Archive for July, 2009

How to (not) make money with hotels

Saturday, July 18th, 2009

A two week travel in California, and staying at more hotels than I care to enumerate, I remained impressed with the innovative methods through which the hotels choose not to make money.

The phone

In all its antiquated, yellowed glory, with the label that calls are charged at the AT&T operator assisted rates + 50%. Operator assisted rates: I did not know that this still existed in 2009. I wonder how much revenue all these phones deployed in hotels across US are bringing in to AT&T and the hotels  (let’s say: maybe they catch an innocent person once a while, but only once in a lifetime).

And the hotels benefit by providing the perception that they are voracious profiteers going after the gullible.

The minibar

Filled in with all those goodies, in ridiculously small packages which have to be done on special order. Some of them even have their own branded peanuts, for $6 a pack. Everything about 10 times retail prices. I wonder how much revenue all these minibars deployed in hotels across US are bringing to the hotels (let’s say: maybe they catch an innocent person once a while, but only once in a lifetime).

And the hotels benefit by providing the perception that they are voracious profiteers going after the gullible.

WiFi

There was one hotel where the wireless internet was charged at $15 / day with no possibility of longer term subscription. This is a lot more expensive than the one charged for in-flight WiFi. For a family with one child, that would have been $45 / day for our respective laptops. $540 for a 12 day vacation. For internet. How many people take this? Ok, some desperate people, very occasionally. I wonder how much profit… you know the rest.

And the hotels benefit by providing the perception … you know the rest.

Ok, here is a counter-example. We have been at a hotel in Lisbon, Portugal (As Janelas Verdes). Four stars, I think, relatively expensive for Lisbon standards. But then we asked for some milk, and they brought us a full one quart pitcher, and they charged 2 euro. Which is kinda the price they paid in the store for it.

Now: they could have brought us a minibar size 1/2 cup can, and charged 8 euro. Which wouldn’t have added to their revenue at all, as we would have not taken it.

But maybe some hotels operators think that they owe it to themselves to push these high margin services, which don’t bring money.