There is a belief among some people that hotels and motels will reduce rates at the last minute to near break-even point just to avoid having a vacant room. I have been asked many times if I couldn't rent a room at a low-ball rate since: "it is late and the room will go vacant otherwise". A recent blog post I found regarding finding the cheapest rate at a hotel shared this view: "So it better for them to (have) the room occupied even at a much reduced rate than to have it go empty."

Nothing could be further from the truth in reality and here's why.

Firstly, there is the issue of wear and tear on the room. Constant turnover requires towels, sheets, carpets, bedspreads, even the walls to experience tremendous wear and tear. TV's, A/C units, plumbing fixtures all wear out with use. Beds need to be replaced more often; furniture gets nicked up and needs replacement or re-finishing sooner. If you are renting rooms at a reasonable profit, you assume all this going in of course and then it is a wonderful 'problem' to have. But if you rented rooms at low, low prices where profit was a wish or a dream only, you would find yourself in the position of properties that aren't kept up. The condition of the property causes people to not come back, their reviews say to stay away and soon you CAN'T charge a decent rate because no one will pay more just to receive less. So you begin to slowly circle the drain.

There is something called building in value in a guest's mind. The perceived 'worth' or value of the property is lowered as rates drop and over time, guests won't value your property enough to pay the amount you need to stay in business. One result (other than avoiding you altogether) is they might wait to book a reservation to see if the rate drops. Or they show up at the last minute asking for a huge discount. Somewhat similar to what happened to the Department Store industry - once they stopped having sales only three times a year and started having them twice a month, no one bothered to shop until sales were announced. Hotels are not about to try that model out. A hotel that recognizes its worth will allow a guest who wants a room at too low a price to just walk away and leave the room vacant.

At some point, it is simply better to let the room 'breathe' for a night or two than constantly be rented out and require new TV's or beds that much sooner. And when the cost of cleaning the room, washing and drying linens and adding in the wear and tear factor nearly matches the rate some people offer, it simply isn't worth it economically, not even for the cheap motels.