Pay Before You Stay: Hungry Hotels Offer a Discount

Last Updated Mar 22, 2010 3:39 AM EDT

Sometimes businesses will give you a discount if you pay all in cash -- at least that's what an art dealer, a framer and a home design showroom did when I offered cash. All gave me 5 to 10% off. So why not hotels?

While I wish hotels would go back to cash, instead they are now offering discounts for those willing to pay upfront. Station Casinos, with 10 properties around Las Vegas, is offering a 40% discount if rooms are booked two months in advance, 30% for a month and 5% for a week. It's obviously a way to get bodies in hotel rooms and raise their sorry occupancy levels, but will it it work? Will the deep discounts bring in guests and will the big discounts raise or drop their revenue per room? (Granted with such low occupancy levels lately, even $40 is better than zero.)

Well, hotels are hedging their bets by giving huge discounts for booking early and also big penalties for cancellations. Station Casinos hotels, mentioned above, doesn't give any money back if guests cancel.

"No refunds on cancellations, so this is truly a promo for the Vegas guest that knows for sure they are coming to town," Station spokeswoman Lori Nelson says.

Properties run by industry giants such as Choice Hotels, Holiday Inn and Marriott are hopping on the pay-before-you-stay bandwagon to assure bookings in hard times. The Marriott Courtyard Gulfport Beachfront in Mississippi had a $103 prepaid room on a mid-March weekday, vs. $129 for a reservation that could be canceled.

The bottom line is the bottom line. Hotels need revenue and fast, because the number of hotels expected to default on loans will double by 2012 (to 30% if you're wondering.) Without making any money, a hotel's debt service is going to be difficult to pay. By selling rooms at half-price, it's not ideal but will bring in more money than they are without it.

Photo: Tracy O