Furthering the à la carte conversation

At a moment when all-inclusive resorts are a focus for the likes of Marriott International and Hyatt Hotels Corp., there is an interesting dichotomy taking place with MCR Hotels CEO Tyler Morse and some others leading a charge to roll out and extol the virtues of à la carte pricing for services. Morse is using this model at his TWA Hotel at JFK airport in New York City as is the High Line hotel in Manhattan, among others around the world.

Granted, city and resort hotels serve different audiences with different sets of expectations, but in a COVID-informed world with loyalty up for grabs, having fewer decisions to make and wanting more care seems to be a trend as much as, if not more than, self-service.

No doubt, ancillary revenue opportunities abound with an à la carte system similar to airlines, but the jury is definitely still out on whether paying for services like housekeeping, gym access, bottled water, faster Wi-Fi and, dare we say it, free continental breakfast, is the way of the future. Staffs are lean and guests are noticing, which could also serve to leave bad tastes in the mouths of consumers asked to pay à la carte pricing. One of the other questions that must be asked is how this approach will work with legacy distribution systems, contract sales and other fee structures traditionally built into rates.

To further take the pulse on this issue, HOTELS reached out to several senior executives to get their take and to ask whether or not it makes sense at a moment in time when so much about service and the guest experience is evolving.

“This is an interesting topic and we are aware some of the bigger groups (Hilton) adopting this approach, and may be interpreted as a cost saving,” said Dr. Jennifer Cronin, president, Wharf Hotels, Hong Kong. “However, in the case of our mainland China properties where guests are spending more than ever by way of pent-up demand on luxury hotel experiences, we are actually adding more services based on the significantly higher ADRs being achieved.

The à la carte pricing will be determined by the guests’ expectations in different markets for different travel requirements, Cronin added. “For example, the ‘workcation’ experience will need different layers of services, while leisure travelers with many travel restrictions are staying closer to home and are prepared to spend their travel dollars on great memories. Therefore, we need to re-imagine a travel world of providing additional services rather than taking them away, in my opinion.”

Richard Millard, managing director of business development for New York City-based owner-operator Highgate, said Morse is “right on” with his idea, similarly believing hotels give too much away. However, Millard said there are issues attached to the concept.

It is like “no tipping,” Millard said. “If you are the only company adopting such a policy, and other companies do not follow suit, you are doomed not only to failure. You may well loose customers, particularly big accounts,” he said.

Millard also opined that first, the on-property team must buy-in to the change, particularly the GM. “This is new and they will give you every reason not to do it. If they are not convinced, it will fail,” Millard added.

There must also be great thought and internal debate regarding the pricing and value proposition, as well as great detail placed on the planning of any rollout, Millard continued. “Is this a service where every customer pays the same amount? Do hotel guests pay less than non-hotel guests? Do regular customers receive a special price?” he asked.

Bottom line, Millard thinks à la carte pricing is a great idea, but needs to be adopted quickly by the “big boys” to have a good chance at success.

Also weighing in on the conversation was Michael Levie, COO of CitizenM, Amsterdam, who said to a certain extent à la carte pricing is already working with amenities such as Wi-Fi, F&B, meetings and other leisure offerings.

Levie said the new housekeeping charge will become an elective in some hotels, for sure. But he also said that channel pricing differences, breaking with rate parity, is a hidden new idea to keep an eye on.

“The current financial health of the industry will force some crazy new things coming,” Levie said. “Yes, à la crate will grow further, but not as blatant as the airlines served to the guest.”