Room service, minibars, free parking, and even individually wrapped shampoo and conditioner may soon become a luxury rather than standard offerings at many hotels.
Some hotels have already removed certain benefits. New York’s largest hotel, the 2,000-room New York Hilton, ceased room service in 2013, and other hotels are reducing room service menus. The minibar suffers the same fate: some Marriott hotels are phasing out the minibar in the room and other hotels are considering a similar approach.
For the most part, hotels are making cuts like these to eliminate or reduce parts of the business that aren’t very profitable and that many customers don’t even want. Revenue fell 9.5% from 2007 to 2012 for room service and 28% for minibars, the segment’s largest decline in the overall hotel food and beverage arena. , according to the most recent data available from PFK Hospitality Research; this is compared to a drop of just 0.6% in overall revenue per room. Plus, many guests don’t even like these perks: A survey by TripAdvisor.com found that hotel guests said the minibar was the least important feature to them.
Additionally, guests shouldn’t expect some hotels in the low and mid-price range to just stop at these amenity reductions, experts say. Hotel consultant Melanie Nayer said we may see reductions in front desk staff soon as many hotels explore mobile check-in or kiosk check-in. Plus, “the concierge can be digital – a touchscreen TV with weather, news, attractions, services, and dining and entertainment recommendations,” says Bjorn Hanson, Division Dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University. Hanson also says that more and more hotels will stop offering free parking, even self-service, in the years to come. “Parking is a very lucrative tax and a supplement for hotels,” he says; PFK Hospitality Research data shows hotel parking revenues jumped nearly 19% from 2007 to 2012, one of the fastest growing segments. And Nayer says some very low-cost hotels might also get rid of individually wrapped shampoos and soaps and instead opt for large containers of shampoo, conditioner and body wash.
We can also see hotels getting rid of some technology and entertainment options, although mostly things that guests don’t care about. Jan Freitag, senior vice president of a travel research company STR, says he thinks many hotels will be phasing out on-demand entertainment selections like live movie rentals. “Travelers these days have their laptops and phones and already have all the entertainment they want,” he says. “Customers don’t need all of these… they can be entertained. (Indeed, hotel movie rental revenues fell more than 56% from 2007 to 2012, according to PFK Hospitality Research.) Ryan Meliker, managing director and head of real estate and housing research at the Bank of MLV and Company investment, says he thinks that over the next five years or so, we might see hotels ditching phones for a similar reason: people just aren’t using them. (Telecommunications revenues for hotels decreased by 37.6% between 2007 and 2012.)
Certainly, many hotels, especially high-end hotels, are moving in the opposite direction. “The luxury segment will do what it does today and much more,” says Freitag. For example, the James Hotel in Chicago recently added selections from health food company 2 Degrees to their minibars, and Miami has expanded its in-room dining options this year. And many lower and middle priced hotels are replacing the amenities they get with other perks. So, for example, while they often ditch the minibar and room service, many offer take-out food in small cafes near the lobby or retail spaces with plenty of dining options, says Nayer. And Meliker adds that while they may ditch the phones, they will likely replace them with another communications device like a smart TV or tablet. The reason: Many hotels are increasing their rates (room rates are expected to increase 4.2% in 2014, according to PFK Hospitality Research) and “in general, when you increase rates, you don’t want to reduce amenities,” explains Meliker.
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