Hotel Operators Eye Subscription Models
Netflix, Peloton, and Hotel Rooms
The next hot thing in travel might just be subscription services—for hotels. At InterContinental Hotels (IHG) in Singapore and Indonesia, for instance, remote workers can pay a monthly fee between $1,100 and $1,970 for a “work from hotel” package with access to workspaces, hotel rooms, and other facilities.
The offering comes as subscription services for television, exercise, gaming, and even groceries have boomed since the start of the COVID-19 pandemic. As hotels struggle under travel bans, brands from the luxury platform Inspirato, Marriott (MAR), and even Chateau Marmont are looking to memberships and subscriptions as a possible way to alleviate the financial strain.
The Verdict is Still Out
While this creative form of monetizing empty rooms makes sense for the hotel companies, would-be customers are less convinced. Some in the industry say it could be challenging to persuade consumers to sign on to recurring travel payments after they watched the travel industry shut down completely in March. Some people also don’t feel comfortable traveling yet, especially because restrictions are still in place in 156 countries. More broadly, the economic crisis has prompted many people to rein in their travel and leisure spending.
The Inspirato Group faced a challenge in the first three months of the pandemic when many members couldn’t see the value in paying for their subscriptions while under lockdown orders. In exchange for those first three months of payment, Inspirato paused charges for members in July, August, and September.
Time to Try New Things
While the value proposition might be somewhat fuzzy right now, these hotel subscription plans reflect a trend that was already in motion before the pandemic started—and that could mean it will return once the pandemic passes. Take BeRightBack, for instance. The London startup offered travelers three trips per year for $65 per month, redeemable at 60 locations around Europe.
Some analysts see this as a great time for hotels to try out payment plans like BeRightBack’s, billed as subscription services. “Changes in consumer behavior—social distancing leading to reduced travel and increased remote work, for example—create opportunities for new offerings and to establish new habits,” said Peninsula Strategies consultant Robbie Kellman Baxter.
If there is any silver lining to the turbulence caused by the pandemic, it’s that some companies see less friction in the market, giving them room to experiment.
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