Major Hotel CEO: Start Unbundling, “Stop Giving Things Away For Free”

Major Hotel CEO: Start Unbundling, “Stop Giving Things Away For Free”

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The CEO of one of the largest hotel investment firms in the United States wants the hotel industry to essentially turn into Spirit Airlines, and start unbundling.

More a la carte pricing coming to hotels?

This week at the Skift Global Forum, Tyler Morse, the CEO of MCR Hotels, made some noteworthy comments about the future of the hotel industry. MCR Hotels’ portfolio includes 125 hotels in 34 states, with a total of over 20,000 guest rooms. The company is the fourth largest hotel owner in the United States.

While you’re probably not familiar with the company, you may have stayed at some of MCR’s properties — many are managed by Hilton and Marriott, while other properties are independent (like the TWA Hotel JFK).

The TWA Hotel JFK is owned by MCR Hotels

Essentially Morse wants the hotel industry to draw inspiration from the (ultra low cost) airline industry, and create more of an a la carte pricing model. Many of these concepts have been trialed at the TWA Hotel JFK, including charging for use of the pool, early check-in, late check-out, and premium Wi-Fi.

The TWA Hotel charges for pool use

As he describes this:

“I keep kind of trying to push the envelope here and say, as a hospitality business, stop giving things away for free. Being hospitable does not mean giving people things for free. Business travelers never use the pool, so why should they pay inherently an indirect cost to use the pool. It allows us to charge a lower rate to everybody, and then people can buy up for what they want. So, everybody gets a lower rate.”

Morse acknowledges that it might take guests some time to get used to this new pricing model, but if it’s adopted on a widespread basis, guests won’t really have a choice. He also sees the revenue potential as being huge, given that at some ultra low cost carriers, ancillary revenue is greater than ticket revenue. He also views it as a win-win:

“To the extent the hotel business moves in that direction, the customer gets what they want. Everybody gets a lower price point, and the industry becomes more profitable.”

Morse believes that leaders at major hotel groups largely oppose changes like this, because they don’t have quite the same incentives:

“[The major hotel company CEOs] all pay lip service to it but remember: They’re in the business of giving things away for free. That adds brand value. We owners are in the business of not giving things away for free because it’s our bottom line. It doesn’t hurt [Marriott CEO] Tony [Capuano] or [Hilton CEO] Chris [Nassetta] to give things away for free. It hurts our P&L.”

Generally speaking the major hotel groups (Hilton, Hyatt, Marriott, etc.) get a percentage of revenue as part of their management fees, rather than a percentage of profits. So they’re not quite as invested in hotels’ margins as the individual property owners are.

Major hotel group CEOs aren’t totally onboard with a la carte pricing

The problem with unbundling hotel stays

I find Morse’s perspective to be so far off base. On the most basic level:

  • Hotels aren’t giving anything away for “free,” but rather it’s included in the cost of a hotel stay; it’s like saying that airlines give caviar away for “free” in first class
  • It’s claimed that rates will be lowered so that guests will only pay for what they use, but we know that’s rarely how this plays out; hotels won’t actually significantly lower rates, but rather will just try to boost their margins through extra fees
  • Has the TWA Hotel lowered rates since charging for things like pool access? And if guests are really only paying for what they’re using and rates are lowered, how are hotel margins improving?
Unbundling is unlikely to lead to substantially lower room rates

I also don’t buy the comparison to airlines:

  • Hotels are in the hospitality industry, and airlines are in the transportation industry — people generally book airline tickets because they’re trying to get somewhere and there’s no alternative, while people book hotels because they’re looking for a pleasant experience, and they do have alternatives (Airbnbs, staying with friends & family, etc.)
  • It’s highly unlikely that the hotel industry at large would adapt these changes; the hotel industry consists of everything from Motel 6 to Four Seasons, and you don’t quite have that amount of variety when it comes to airlines (it’s not like flying Delta economy will typically cost you 10x as much as flying Spirit Airlines economy, when all is said and done)

Lastly, where do hotels draw the line when it comes to what they should charge for? At some point you’re undermining the most value proposition of selecting at a hotel. Not everyone uses the hotel gym, not everyone parks when there’s free parking, not everyone eats the free breakfast, etc.

Not everyone eats breakfast, so maybe charge for that too?

Is there some merit to a la carte hotel pricing?

