Asian Hotels Look to 2-Tier Pricing for Recovery

The Malaysian Budget and Business Hotel Association recently called for a two-tier system for room rates, with foreigners paying more for accommodation than locals.

The mechanism is expected to help Malaysia’s hotel sector generate higher income while remaining competitive in the region.

As Thailand plans to raise hotel rates to pre-pandemic levels to ensure survival and faster recovery of the hotel industry, there had been reports that the country’s tourism ministry had also asked hotel operators to implement a dual-tariff structure under which foreign visitors may be charged new rates while locals could enjoy discounted rates.

However, the two-tier price system in hospitality isn’t a new phenomenon, and is quite common in many countries.

But while it may be effective in the short run to help the hotel industry bounce back after two years of Covid by making the most of those "revenge travelers," stakeholders have their doubts about it being an effective long-term strategy.

"This could give rise to way too many tiers for each source market making it more difficult for travelers to decide or determine which product or service is right for them. With the choice now between destinations first then the hotels, travelers could lose interest in even considering the destination," said Kamesh Shukla, executive vice president, Asia Pacific, Middle East and Africa for RateGain.