WKHS Marketing 2

Farron Gilpin saved an extra 10 percent to 15 percent this year on his room at St. John’s Inn, where he and his family have been staying for years on their annual Myrtle Beach summer vacation. The discount, he said, was enough to keep him from checking out other hotels to see if there were better rates.
“I’m sure there’s a lot of people that’s not going to get to take a vacation this year because of their job situation,” said Gilpin, 38, an insurance adjuster who lives in High Point, N.C. “I really like Myrtle Beach reaching out to me and my family.”
As hotels scramble to fill rooms in a lagging economy, many are trying to lure new visitors — and keep old ones — with rate discounts. Country Club Villas and Sandy Shores III, both timeshare resorts, are offering a 20 percent discount this year to the general public, instead of just owners, for the first time.
“I feel like people are going to still take their vacations,” said Joy Korros, the general manager of both the resorts, “but they want the best value for their money.” Although the rate cuts are good news for consumers, some say going too low is not the best business strategy. A joint study by Cornell University and Smith Travel Research, a private firm, found that dropping rates led to more guests, but it also led to decreased revenue per room for hotel operators.
The higher number of guests also did not make up for the lost revenue, according to the study, which analyzed hotel data from 2001 through 2007. That held true for both lower- and higher-end hotels and did not vary much from year to year.
Jeff Higley, a spokesman for Smith Travel Research, said many hotels began discounting after the Sept. 11 terrorist attacks to attract guests as the travel market tanked. Adjusted for inflation, he said it took six years for rates to get back to pre-Sept. 11 levels.
So why are hotels discounting again? “It’s a sign of the times,” Higley said. “I don’t think it’s desperation out there, but it’s as close as you can be in some cases to desperation — of just trying to stay afloat while the market’s tanking, while the economy’s tanking.”
For the first time since 2003, data from Smith Travel Research shows that Myrtle Beach’s average daily rate dropped during January and February compared to the previous year — from about $64 a night in 2008 to $62 this year.
There can be a ripple effect, too, Higley said. As one hotel discounts, others are likely to follow suit.
That’s why Josh Neidig, the general manager of the Grand Atlantic Ocean Resort in Myrtle Beach, is offering up to 30 percent off all year if the rooms are booked early enough. Last year, he said, no discounts were offered during the summer.
“The only reason we ended up discounting was because the other hotels were discounting heavily, and even if people liked us better, it’s hard for them to give up that big of a discount,” Neidig said. “People are still going to be smart with their money.”
There are deals to be had in Myrtle Beach for the savvy consumer. At Hotel Blue, visitors can get rooms for as low as $33 a night in the first few weeks of April. Caribbean Resorts offered discounts up to 50 percent in March, according to their Web sites.
Some hotels are offering other deals, too — such as buy six nights, get the seventh free.
Matt Klugman, the director of marketing for Endless Fun Resorts, which includes St. John’s Inn, part of The Caravelle Resort, said his chain is also offering discounts of up to 30 percent for guests who buy early enough.
Part of the idea, he said, was to encourage visitors to book early. As the economy stumbles, many travelers are waiting to make their reservations in hopes of getting some last-minute deals.
“We’ve really wanted to be careful about how low we go,” said Klugman, adding that the chain has never offered discounts as high as 30 percent before. “We’ve trained people to wait until the last minute and they get the best deal, and we’re trying to avoid going down that road.”
Joining Gilpin and his family on vacation will be his parents and his sister, Stephanie McFarland, and her family.
McFarland, 36, a waitress who lives in Bluefield, Va., said with her family cutting back a little to save money, she was pleased St. John’s Inn offered the rate discount.
“When you do have two kids, and the prices of everything nowadays, every little bit helps,” she said.
1. Will these discounts work?
2. Is the economy that bad as to where people will not travel on vacation?
3. Does it hurt in state residents decision to travel to in state vacation areas?
4. Would it hurt the economy more to offer these discounts?