No Guts, No Glory
MCR To Roll Out New Pricing Model At Handful of Properties For Additional Revenue
Being in the position of moderating panels on a regular basis I’m fortunate to get many different perspectives on the industry from high-level hotel executives. Sure, if it’s a sticky subject most of them are skilled at speaking in cliches and talking a whole lot without really saying anything at all, but just ass often they have plenty of valuable insights as well.
Such insights were shared a few months ago during one of our virtual BITAC events when several veteran hoteliers were bemoaning the fact that hotels seemed unable to drive rate and yet continue to give away the store, so to speak, when it comes to amenities and extras that guests have now come to expect.
Fred Hirschovits, Founder & CEO, Twenty/Twenty Worldwide Hospitality, began by asking the question.
“Is it time for us to find some other revenue sources like charging 10 bucks for early check-in or late check-out? Is it time for us as an industry to start charging if you want to have your room cleaned every day? The airlines get away with it as an industry. There might be some opportunities to offset that higher labor that we have to pay for in the future,” he said.
Kerry Ranson, President, HP Hotels, further drove home the point.
“I think we need to re-educate the consumer and now is the time to do that. It’s amazing to me that you can go and pay for an Airbnb or a VRBO and with it you not only pay your nightly rate but you also pay the cleaning fee. So people are okay doing that but they’re not okay doing it at hotels because it’s what we’ve done over the years; we just give everything away for free,” he said.
Well either Tyler Morse, CEO of MCR Hotels, was listening in or he had the same thought (more likely the latter). MCR Hotels—one of the largest owner/operators in the industry with approximately 110 properties in its portfolio—has decided to implement an a-la-carte type of pricing approach for a number of guest services at about a dozen of its properties, including the well-known TWA Hotel at JFK Airport in New York.
Morse acknowledged the new practice in an interview with The Wall Street Journal, where he noted some of the examples of this will include guests paying a fee to check-in early or late, as well for use of the fitness facility and the swimming pool on the weekend, for example. Other such amenities that could come at a cost to guests include breakfast, housekeeping and WiFi, according to The Wall Street Journal report.
Of course, we’ve seen this kind of pricing approach at the luxury level many times in the form of resort fees or other thinly veiled charges. However, for a mainstream management company to introduce such an approach could represent a big step, particularly in a copy cat industry. You have to figure if the model is successful at these 12 properties the company will extend it to others within its sizable portfolio.
But just how do you define success? That’s the million-dollar question. Is it by generating additional revenue and profitability? What if you generate more revenue but see guest satisfaction scores drop as they feel they’re getting nickeled and dimed, for example?
During the aforementioned panel, Hirschovits later suggested “somebody has to have the guts to do it.”
As the saying goes, no guts no glory? As such, you can bet many in the industry will be watching closely to see if there is glory for MCR, or more importantly, a healthier bottom line.
