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When something irritates the crap out of me - in this case, large hotel groups / competitive discounting to below cost price / survival and recovery..
I obsessively research until I understand.
I think I understand it now, so a thread and please feel free to chip in.
I obsessively research until I understand.
I think I understand it now, so a thread and please feel free to chip in.
For me, I didn't really find any clarity until I got side tracked by resort fees.
As I understand it these originated in the US.
At the turn of the century a spiral of events hit. First was a huge increase in the cost of electricity. To counter this hotels added an electric fee.
As I understand it these originated in the US.
At the turn of the century a spiral of events hit. First was a huge increase in the cost of electricity. To counter this hotels added an electric fee.
The same as way back when hotels all over the world were charging hugely inflated prices for phone calls before mobiles became the thing, and parking. These were ways to monetise the property and to some degree were normalised.
Next in around 2007 came the recession. To retain business hotels had to drop their knickers to get guests in. Same for the cruise industry. Rooms & cruises were practically given away.
Over time those losses built up and IMPORTANT - guests started to expect these discounted fees
Over time those losses built up and IMPORTANT - guests started to expect these discounted fees
During the long recession the hotels had lost so much revenue and as the financial market recovered the hotels were caught with their knickers around their ankles. They couldn't raise their prices to what they were before.
Mobiles had wiped out the profits from phone calls, WiFi became a contested extra fee for a while (still is in some properties brave enough to chance it).
To keep booking prices down, they needed to raise capital by adding another fee - the resort fee.
To keep booking prices down, they needed to raise capital by adding another fee - the resort fee.
Need to get one of my chickens from Aunty Duck so will continue shortly.
OK. So stretched similarities but we have a basic example of a two plus year recession, that lowered prices normalise quite quickly and add on fees become accepted and almost expected a bit further along the line.
Two years is long enough for these to cement.
Two years is long enough for these to cement.
Resort tax.
It was a way of keeping prices low, but increasing capital.
Depending on your postcode tax benefits are negligable. For a longtime (and still with a few) OTAS ignored them so they were uncomissioned.
It was a way of keeping prices low, but increasing capital.
Depending on your postcode tax benefits are negligable. For a longtime (and still with a few) OTAS ignored them so they were uncomissioned.
For flag hotels (independent or franchise) that is straight (though taxable) profit that the flag doesn't see a piece of.
As resort fees have always been a prickly subject it's really only the big chains that have these. That's OK though, because that's the market I'm focused on - the destroyers of small independent hotels more likely to survive this period.
The difference is the big chains can survive longer working at a loss, but when we all start travelling again they are going to need to make it back.
They need a new resort fee - the alternative is a complete international rebrand to change the experience.
They need a new resort fee - the alternative is a complete international rebrand to change the experience.
That is where small independents (those that survive) have the edge when borders reopen. They have flexibility / can make changes to the experience they sell far more easily.
What matters in the interim for indies is all about the guest and what travel mindset is being marketed.
What matters in the interim for indies is all about the guest and what travel mindset is being marketed.
Anyway, there is a short window when travel restarts where surviving / new independents could have the edge on the big brand hotels.
Somehow
..
Somehow
..
