"Price based competition, particularly in the case of extreme discounting or the offer of free rooms, will not generate a competitive advantage for a hotel operator. The more critical aspects of customer satisfaction and acknowledging guest preferences are what lie at the core of a sustainable strategy for hotels."

"We have seen our customers use the Amateo system as an alternative to engaging in price competition: they have the ability to build guest profiles in order to deliver targeted offerings to specific guest segments. In difficult trading conditions, this will always prove to be a more profitable approach to identifying, acquiring and retaining guests."

Amateo are leaders in Marketing Automation and Business Intelligence solutions for the hospitality sector. Amateo's Guest Relationship Optimization product suite standardizes historical guest data stored in multiple hotel property management systems and facilitates revenue generating applications including Amateo 360 (Marketing Campaign Automation), Amateo Portal (Reporting and Analytics) and Amateo Affinity (Loyalty/ Executive Club Schemes).

Published on Lodgingnews.com, 6 June 2002.

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