I’m trying to be balanced here, so I’ll ask — are there some situations where better monetizing services makes sense? For example, I’ve always thought that hotel check-in and check-out times have been fairly inefficiently managed:

  • Hotels will generally let you check-in early if there’s a room available, without charging you extra
  • However, it’s usually on a first come, first served basis, which doesn’t seem fair or ideal; for example, if there are two rooms available before the official check-in time on a particular day, should it really go to the people who showed up the earliest (maybe 8AM), rather than the people who arrived at 12PM but who are willing to pay a premium for a few extra hours in a room?
  • I’ve always thought hotels could better monetize late check-out; for example, say you have an 11PM flight and the hotel has empty rooms, wouldn’t it make sense to sell late check-out at a reasonable cost, rather than charging for a whole extra night?

Of course some hotels do a good job with this, but I’d say it’s the exception rather than the norm. I do think there are some ways for hotels to be more efficient and generate ancillary fees, but that shouldn’t go as far as turning into Spirit Airlines, in my opinion.

Maybe Spirit Airlines should open some hotels?

Speaking of the direction of the hotel industry vs. the airline industry, I find it curious that in some ways airlines are becoming more hospitable, while hotels are becoming less hospitable. Airlines have largely eliminated change fees during the pandemic, some airlines eliminated standby fees, etc. The airline industry has become less punitive. Yet it seems that it has only been negative change after negative change in the hotel industry.

Bottom line

The CEO of one of the largest hotel investment firms in the country wants hotels to stop giving away things for “free,” and instead unbundle pricing. The logic is deeply flawed, in my opinion, especially when it comes to drawing inspiration from ultra low cost airlines.

The hotel industry is a totally different beast than the airline industry, and I don’t think this would go over well with consumers. I also suspect rates wouldn’t be materially lowered if unbundling were to occur, but rather this would just serve to increase margins for owners.

Hotel investment firm CEOs sure are saying some controversial things lately. Just recently another major CEO said he wants guests to tip more, rather than raising wages.

What do you make of hotel stays being unbundled?

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  1. Brendan Joseph

    Premier inn business model is exactly this. I was charged for an iron.

  2. Nils

    I think this shows once more that it's often more important to look at who owns the hotel vs. who is managing it. It really comes down to the individual property, you can't expect consistent service anywhere.

    I certainly wouldn't enjoy a stay where I constantly felt the owners hand in my pocket - this is already a problem at many Hotels where I pay the same price as 2019 but most of the amenities...

    I think this shows once more that it's often more important to look at who owns the hotel vs. who is managing it. It really comes down to the individual property, you can't expect consistent service anywhere.

    I certainly wouldn't enjoy a stay where I constantly felt the owners hand in my pocket - this is already a problem at many Hotels where I pay the same price as 2019 but most of the amenities are gone. This really only works if people don't have options (e.g. there is one Hotel at the airport, one airline route). It feels like most of the property owners don't really get how a hospitality business works and that guests have choices.

  3. N. Conti

    I’m a Diamond member with 1 M pints with the Hilton. The points get me a lousy room over looking an alley. Hilton staff don’t give a damn about your loyalty. Breakfast is already barely edible, powdered eggs, give me a break. You have already destroyed the quality service that once existed. Go ahead do your worst, I’ll pay the xtra dollars and frequent a provider that respects loyalty.

  4. Jack

    This is just such a ridiculous strategy. On a general note, why would I pay more to stay at a full service hotel if every bit of "full service" is an added fee? As travel has resumed a bit this year, I've come to realize there's no reason to. It makes much more sense to pay less for a limited service hotel than to pay more at a full service hotel and be denied full...

    This is just such a ridiculous strategy. On a general note, why would I pay more to stay at a full service hotel if every bit of "full service" is an added fee? As travel has resumed a bit this year, I've come to realize there's no reason to. It makes much more sense to pay less for a limited service hotel than to pay more at a full service hotel and be denied full service.

    More specifically to Morse's comments, his properties are most definitely not lowering prices in order to bundle additional services. I recently paid about $400 for one night at the TWA hotel, and what did I experience? Surly staff, dirty and unmaintained rooms and common areas, and a "cover charge" for the privilege of spending money for food and drinks at the hotel bar - served by more surly, inattentive staff and of a quality one might expect at a roadside motel.

    Morse might believe this is a strategy for increased profit, but to Ben's point he'll eventually learn most hotel consumers won't pay a premium price for a substandard product.

