Image by elmada via FlickrIf there's one thing I learned as a revenue manager, it's that discounting doesn't increase demand!
With discounting, you may be able to shift some share, but when demand is down you need to resist the temptation to discount. Your best strategy is to make sure that your are priced right and you are going after the business that is there. Make sure that you have enough base business that you can put pressure on group and transient business to leverage both occupancy and rate.
So why do so many hoteliers not get it. To often, you see hotels immediately start discounting and that just leads to a downward spiral. This article from the AZ Central talks about the change from hotel discounting as being a "special" to making it the "norm" because it happens so much now, even at luxury hotels. Discounting may get people in the door now, but when you try to get the rate back to where it belongs once everything is rosey again. . .
It can take years to fix what you did in months. Don't do it. Just resist the urge to discount!