Hotel Operator Tests à la Carte Menu of Amenities
MCR Wants to Charge You to Work Out
MCR Hotels, one of the biggest hotel-chain operators in the US, is testing a new way to make money from its guests: an à la carte menu of amenities. This is a new strategy for the hotel industry, but is something airlines have been doing for years. By charging for amenities like early check-in or access to the pool on a busy weekend, MCR can lower the rates it charges at some hotels, boosting its occupancy rates.
Guests may be resistant to paying extra to work out in the gym, but MCR is betting that once they get used to it, this business model will be a success.
Hotel Owners Look for More Revenue
While some of larger hotel operators are skeptical of MCR’s new pricing model, some hotel owners say this strategy will help make up for revenue lost during the pandemic. Hotels have seen an uptick in business since vaccinations rolled out and restrictions eased. However, the Delta variant is threatening that recovery. Hotel revenue per available room is not expected to return to normal until 2024.
The hotel owners and operators are also seeing their costs rise. The price of labor is rising. Additionally, COVID-19 safety precautions are costly to implement. To offset those increased expenses, hotels are trying new ways to generate revenue from guests.
Charging guests for services like gym and pool access is new territory for the hotel industry. But charging extra for some special services is nothing out of the ordinary. For instance, some hotels already charge for WiFi access and others have moved to charging extra for daily housekeeping.
Big hotel operators including Marriott (MAR) and Hilton (HLT) are not sold on the idea, fearing it will hurt them with competitors which offer perks like gym access for free. They also think it would be met with pushback on the part of the consumers. However, the same could be said of the airline industry when it started charging for checked luggage. Fast forward to 2019 and the airline industry’s à la carte revenue was $75.6 billion. It will be interesting to see if hotels will be able to achieve this kind of success through the new strategy.
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