  5. Peachtree21

    I agree with Ben's point. Unlike airline where an alternative mode of transportation is not always available, there are other options if consumers start realizing that they are being ripped off over and over for the same hotel stay. AirB&B will become more popular if hotel starts charging for everything other than using the bed for sleeping. I have Marriott Lifetime Titanium status and even I wouldn't hesitate to cut Marriott completely out from my...

    I agree with Ben's point. Unlike airline where an alternative mode of transportation is not always available, there are other options if consumers start realizing that they are being ripped off over and over for the same hotel stay. AirB&B will become more popular if hotel starts charging for everything other than using the bed for sleeping. I have Marriott Lifetime Titanium status and even I wouldn't hesitate to cut Marriott completely out from my choice of future hotel stays if they did what their CEO said. After Marriott took over SPG their Titanium tier benefit is mostly illusion and most hotel properties don't really pay much attention to it any way (at least in US). CEO's can consider various strategies to increase their business profit but what surprises me is the fact that how detached these people are from the realities and consumer's sentiment toward their brands. To consumers Marriott's appeal is not in their brans or in the royalty program (which is less than mediocre compared to others) but number of properties they manage and coverage of areas. If they unbundle every hotel service they are announcing that they are essentially unattractive version or AirB&B. And I would rater stay at AirB&B than Marriott.

  6. Andre Bronson

    Sounds like a horrible idea to me

  7. Patrick

    Aside from elite perks what's left to take? American hotels already suck big time. Pool and gym access maybe but that's about i? Free breakfast is rare to get aside from brands it defines, like Holiday Inn Express. They charge for literally everything else. That free newspaper nobody has asked for since 2003?
    Maybe they will really follow Spirit's lead and adjust the comfort of your bed to how much you'll pay. The base...

    Aside from elite perks what's left to take? American hotels already suck big time. Pool and gym access maybe but that's about i? Free breakfast is rare to get aside from brands it defines, like Holiday Inn Express. They charge for literally everything else. That free newspaper nobody has asked for since 2003?
    Maybe they will really follow Spirit's lead and adjust the comfort of your bed to how much you'll pay. The base rate will include a 3x6 ft sheet of plywood with 1 inch of foam on top, and the mattress will be an upcharge.
    I could see them going another route and mimicking the capsule hotels of Japan and Asia in general. A safe, cheap place to crash for a night under $40 would be amazing. I wonder if America's weird laws would allow such a thing to exist.

  8. NYGuy24

    These CEOs always talk about cuts like it is somehow for the benefit of the customer. They are completely dishonest. The reality is that people who book at the hotels are not going to see a real reduction in the room rates, instead they will just be required to pay more for other features. If they did make the room rates dirt cheap the way spirit airlines sells cheap tickets then you are going to...

    These CEOs always talk about cuts like it is somehow for the benefit of the customer. They are completely dishonest. The reality is that people who book at the hotels are not going to see a real reduction in the room rates, instead they will just be required to pay more for other features. If they did make the room rates dirt cheap the way spirit airlines sells cheap tickets then you are going to get hotels full of spirit airlines customers. Not remotely intertied in staying in a hotel with a bunch of those types of people.

  9. Marc

    So many hotel owners these days are not hoteliers, but real estate investors. It used to be that hotel owners took pride in offering the best amenities and service at their properties to stand out from the competition, whether it be a road-side Holiday Inn or a luxury hotel in the city. Now, most hotels are owned by large REIT's or corporations. They are beholden to shareholders and the only concern is maximizing investor's return...

    So many hotel owners these days are not hoteliers, but real estate investors. It used to be that hotel owners took pride in offering the best amenities and service at their properties to stand out from the competition, whether it be a road-side Holiday Inn or a luxury hotel in the city. Now, most hotels are owned by large REIT's or corporations. They are beholden to shareholders and the only concern is maximizing investor's return on investment. They buy distressed hotels, invest some money for modest improvements, increase efficiency (usually by reducing staff and increasing workload on remaining staff), increase the rates based on the "improved product" and then sell the hotels for a profit after about 5-10 years. They have no concept of hospitality. Every decision is driven by the bottom line.

