It was about 6 p.m. last evening when I heard the doorbell ring. The first thought that came to me: "Someone asking for money." I was right. Turns out it was the "cable guy." In fact, he introduced himself as "Frank, the cable guy." (He did not look at all like Jim Carrey from the movie.) Frank represents a company that competes with the one I currently have. I gave Frank the chance to give me his pitch. Turns out I will be able to save about $44 a month if I switch over to Frank's company. Frank is willing to even throw in an extra movie channel and a $100 credit to get my business. Frank is supposed to return later today. First, I am going to call my current company to tell them about Frank. My question to them: "Are you willing to beat Frank's offer?" I suspect they will lower their rate to keep my business.
I mention this incident from yesterday because it is indicative of the competitive environment our industry finds itself in today. The consumer is king and you have to do what is necessary to get that person's business, even if it means slicing your rate significantly and tossing in a spa visit, or free meal or two. Last year I went to several conferences where speakers advised/warned against dropping rates but we all know it is happening. What else can you do? According to Smith Travel Research, for the week March 1-7, revenue per available room compared to the year earlier dropped by 23 percent in the United States to $52.18.
Is there any good news to report? Yes. According to the February travelhorizons survey, the U.S. Traveler Sentiment Index rose to 90.2 in February 2009 from 78.2 in October 2008 due to an increase in the perceived "affordability of travel." The spike in the perceived affordability of travel appears to be a direct result of many travel suppliers' recent efforts to stimulate short-term demand through the aggressive promotion of discounted fares and rates. Promotional pricing and related incentives are now offered by suppliers representing practically every segment of the travel industry from airlines to cruise lines, hotel companies, attractions and rental car companies, some of which are featuring rates and fares that are up to 50 percent off the prices being quoted just six months ago.
Our industry has gone through this before and rates will recover as they always do. Until that happens, consumers will benefit from some of the best deals in a long time.
What do you think? Should I ask the cable guy to throw in a cruise to the Bahamas?