The notion of potentially charging guests extra for a handful of services and amenities was touted by a trio of veteran hoteliers as a viable means of generating additional revenue to help increase profitability going forward.
Speaking at BITAC Owner’s Virtual Connect 2021, the executives discussed the topic at length during a panel discussion entitled, “Return On Investment: How Does Lodging Industry Deliver Following COVID-19?” The owner/operators also cited a number of signs of positive momentum for the industry moving forward following the pandemic.
Fred Hirschovits, Founder & CEO, Twenty/Twenty Worldwide Hospitality, introduced the idea of hotels adding costs for select services.
“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 just like you pay extra when you’re flying if you’re sitting coach or economy and you have two bags. 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, adding that hotels are likely to offer more self-service amenities going forward as well.
Kerry Ranson, President, HP Hotels, amplified 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.
Ranson continued, “The expense creeps that have come in our business over the last 15 to 20 years are astronomical. And now we’re at a point where it’s going to end up ballooning even further with the labor pieces, the cost of product, and the inability for us to get product.”
Hirschovits suggested one company needs to take a leadership position.
“Somebody’s going to have to be the first one, just like the airlines. Somebody had the guts to do it and it’s going be interesting to see if some of the bigger brands will,” he said.
Ranson further acknowledged the brands would need to take the lead. “They’re the ones that are driving the standards that are put out there and with it they’ve got to work with the franchisees,” he said.
Roger Bloss, President, Alternative Hospitality, further discussed the role of the brands going forward as it relates to amenity creep. “I think the brands are going to have to find ways to cut our overhead costs if they expect to be our brands in the future,” he said.
Bloss continued, “costs have over the years creeped up on us. I think you’re going to see a lot of brand changes and I think you’re going to see some properties changing brands and maybe going independent because again these costs just keep creeping and creeping. At some point we’ve got to draw the line.”
The good news, according to Bloss, is performance has recently turned for the industry, particularly in his hometown of Las Vegas.
“We are already back to pre-pandemic occupancies on Thursday through Sunday,” he said, noting that midweek group business is still lagging a bit.
However, Bloss did note he sees signs of progress with group business, particularly with smaller impromptu meetings. “What I do like that I am seeing is companies do pop-up events and things because they don’t have really the lead time that they had. On the flip side because the hoteliers don’t have a lot of [advanced] bookings we’re able to do some pretty quick bookings and do pop-up events,” he said.
Ranson also noted he’s seen progress on the group side of things pointing out that “RFPs are coming in at a rapid pace in the third and fourth quarter” for the company. Meanwhile, he noted leisure business has been driving plenty of momentum.
“The numbers don’t lie. I think we will be well above pace probably through Labor Day and then at that point I think it’s probably a re-evaluation of what happens from the standpoint of that Monday through Thursday corporate business. But we have been speaking with a lot of meeting planners and that’s probably been the surprising piece that I’m running across is how much activity they’re having as far as wanting to put together meetings,” he said.
Hirschovits also stressed there is plenty of reason for optimism going forward noting that some 77 percent of Americans are planning travel for the summer as opposed to 29 percent last year. He also noted two-thirds have already planned or booked summer trips.
“I think the pent-up demand is real, especially in leisure. A lot of people are especially going to visit beach properties and resorts because consumers, employees, and families are all sitting on banks on vacation time. I really believe that,” he said.