  10. john

    There is no win-win here. Tyler Morse, the CEO of MCR Hotels is a money hungry tycoon that wants to make himself get rich. I am sorry but when I am paying 200.00 a night a hotel I should not have to pay for WiFi or extra to use the pool. I think the TWA hotel is nice bit way to expensive and all the add on will make stay somewhere else. If Tyler wants...

    There is no win-win here. Tyler Morse, the CEO of MCR Hotels is a money hungry tycoon that wants to make himself get rich. I am sorry but when I am paying 200.00 a night a hotel I should not have to pay for WiFi or extra to use the pool. I think the TWA hotel is nice bit way to expensive and all the add on will make stay somewhere else. If Tyler wants to use the Spirit method then lower the hotel rooms down to the Spirit price. But don't charge 150.00- 200.. a night and then expect to pay to use the pool or other things that are normally free. I hope Tyler reads this and see how the consumer really feels.

  11. Theo

    Just returned from Vegas. Unbundled n charge Ala carte.....they already do. Extra fee for "Beach club" pool, etc. Can you say RESORT FEES?!?

  12. Debbie

    Trust me...The big rich CEO'S do not give a damn about the hotel travelers or consumers. All they are interested in is their HUGE PAYCHECKS AND BONUSES. I personally have witnessed this. I have seen it from the inside! Next you will have to pay for a towel....so they can purchase that yacht or plane they have had their eye on.

  13. Rodger

    I remember a U.K. television advert about apparently takeaway quality frozen pizzas in a survey, it had the slogan called ‘looks like closing time for Pizzerias”.

    If hotels go down this toxic and cynical path, it will only cause Airbnb etc to rise further in popularity, if it is so unbundled then you might as well do self catering with more space than you get in hotels.

  14. u600213

    I want my bundled benefits, even if I don't use them :-)

    Now I will have to start excluding MCR owned hotels
    https://www.mcrhotels.com/hotels/
    from my possible choices, adding that to the Marriott's that do not provide breakfast in lieu of lounge access:
    https://www.marriott.com/loyalty/terms/default.mi#elite
    ● The Algonquin Hotel Times Square, Autograph Collection
    ● Boston Marriott Copley Place
    ● Boston Marriott Long Wharf
    ● Chicago Marriott Downtown Magnificent Mile
    ...

    I want my bundled benefits, even if I don't use them :-)

    Now I will have to start excluding MCR owned hotels
    https://www.mcrhotels.com/hotels/
    from my possible choices, adding that to the Marriott's that do not provide breakfast in lieu of lounge access:
    https://www.marriott.com/loyalty/terms/default.mi#elite
    ● The Algonquin Hotel Times Square, Autograph Collection
    ● Boston Marriott Copley Place
    ● Boston Marriott Long Wharf
    ● Chicago Marriott Downtown Magnificent Mile
    ● JW Marriott Essex House New York City
    ● JW Marriott New Orleans
    ● JW Marriott San Francisco Union Square
    ● JW Marriott Washington, DC
    ● The Lexington Hotel, Autograph Collection
    ● Monterey Marriott
    ● New York Marriott Marquis®
    ● Philadelphia Marriott Downtown
    ● Renaissance Boston Waterfront Hotel
    ● Renaissance Chicago Downtown Hotel
    ● Renaissance Los Angeles Airport Hotel
    ● Renaissance New York Hotel 57
    ● Renaissance New York Midtown Hotel
    ● Renaissance New York Times Square Hotel
    ● Renaissance Washington, DC Downtown Hotel
    ● Marriott Marquis San Diego Marina

    the hotels with labor disputes:
    https://www.fairhotel.org/boycott-list, some of the Hilton aggressive NOR 1 properties and the Hotels I have been too before and just didn't like.

    No, I don't really do this every time, but sometimes I get a bad feeling , or think I remember having read something about a potential booking and check it out more thoroughly.

  15. Diana

    You need to read Psalm chapter 15 sir the Amplified version.

  16. Roman

    @Lucky, I’m not sure I agree with you fully. Try asking for an upgrade when check-in to your flight… now do the same thing at a hotel. Hotels have been very hospitable and, in my opinion, consistently so far more than airlines. Airlines make you feel they are doing you a favor if you ask for a window seat and actually get one. And to the point of the CEO, it’s absolutely nonsense - the...

