Although U.S. hotels widely discounted their room rates in 2001 and 2002 when business was slow, Cornell research shows that hotels that resisted the temptation to discount were more likely to come out ahead.
That's because these hotels are more skilled at knowing when to raise or lower occupancy rates to fit shifts in demand. In general, the researchers at Cornell's School of Hotel Administration found that hotels that charge rates above their competitors are better at pricing rooms in response to demand in good times and bad.
However, the degree of skill at balancing price and demand does vary depending on whether the hotel is in the economy, mid-market or luxury segments, say Linda Canina and Cathy Enz, professors in the school's Center for Hospitality Research. Their report, "Revenue Management in U.S. Hotels: 2001-2005," is available at http://www.hotelschool.cornell.edu/chr
