Hotels without minibars, free parking or desk clerks - Interview with PFK president Mark Woodworth

Recovering lodging industry looks at removing perks customers no longer want

North American hotels are expecting to increase revenue per room by 6.6 per cent in 2014 amid increased travel and an improving economy, according to Atlanta-based consultant PKF Hospitality Research. But while room revenue is up, hotels are concerned about the declining profitability of food and beverage and other services customers have come to take for granted. That’s why some hotel stays in future will come without room service, minibars, free parking or even desk clerks, according to PFK president Mark Woodworth.

"We think that a lot of hotel managers eliminated or reduced some types of services or amenities because customers simply don’t want them," he said in an interview with CBC's The Lang & O'Leary Exchange.

Revenues for room service dropped 9.5 per cent in the five years from 2007 to 2012 and 28 per cent for minibars, PFK said in its yearend report.

Hilton with no room service
That’s one reason why New York City’s largest hotel, the 2,000-room New York Hilton, stopped offering room service in 2013. Other hotels are looking at more streamlined menus.

"Fundamentally whether I deliver something to one room or, in the case of the New York Hilton, 2000 rooms, there’s a certain cost to just make that service available," Woodworth said.

"Typically, I need to have a room service kitchen that’s dedicated to that function, I need to have service staff and I need to have product on the shelves, in the coolers."

Minibars are falling out of favour as business travellers cut discretionary spending and some Marriott hotels are phasing out the in-room minibar.

For discount operators, even more travel perks are under scrutiny. For example, parking and in-room soaps and shampoos may no longer be free.

With guests carrying their own laptops with built-in entertainment, some hotels may get rid of some entertainment options such as pay-per-view movies.

Internet and phones
Woodworth said hotels are having a hard time justifying what customers are asked to pay for internet service and entertainment.

"What we’ve observed in the hotel business, there seems to be a relationship between what you pay for your room and what you pay for access to the internet. It’s the opposite of what you think. The lower price the hotel you’re staying in, the more likely it’s going to be a free service," he said.

Even the bedside phone may be removed as so many guests have cellphones.

"What we know is the vast majority of people that travel have their own phone with them, so that’s what they use to communicate, so don’t use the instrument next to the bed," Woodworth said.

These amenities used to be profit centres for the hotel industry, but now many travellers no longer use them, Woodward said.

Chains are also experimenting with  replacing  the front desk clerk with an electronic kiosk or cellphone check-in procedure.

The lodging industry has been in recovery since 2010, with 2013 starting out strong but slowing in the second half, PFK said. The luxury hotels recovered first and discount chains are still catching up.

"2013 was a very good year, 2014 will be even better – it could be one of the best years that we’ve seen really going back to the dotcom days in the late 1990s. Revenues are up, profits are growing and demand continues to expand," Woodward said.

PFK expects hotels to raise rates in 2014, so any decisions to remove perks will have to be balanced against the likelihood that guests will become dissatisfied.

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