    @Lucky, I’m not sure I agree with you fully. Try asking for an upgrade when check-in to your flight… now do the same thing at a hotel. Hotels have been very hospitable and, in my opinion, consistently so far more than airlines. Airlines make you feel they are doing you a favor if you ask for a window seat and actually get one. And to the point of the CEO, it’s absolutely nonsense - the fixed costs of operating a pool are there, regardless if someone uses it or not. The minute variable costs are in the cleaning and providing for clean towels, that’s it. So, ultimately, as you rightly mentioned, Lucky, rates will not lower if services do unbundle at MCR, they will remain the same with higher profit margins, that’s all.

  17. Bear

    My thoughts on where this is going:

    Dear Guest,
    Skift group of hotels have greatly “enhanced” your stay with us.

    To lower or room rental cost to you our valued customer we have made some enhancements to save you money on your stay with us. Most of our valued guests do not utilize all of our services.
    Please see below some enhancements to our pricing structure:

    Room key using you iPhone: complimentary
    ...

    My thoughts on where this is going:

    Dear Guest,
    Skift group of hotels have greatly “enhanced” your stay with us.

    To lower or room rental cost to you our valued customer we have made some enhancements to save you money on your stay with us. Most of our valued guests do not utilize all of our services.
    Please see below some enhancements to our pricing structure:

    Room key using you iPhone: complimentary
    Room card : $5.00 second room card $10.00

    Check in on your iPhone : complimentary
    Check in a front desk: $25.00 for rude agent
    $50.00 for helpful agent
    Calls to front desk: first call $5.00.
    Second call: $10.00
    Customer service complaints: calls to our call center in India: complimentary
    Complaints to front desk $25.00.
    Calls to hotel resident manager:$. 50.00
    After hours calls to manager: $100.00
    Towels and sheets in room: $25. Dirty towels and sheets: complimentary .
    Our elevators require exact change. Pricing is on per floor basis. Charges to you credit card will incur a service fee to be determined on a case by case basis.
    Air conditioning or heat in room $25.00 for the first 4 hours. Prorated per KW hour. We offer 4 hours of room lighting For no extra charge.
    Room cleaning: we have contracted these services out to an outside contractor. Please feel free to contact their toll free line in Manila for price list and scheduling. You will be assed a 25% service charge in addition to the price quoted for contacted services.
    Pool use: fees based on time of day.
    Please see in room price list for incidentals: shower use pricing, toilet use per flush and our enhanced pricing structure for hygienic services, ie soap and toilet paper. These items may be obtained at the front desk for the standard room service charges plus 25%.
    We are looking forward to your stay with us.
    Thank you in advance for your understanding of our reduced services during this covid emergency.
    Please note:
    We reserve the right to adjust the room rate during your stay based on whim or demand.
    Not included in your room rate will be: city, state and local taxes, these charges may our property tax, labor cost. Plus location tax.
    You may also be assessed for the incentive bonus for our CEO for working to make our hotel profitable during this pandemic.
    We appreciate the opportunity to deliver our enhanced experience to you our valued customer.

  18. LuxinLA

    Not surprised that comment came from him!
    Have you stayed at the TWA Hotel @ JFK??

    Location and History, if your an AvGeek, are it's only advantage.

    The Service is poor to non-existent (Customer Svc = Front Desk), they give you nothing in the rooms, with the exception of Guests giving a Peep Show for Airport Staff w the Views into the hotel rooms, barely any soap/lotion/shampoo/conditioner.

    Smartest move they've made is special...

    Not surprised that comment came from him!
    Have you stayed at the TWA Hotel @ JFK??

    Location and History, if your an AvGeek, are it's only advantage.

    The Service is poor to non-existent (Customer Svc = Front Desk), they give you nothing in the rooms, with the exception of Guests giving a Peep Show for Airport Staff w the Views into the hotel rooms, barely any soap/lotion/shampoo/conditioner.

    Smartest move they've made is special rates for access in 4-8 hr blocks to a bed and the pool deck.

    Glamorized Adult Hostel for Sleeping only!

  19. Suzy Mac

    "Hotel investment firm CEOs sure are saying some controversial things lately. Just recently another major CEO said he wants guests to tip more, rather than raising wages."

    How about giving up half of your over paid salary so the real workers get paid a livable wage..

    1. Husein Alibhai

      You do realize Generals lead and win wars....soldiers fight the fight. not everyone has a brain. and to get to some leadership role and maintain it, some skill must be there. stop hating leaders. is this a good idea? no. a lot of these leaders have PTSD from this once in a millenia mind f to their biz.

      one of the new discount offshoots should try it tho but no, its not, the bundling...

