Travel expert: 'A la carte' pricing is the future of hotels
In exchange for lower room rates, one hotel brand is charging for other perks — like early check-in or pool access — that guests pay for only if they want it.
“By going to an a la carte menu, it allows people to customize their experience and get exactly the product that they want when they want,” MCR Hotels Chairman and CEO Tyler Morse recently shared with Yahoo Finance Live. “Consumers always have a choice in the matter.”
The model is being piloted in several independent, non-branded MCR Hotels, Morse said, and feedback has been positive, so far. The new pricing strategy isn’t dissimilar to how airlines began charging for luggage, he said, noting it took some time for flyers to accept the ancillary fees.
"It allows businesses, in our case — hotels, to charge lower room rates, which everyone is appreciative of," he said. "Because people don't want to pay for services that they're not getting."
For instance, travelers might pay between $15 to $20 for early check-in or a late checkout, he said. Additionally, while the pool access may be free in the morning at the hotel, guests may be charged $25 to access it during peak hours.
"It's not that dissimilar to charging and paying for Wifi," he said. "If you want access to super, super fast Wifi, you pay a bit of a premium for that. If you just want the slow boat in terms of Wifi, that might be free or at a lower price."
It all goes back to customer customization, Morse emphasized. With the aid of a company-wide software system, the hotel has reduced its offerings into micro increments of modest amounts that give guests the optionality to optimize and right-size their spend to better align with their needs.
As for where the rollouts will extend next, Morse said it’ll likely be seen in bigger cities that typically see more business travelers who might have no use for the hotel pool or breakfast buffet, even though the privilege of both are included in the nightly rate.
“In New York City, there's a high demand for this and it's relatively easier to execute," he said. "If you are in Dubuque, Iowa, it may not be as palatable from an 'a la carte' pricing standpoint.”
It’s a model that Morse says will eventually catch on industry-wide.
“I think all the big brands will catch hold of this, because it's better for hotel owners, and it's better for guests,” he said. “It's really the micro economy, I call it.”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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