The proposal is out, the general manager is keen, and then the email arrives: we would love to go ahead, but we need you to come down by a third. It is the last week of the quarter. The deal would help the number. Saying no feels like throwing away a customer who already wants the product, and saying yes feels like setting a price you will be living with for years.

The decision is rarely a simple yes or no. Between full price and walking away there are trades, restructured terms and smaller scopes. This decision tree takes you through the six questions that sort a difficult hotel deal into one of them. Answer in order and stop at the first question that gives you an answer.

Before you start

Have three things in front of you: the full cost to onboard and support this property for its first term, the discount the prospect is asking for, and the lowest price you have given a comparable property in the last year. If you do not know the first figure, estimate it from onboarding hours and support tickets for similar accounts. Deciding without it is guessing.

The decision tree

Question 1: Is this property in the segment you serve well?

Look at the property's size, type and ownership against your best customers, not your whole customer list.

• If it sits outside your strongest segment: walk away, or hold full price and let them decide. A discount on a poor-fit account buys you a customer that costs more to keep and leaves sooner. The hidden cost of selling to every hotel segment at once sets out where that cost appears.

• If it is a good fit: go to question 2.

Question 2: Do you know why they want the discount?

Ask directly what the reduced price would change for them.

• If they cannot say, or the answer is that everyone asks: hold the price. The request is a negotiating habit, not a constraint, and conceding teaches them to ask again at renewal.

• If there is a specific reason, such as a budget ceiling, a cheaper competing quote or a cash-flow problem this season: go to question 3.

Question 3: Would the discounted account still pay for itself?

Compare the discounted contract value over the first term with the onboarding and support cost you estimated.

• If it would not cover its own cost: walk away, or offer a smaller scope at a price that does. A customer who loses you money every month is not revenue, however good it looks on the quarter.

• If it still covers its cost with margin: go to question 4.

Question 4: Could you give the same price to every similar property?

Hoteliers talk. General managers move between properties and compare suppliers at association meetings and on group calls.

• If you would not be comfortable offering this price to every comparable hotel: do not offer it as a price. Go to question 5 and turn it into a trade.

• If you would, because the price was too high for this segment anyway: give the discount, and then fix the price list. The deal has told you something about your pricing, and per room, per property or flat is the place to start.

Question 5: Is there something they can give in return?

A discount the prospect pays for is a trade, not a concession.

• If they can offer something of real value: trade. Common exchanges are a two- or three-year term, annual payment upfront, additional properties in the group, a reference call or written case study after ninety days, or a signature by a fixed date. Match the size of the trade to the size of the discount.

• If there is nothing they can give: go to question 6.

Question 6: Can the deal be restructured instead of discounted?

• If a smaller starting scope would fit their budget: restructure. Start with fewer modules or one property at full price, with an agreed point at which the rest is added. The price per unit stays intact.

• If the timing is the issue: defer the start or the first payment to after the season, rather than reducing the price.

• If neither works: walk away politely and leave the door open. Say what the price is, why it is the price, and that you will be glad to talk when the timing or budget changes.

The tree on one page

If you do discount

• Put the discount's end date in the contract, so renewal at full price is a planned step rather than a surprise increase

• Write down what the customer gave in exchange, so the next negotiation starts from the same facts

• Keep one person responsible for approving discounts, against a written rule

• Review discounts given each quarter: the average, the range, and which segments asked

The renewal is where a careless discount costs the most. Restoring the full price a year later is the same conversation as a price increase, and should you raise prices on existing hotel customers covers how to have it.

The takeaway

Walk away from deals outside your segment and from deals that would not pay for themselves. Hold the price when the prospect cannot say what the discount would change. Trade when they can give you term, cash, scale or a reference. Restructure when the budget or the season is the real obstacle. A straight discount is the right answer only when you would offer the same price to every comparable hotel, and in that case it is your price list that needs fixing.

If difficult deals and late discounting are a pattern rather than an exception, the 12-point leak audit takes about twenty minutes and shows whether the leak is in pricing, positioning or the sales process itself.

Frequently Asked Questions