Abstract
Room rates in United States hotels and lodgings rose rapidly prior to the present recession. Growth has now slowed and demand for rooms has slackened. However rate cutting is not necessarily the answer to the problem of low occupancy, and some industry leaders are concerned that it may prove detrimental to the long term good of the industry. The real test of any pricing policy is whether it will bring new demand to the industry. Operators should base their pricing policies on sound market research and a thorough understanding of the economics of price changes, rather than on intuitive judgements of what the market will bear.
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