      You do realize Generals lead and win wars....soldiers fight the fight. not everyone has a brain. and to get to some leadership role and maintain it, some skill must be there. stop hating leaders. is this a good idea? no. a lot of these leaders have PTSD from this once in a millenia mind f to their biz.

      one of the new discount offshoots should try it tho but no, its not, the bundling has worked for the hotel industry bc some, like me, dont eat a lot of calories for breakfast. ever. but if pool is nice, i dont care if ten min, im going for a dip.

      we need one stop transparent pricing and then YES, why is late check out not strategized more often...its so important for late fliers? and lastly, yes, there can never be unbundling if "resort/property fees" dont have a legal rekoning and just bake it all into the price.

      I'll end with a lovely take away from a 2 week trip to Australia, where every price from drink to entree at a restaurant to coffee to clothing - its that price. no stress for tax calc, no stress for tip calc (they do actually pay a living wage everywhere so i know thats just not happening in USA but not point)...but i have to say it made my time there just a bit more relaxing...and by the end of trip, i noticeably liked the feeling. something to think about when you're not trying to calculate or keep from being gamed or gaming a complex system.

  20. Ex Hotel Type

    FIRST, business travelers don't care about small price decreases - for most, their company is paying. SECOND, it will be practically impossible to unbundle the whole experience successful. The big hotel companies don't have the ability, today, in their reservation sites/apps to allow selecting and enforcing all the components of the stay (ie select which of the 5-10 amenities you want to pay extra for). And research shows the more options you give the customer...

    FIRST, business travelers don't care about small price decreases - for most, their company is paying. SECOND, it will be practically impossible to unbundle the whole experience successful. The big hotel companies don't have the ability, today, in their reservation sites/apps to allow selecting and enforcing all the components of the stay (ie select which of the 5-10 amenities you want to pay extra for). And research shows the more options you give the customer at checkout - less people book. THIRD, the employees will have to managed customers who all bought slightly different things. If a hotel has 6 amenities (breakfast, late checkout, pool, gym, biz center, etc) then there are hundreds of possible combinations to account for at the hotel operationally. From experience, many guests wont remember what they bought and their family members / companions won't know. "Dad did you pay the 2$ per day for the pool"?

  21. Trip Taylor

    This guy is an idiot

  22. Tortuga

    The only state where MCR has a double-digit presence is Texas. Quelle surprise! Every photo on their site features an extreme-majority count of white, fat people. Quelle surprise! Their mission statement reads like a page from the Ayn Rand Playbook. Quelle surprise! Twenty of the 22-person senior management team are white (and Chitnis presents as white, so let's lump him in for a count of 21). Quelle surprise! Only 6 of those 22 slots are...

    The only state where MCR has a double-digit presence is Texas. Quelle surprise! Every photo on their site features an extreme-majority count of white, fat people. Quelle surprise! Their mission statement reads like a page from the Ayn Rand Playbook. Quelle surprise! Twenty of the 22-person senior management team are white (and Chitnis presents as white, so let's lump him in for a count of 21). Quelle surprise! Only 6 of those 22 slots are filled by (white) women. Quelle surprise! Trying to find a face of color in their 2019 MCR Team Conference photo is like playing "Where's Waldo?". Quelle surprise! I could go on for hours -- quelle surprise! -- but I'll spare us all.

  23. Reno Joe

    As Ben illustrated, the caviar in first-class is embedded in the ticket price . . . as well as the loyalty program points and loyalty program benefits. NONE of it is free. This concept is key. The value of your award trip to Hawaii . . . and your two no-charge checked bags . . . and your upgrades . . . and your lounge access . . . are all embedded in the ten...

    As Ben illustrated, the caviar in first-class is embedded in the ticket price . . . as well as the loyalty program points and loyalty program benefits. NONE of it is free. This concept is key. The value of your award trip to Hawaii . . . and your two no-charge checked bags . . . and your upgrades . . . and your lounge access . . . are all embedded in the ten PAID trips you had.

    The same is the case in the hotel industry. Embedded in the price of PAID stays are the loyalty program points and loyalty program benefits receives. NONE of it is free. But, the hotel property owners see it as being free . . . a give-away . . . which they know is not true. And, the network CEOs are siding with them. It's a dirty, dirty business.

