Tidy My Room or Tidy My Wallet: Should Hotels Offer Discounts in Return for Not Servicing the Room

By Laurence Bernstein Managing Partner, Protean Strategies | October 21, 2012

It looks like eighty percent of US business and leisure travelers are willing, nay, even anxious, to receive a discount on their room (or from this study, 1000 additional loyalty points) in exchange for not receiving daily housekeeping service. This is the extreme bottom line finding of a survey we conducted of US travelers that stay in hotels.

The study was conducted in response to a below-the-radar emerging trend of offering travelers benefits in exchange for foregoing housekeeping. Our sources are hearing of this happening to travelers in major branded hotels (some Westins, for example) as well as independent hotels. We hear of offers of room discounts (ranging from $5 to $10), F&B discounts (ranging form $5 to $10) and loyalty points (ranging from 250 to 500) based on guests' willingness to give up housekeeping. We wondered whether this was an inherently brilliant idea, or whether it was folly.

We should add that in most cases these offers were wrapped in an environmental envelope: "as part of our ongoing efforts to help the environment, we are offering you this opportunity to assist by foregoing daily housekeeping in exchange for…" Consequently, we still need to understand whether the "environmental envelope" carries serious motivational weight or just justifies a reason for guest cheapness.

The implications of programs such as these are potentially grim: on the bright side, once a pattern of acceptance is established, hotels can reduce labour costs by scheduling fewer housekeepers – this is cost reduction that drops, like lead, to the bottom line. What could be bad about that? However, on the dark side, it can be seen as airline-like decontenting. Gradually removing all the content from the experience (baggage check, food, pillows, blankets, smiles, and very soon use of the on-board toilets) and then charging for these as extras is a tactic airlines have engaged in over the past few years, to the annoyance and frustration of the traveling public. Dilemma: These so-called service fees have provided a significant amount of revenue for the airlines over and above any cost savings, but the question still remains as to whether, in the long run, the airlines are doing themselves more harm than good.

Hotels are in a different position – there are so many more options to choose from. There are more hotel grades to choose from. If someone wants to save money, they can forego a luxury hotel and stay in a budget hotel at the location they want to stay at. It's a whole easier than finding a budget airline flying to where they want to go, when they want to go there. And, since the advent of OTAs there is more range of choice in terms of price in each category, than in the airline sector. So the parallel with airlines is misleading. It amazes me how ready hotel marketers are to slavishly copy the tactics of airlines despite the dismal success airlines have in making a profit. Didn't we all learned many years ago that the secret to success is to see what the failures were doing and don't do that?

We fielded a survey to a representative sample of business and leisure travelers that had stayed in a full range of hotel segments (from budget to 5 Star and Luxury, as well as Boutique and Lifestyle properties). What we found was that this value-delivering practice was more common than we had ever imagined – close to one in five respondents had been offered this alternative at some point in the past. And that's a lot! Furthermore, most of these travelers who had been offered this option gave an emphatic, "Yes!"

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.