Changing the Hotel Pricing Model

I spent three nights recently in the guest house at Hitotsubashi University in Tokyo. Very pleasant — and it was priced at $20/night (obviously heavily subsidized). In addition, however, there was a one-time $16 charge for cleaning at the end of my stay.

This pricing scheme was clever since cleaning of the room, and certainly of linens, is typically done in full only at the end of a several-day stay. Why should someone pay the same per night for a one-day stay as for a three-day stay? They shouldn’t. Pricing like this in hotels more generally would reflect hotels’ costs more accurately and prevent long-stay guests from subsidizing short-stay guests. I would expect that, as concerns increase about pollution resulting from excessive use of detergent (“please place towels on racks if you don’t wish to re-use them”), we will see more of this kind of pricing.


DaveyNC

Mr. Hamermesh, this model is already quite widespread in the US in extended stay hotels/motels. Brands such as Residence Inn, Homewood Suites, and so on. In fact, many of them don't even service the room every day, they just take the trash out. Also, most hotels now place a sign in the room that if you will hang your towels to dry, they will not replace them that day.

Jill

I am not an economist, just a traveller, but I would assume that the cost of paying the cleaning personnel would be the primary cleaning expense. These individuals need to bring home the same salary regardless of the fluctuations in lengths of stay at any given time, no?

kevin

The model does exist depending on the type of hotel. This is not 1980 where there are fewer hotels. Now, in between any major airport and the local "business park" you will find a Marriott, a Courtyard, a Residence Inn, a Fairfield, and a Spring Hill Suites... they all have different pricing models.

But, as far as the fear of subsidizing goes... Should we also charge more for people who use more energy in their rooms? Or who take more from the continental breakfast? Why not put a price on every individual activity: time on the treadmill, in the pool, did you take a newspaper from the lobby? Did you sit in the lobby and watch the game on the big screen? You were in a double room, but you moved the pillows on both beds.

Hotels become the new airlines? Charging for every service separately?

DavyNC is right, for the most part, the extended stay places already operate on that model. And in my experience, the luxury hotels and resorts charge for individual services already - whereas at the middle of the road (Fairfield) type hotel, you get everything in one lump sum. So, the consumer already has a choice of their pricing model.

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Steve

Where's the incentive for the hotels to change their pricing model? If they can charge me the same price for a 1 day stay and a 5 day stay and do less (relative) work on the 5 day stay, why should they change? It seems to me, they're making more per day and I'm none the wiser.

I don't believe this will work unless and until people start demanding it. Perhaps on my next trip, I'll ask for a discount for them not having to wash my towels and linens every day. It'll be interesting to see how far I get. I'm not expecting much.

Doc

In a normal full-service hotel there shouldn't be any meaningful difference in operating cost netween one night and multi-night guests other than the possibility that the guest reuses the towels. The room has to be cleaned every day, the restaurant has to stay open whether the guest eats there or not, as does the bar, the gift shop and every other element of full service. In many hotels the food and beverage department is a perennial money loser despite the high prices. The room rate subsidizes all of those services plus the meeting rooms and pre-function space for most group business.

Sorry, but don't expect to see those rates go down as we enter the recovery.

Justin James

This is obvious... if you keep it a separate charge than when someone comparison shops it isn't part of the price that they are looking at.

This is the unintended consequence of the supposed transparency in pricing that the Internet brings. Vendors just find other ways to create pricing opacity, and fees and charges are the easiest way to do it.

J.Ja

Matthew - Chicago

Just like the airlines, if hotels start to tack on charges for certain "as-needed" services, under the guise of this kind of model, they will also need to lower their room rates to show the customer the difference. If they keep their room rates the same, then they are just milking the customer for more $$ (just like the airlines - same seat, same price, but now you pay to bring your clothes with you).

Erik

Many hotels already do this by offering reduced rates or free nights for multi-night stays. It's just not quite as obvious.

EIleen Wyatt

While @DaveyNC is correct about the existence of a longer-term pricing model defining certain chains, one of the interesting tricks to cheap weekend travel is that extended-stay chains often offer very cheap weekend rates to fill the rooms that have been deserted by consultants who checked out on Thursday or Friday morning to go home (but who will be back on Sunday night).

This leaves me inclined to agree with the posters who say that salaries are the major cost, as if cleaning were the key cost issue, it'd make more sense to leave those rooms empty until Monday rather than cleaning them a second time on Sunday afternoon.

Wyatt Barnett

I always thought the "leave your towels on the rack" had nothing to do with altruisim and everything to do with keeping laundry costs down. Culture changed enough so that guests might also think this is a hotel caring about the environment, not a cost control measure.

Mehmet @oeskici

Hotels are already charging all costs, unless it Is heavily subsidized as in Daniel's case.

Hotels can ask seperate and/or additional charges, when their rack rates are reasonable, other than that it will be double charging.

Giving additional discounts are better approach physcologically in many cases, as guests feel uncomfortable when they are paying seperately.

In my previous experience, We were having higher customer satisfaction, when we are applying all inclusive prices in a 4 -5 star hotel operation.

Generally The guests, feel more comfortable
Additional charges,
The biggest obstacle for hoteliers I

Richard

Pricing is not based on costs, but on what the market will bare, so I wouldn't expect to see fluctuations like this occur for most hotels.

The only place I see this happening is in low cost hotels that would follow the easyJet/Ryannair model where the customer is nickel and dimed over all usage.

164

Hotels that want to use the ariline pricing model already add mandatory "resort fees" that may or may not be apparent at the time of booking. These are junk fees, since you pay them no matter what services you use. Surprzed no one mentioned these yet.

Mark

Jill, you don't have to lower the wage of the cleaning staff, you just have to have fewer of them.

Interestingly enough, a hotel in Vancouver recently had its cleaning staff go on strike (or walk out, I'm not sure), in response to a policy of cleaning at the end of each stay. They insisted that they have to use way more cleaning product if they didn't clean every day. Sounds to me it was more a case of not wanting to lose jobs.

BSK

I stayed in a hotel recently that offered me a $5 voucher or extra "reward" points if I opted not to have the room cleaned on a given day.

Panem et Circanses

Same idea as airport parking services which can do much better with multi-day stays, since a large piece of their expenses is taking you to and then from the airport, each of which is done once on each stay. They haven't priced them accordingly (say, maybe $15 for the first day and $5 for subsequent days, instead of $9 per day), but they could, and if some did the others could be forced, eventually, to follow.

Jon in the chilly weather

Have to applaud the integrity of pricing schemes that acknowledge different uses. Once in Japan, we were refunded a part of a day of rental car use (by Hertz in Hokkaido) for bringing the vehicle back early. Charging for cleaning in a hotel seems fair. You order what you want and you pay for it. Not surprising that buying in that way makes you a stakeholder and the environment will benefit accordingly.

TJ

Price and cost are two very different things. Hotels will continue to charge what they think the market will yield... Why do you think you pay for internet service at fancy hotels, yet at cheap ones its free??

FJP

No. Not. Never. Non. Nein. Nyet. Please don't give the hotel industry any more bright ideas. The last thing we need is the airline business model applied to hotels. The proliferation of prepayment discounts, and the gradual slippage of the cancellation deadline from the afternoon fo arrival to the day before, or the day before that, is bad enough.