Hotels try out pool use and early check-in fees
The TWA hotel at John F. Kennedy International Airport is testing the pricing model. (Photo: AFP)
One of America’s largest hotel owners is experimenting with a new business strategy this year: charging customers for most services and amenities, like in the airline industry.
At about a dozen hotels independent of his company, Tyler Morse said, any guest can get early check-in, but it costs around $ 20. Similar charges apply for late check-out. Pool use may be free on a Tuesday morning, but costs guests $ 25 on a scorching Saturday afternoon. Use of the gym and breakfast also come at an additional cost.
In return, these properties are reducing their nightly rates to varying degrees, Mr. Morse said.
Its hotels that test the pricing model include the TWA Hotel at John F. Kennedy International Airport and the High Line Hotel in Manhattan.
Mr Morse, chief executive of MCR Hotels, said a difficult transition period could occur before most hotel guests adjust to the idea of paying only for services and perks. they wish.
But he said the pay-per-view approach is likely to be successful over time.
“Not all customers want all products, and they don’t want to pay for something they were never going to use anyway. Other owners are all behind me, but there is always a fear of change. . “
Last year, Hotel Business magazine ranked MCR the fourth largest hotel owner in the country in terms of number of rooms. The New York-based company currently has nearly 20,000 rooms, according to Morse.
It’s impossible to know how many guests have foregone MCR properties due to an aversion to service charges, but Mr Morse said staff at his hotel report few guest complaints related to pay-per-view prices.
Yet there are many obstacles to the overall success of the pricing model. Most of the big hotel chains say they view it with skepticism.
The hospitality industry is inherently slow to embrace significant change, and many properties lack the technology to implement a la carte pricing system.
Airbnb Inc. and other short-term rental companies offer alternative accommodation in almost every market for travelers who think hotels charge too much.
But some hotel owners and operators say they have no choice but to make it happen.
The pandemic decimated the industry in 2020. Just as business was picking up this year, chronic labor shortages and the Covid-19 Delta variant hit travel once again.
U.S. hotel revenue per available room, a popular industry metric, is not expected to return to 2019 levels until 2024, according to hotel data tracker STR.
At the same time, hotel owners have increased their spending on sanitizing their properties to prevent the spread of disease.
Hotels need to recoup these additional costs and losses, said Kerry Ranson, managing director of HP Hotels, which operates around 30 hotels.
“And the only way to do that is to charge for convenience items,” he added.
The hospitality industry has tried a piecemeal pricing approach in the past, and some accommodation companies continue to do so.
Many carriers initially charged for Wi-Fi connections, and a number are still adding charges for the higher-speed service. Much of the industry is also moving towards a new standard of housekeeping where service is offered daily only on demand. Some hotel owners are experimenting with charging an extra charge, industry executives have said.
“It shows the consumer is willing to pay for it,” Mr. Ranson said, “and for years we’ve offered it.”
Mr Ranson said he has yet to implement any of these practices because the hotels his company manages are affiliated with big brands.
Major accommodation brands such as Marriott International Inc. and Hilton Worldwide Holdings Inc. manage or franchise more than half of the 5.6 million hotel rooms in the United States, and owners say they would need to brand authorization to implement this type of change in the pricing model.
Brands are reluctant to disadvantage their peers by charging for a popular service provided for free by a competitor, hoteliers say.
Marriott general manager Tony Capuano has said guests will “push back” an a la carte pricing model, and he’s skeptical that most owners affiliated with his hotels would support him.
“We will continue to be influenced by what we hear from guests and partners,” he said in an interview. “But it would be foolish to have an instinctive reaction to what may be a vocal minority.”
When airlines started charging fees for checked baggage, passengers were furious. Members of Congress held hearings on whether to limit or ban the practice. But eventually, customers ended up accepting it, Mr. Morse said.
In 2019, airlines around the world raised $ 75.6 billion in pay-per-view revenue, more than double what they received in 2015, according to a study by consulting firm IdeaWorksCompany and CarTrawler, a company who works with car rental and travel agencies.
A la carte revenues included fees for checked baggage, assigned seats, on-board meals and entertainment.
A shift to service fees with lower room rates would also save hotels money on bookings made through online travel agents, such as Expedia Group Inc.
These companies typically receive a percentage of the room rate booked on their websites, but would not collect the fees charged by the hotel owner on property amenities.
This additional income looks good for Greg Friedman, managing director of Peachtree Hotel Group, owner and operator of approximately 65 hotels in the United States. But he won’t be one of the first to embrace the new pricing model.
“The whole industry, if brands buy into it, everyone would take it,” he said. “But the challenge is who would jump off the cliff first?” “