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Monday, March 26, 2007
Lesson on how to set prices
Foreigners or Romanians living abroad always say Romanian hotels belonging to international chains have high prices. Higher than in other capitals around Europe. I always wondered why this policy was accepted. Wouldn't foreigners be reluctant to pay more for the same services? Well, first I thought most customers of 4-5 stars hotels are business tourists. So they couldn't care less about prices. Another fact just caught my attention today. This pricing policy is really working:
Out of the 32 hotels operated by the Marriott group within continental Europe, the JW Marriott hotel in Bucharest is among the top five contributors to the group's turnover, says Kurt Strohmayer, general manager of the hotel.
"Contrary to the general opinion, the most profitable hotels are not those in Western Europe. The hotels that contribute the most to the group's business, with the exception of the American market, are those in Russia, followed by those in Eastern Europe", Strohmayer says.
Last year, the five-star hotel posted 38.5 million-euro turnover and 16-million euro profit. On the local market, JW Marriott leads the ranking of most profitable hotels, according to financial information provided by Societatea Companiilor Hoteliere Grand, the company managing the hotel.
Everyone says that the romanian hotel market is underdimentioned and it needs to at least double in size. Given this fact, high prices are normal. It's just a rule of the offer-demand-based market economy. The offer is limited, the demand is sky high, the prices are sky high, because the customers have no other choice anyway and the hotels are almost always full.
On the other hand, because of these prices, I still don't know what would I do if I were to spend a normal (i.e. not "luxury") night in Bucharest. If I go to have fun, I'm OK sleeping in the North Train Station, but if I were to go there for something needing more brain, like the two day Manipulation course that "Extreme Training" is holding, I don't know what would I do. I found some hostels on the net, but the opinions are really not that relyable and/or consistent. Obviously, there's no one in Bucharest willing to take me in.
Well, this is not only about demand and offer, Radu, as there are other hotel chains present in Romania, but they do not speak of such great results. I guess the high prices need some compensating.
As for Bucharest, I couldn't help you there. First because I have a full house. Second because I know nothing of places to stay at here. Sorry :(
Name: Alina Home: Bucharest, Bucharest, Romania About Me: "This is my church. This is where I heal my hurts". It's also where I feel free and my preferred means of expression. See my complete profile
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Everyone says that the romanian hotel market is underdimentioned and it needs to at least double in size. Given this fact, high prices are normal. It's just a rule of the offer-demand-based market economy. The offer is limited, the demand is sky high, the prices are sky high, because the customers have no other choice anyway and the hotels are almost always full.
On the other hand, because of these prices, I still don't know what would I do if I were to spend a normal (i.e. not "luxury") night in Bucharest. If I go to have fun, I'm OK sleeping in the North Train Station, but if I were to go there for something needing more brain, like the two day Manipulation course that "Extreme Training" is holding, I don't know what would I do. I found some hostels on the net, but the opinions are really not that relyable and/or consistent. Obviously, there's no one in Bucharest willing to take me in.