Hotel Amenity Unbundling

Posted by Helena Murphy on January 12, 2016 at 10:30 AM

Adding Incremental Revenue with Amenity Add-ons

While the hallmark of the hotel industry has traditionally been service levels, there’s a new trend emerging. A trend which invites guests to forego amenities or choose reduced service levels in order to gain a lower nightly rate. It was only a matter of time before the hotel industry chose to follow the airlines into this era of “unbundling”.

Airlines have been able to increase their incremental revenues by charging for baggage, snacks, blankets, and even seat assignments. But these increased revenues have come at the expense of customer satisfaction and some customers feel “nickel and dimed” by the additional fees. Hotels are interested in enjoying additional revenues from these add on fees without alienating guests.

Hotels are experimenting with unbundling and add-ons in different ways. 

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MGM’s Mirage in Las Vegas offers guests the ability to skip the registration lines and use the express check in window – for an additional $30. If a guest would like to confirm a non-smoking room at the Bellagio Las Vegas,  they can pay an additional $30 on top of the room rate and resort fee. 

Other hotels have taken the idea even further, Tune Hotels offers an inexpensive base rate for a room with no amenities. Guests can pick and choose which individual amenities, such as towels, toiletries, internet or TV, they’d like to purchase. Or the guest can choose to purchase an entire comfort package.

 

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Whether you believe this practice is a clever revenue driver or simply driving away potential guests, it’s clear that unbundling has arrived to the hotel industry.

If you have any comments or questions on how this shift has impacted your property please get in touch below.

Topics: Competitive Advantage, Trends

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