Discount rate

A discount rate is a percentage reduction from the original price of a travel service or product. Hotels, airlines, and other travel service providers use discount rates

• during times of low demand, such as weekdays for business hotels or the off-season for tourist destinations;
• to fill unsold inventory, such as empty airline seats, close to the travel date;
• when launching a new service, entering a new market, or rebranding;
• to reward repeat customers or loyalty program members;
• during limited-time offers or special promotions to create urgency; and
• for specific customer segments, such as families, business travelers, or seniors.

To establish discount rates, companies analyze competitor prices and historical data to determine when and where discounts are most needed. They also calculate the minimum price needed to cover costs to determine acceptable profit margins and how discounts will impact them.