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MCR Hotels, the fourth-largest U.S. hotel chain with about 20,000 rooms, according to Hotel Business magazine, is testing a la carte pricing for services at a dozen of its inns.
For example, guests are charged $20 for an early check-in or late checkout; guests also pay a fee to use the hotels’ fitness centers or swimming pools.
No more complimentary breakfasts, either.
Charging customers who use services but not those who do not allows the hotels to charge lower room rates, CEO Tyler Morse told The Wall Street Journal.
“Not every guest wants every product and they don’t want to pay for something they were never going to use anyway,” he said.
The novel business model also cuts fees a hotel would pay to travel agents and online booking services such as Trivago, he added: hotels pay agents a percentage of the room charges but would not have to give them a share of the new service fees.
Other hotels also are beginning to charge fees item by item. Guests at the Host hotel chain now will have to opt in to some housekeeping services instead of receiving them automatically. (See “2020 SHUTDOWN PERMANENTLY ERASED JOBS,” Trends Journal, 20 July 2021.)
Many now charge a fee for full daily housekeeping service, the WSJ noted.
“The consumer is willing to pay for it and, for years, we’ve been giving it away,” Kerry Ranson, CEO of the 30-inn HP hotel chain, said to the WSJ.
The new business model faces obstacles, the WSJ noted: the lodging industry is slow to change, it reported, and guests may object to being nibbled by a gaggle of small charges.
Many hotels hesitate to charge for a service that a nearby competitor provides for free, the WSJ added.
Guests will resist a la carte pricing, according to Marriott CEO Tony Capuano, as will the company’s franchisees, he said in a WSJ interview.
When airlines began charging a la carte fees for such extras as meals, baggage checks, and in-flight movies in 2015, passengers rebelled and Congress held hearings to determine if the charges should be banned, Morse pointed out, but, since then, travelers have come to accept the charges.
In 2019, the global airline industry collected $75.6 billion for such fees, according to a study by the consulting firm IdeaWorksCompany.
TREND FORECAST: The stripping of services out of the cost of a hotel room and nickel-and-diming guests for services comes with risk. If not enough guests pay the fees to support gyms, fitness centers, pools and other services, hotels will be more likely to drop those features and lower the quality of guests’ experiences.
Indeed, a la carte pricing for airlines worked because all airlines eventually adopted the “pay for what you need” model. And as they offered less, and had people pay more, the level of service and fun of flying has markedly deteriorated. So too will this impact much of the hotel sector.
However, unlike airlines where much of first-class has diminished below what used to be “coach class,” a few decades ago… top-line hotels will continue to attract high end customers by offering “all-inclusive” pricing, which most guests are used to and will continue to prefer.