  24. shoeguy

    If your idea of a sound business plan is to model Spirit Airlines, good luck retaining customers and mitigating regulatory scrutiny. I won't be staying at any of such properties and do not fly Spirit nor would I even consider it.

  25. Alexf1

    As you point out, hotel owners look only at profit whereas managers (ie Hilton, Marriott) look at brand. The owners can't live without the managers because the managers' brand drives business. Plus it's the elites who drive brand policy. Unless the elites become willing to pay extra for what they now get for free (or is expressly included in their membership level like free b/fast or late checkout) then that will impact loyalty. It only...

    As you point out, hotel owners look only at profit whereas managers (ie Hilton, Marriott) look at brand. The owners can't live without the managers because the managers' brand drives business. Plus it's the elites who drive brand policy. Unless the elites become willing to pay extra for what they now get for free (or is expressly included in their membership level like free b/fast or late checkout) then that will impact loyalty. It only works if all brands adopt the same practices and I don't see that happening in a competitive market.

  26. Samo

    I'm all for unbundling if I still can get everything I want for a price lower or equal to what I pay now but I doubt that will be the case.

    What I'd love to see though is hotels being more flexible with check-in and check-out times. The current model of having a fixed time is dumb as it almost never matches will one's needs. The problem is that hotels only approach this as charging...

    I'm all for unbundling if I still can get everything I want for a price lower or equal to what I pay now but I doubt that will be the case.

    What I'd love to see though is hotels being more flexible with check-in and check-out times. The current model of having a fixed time is dumb as it almost never matches will one's needs. The problem is that hotels only approach this as charging for early check-in or late check-out rather than allowing completely flexible times. Ok, charge me to leave the room later but give me a discount if I want to check-in late too. If you have one customer leaving at 18:00 and other arriving at 20:00, why not use the same room for them? You can still charge a little more than 100% of the rate for that room - for example, charge 60% for late checkout and 70% for late check-in, earning total of 130% of the nightly rate while keeping everyone happy.

    Most people travel in the morning or the evening. Turning rooms around during mid-day is stupid.

  27. Retired Jim

    Let them know your thoughts.

    https://www.mcrhotels.com/contact/

  28. AA

    Cool. Charge me just $10 for the room.
    I'll then pay you for the 50c worth of electricity, $1 of water, $1 for toothpaste, $1 for the pillow, and $1 for the towels.
    I don't need any housekeeping, and will walk down the stairs to avoid being charged for the elevator, and as I don't own a car, I don't need parking.
    I'll take every single dollar of my coffee, juice, breakfast,...

    Cool. Charge me just $10 for the room.
    I'll then pay you for the 50c worth of electricity, $1 of water, $1 for toothpaste, $1 for the pillow, and $1 for the towels.
    I don't need any housekeeping, and will walk down the stairs to avoid being charged for the elevator, and as I don't own a car, I don't need parking.
    I'll take every single dollar of my coffee, juice, breakfast, lunch, dinner, and drinks spend elsewhere, use the hotspot on my phone rather than paying for your wifi, watch pre-downloaded movies on my laptop/ipad, and use my classpass/equinox or similar for the gym or a swim at a nearby establishment.

    Looking forward to this being implemented and my total charge of $14.50/night + tax.

    1. NYGuy24

      Pretty sure they will throw a $15 charge on you for breathing their air.

  29. Adrian

    Now I understand why TWA Hotel in JFK is run in this particular way, which I don't see any value for money. I stayed there once as an AvGeek but the whole experience of staying there did not match the price tag, so I did not plan to stay there anytime soon again. Sometimes I just feel that these hotel CEOs are really out of touch. Unlike the airline industry, you are competing with other...

    Now I understand why TWA Hotel in JFK is run in this particular way, which I don't see any value for money. I stayed there once as an AvGeek but the whole experience of staying there did not match the price tag, so I did not plan to stay there anytime soon again. Sometimes I just feel that these hotel CEOs are really out of touch. Unlike the airline industry, you are competing with other modes of accommodation like AirBNB and staying with F&F, so the only way of doing is is to compete with the actual amenities. I don't mind hotels selling early check in and late check out, or breakfast (but given all these Covid protocols now, no one in the right mind will buy a breakfast package!), but selling access to gym or pool is just poor taste. Americans really need to start finding CEOs who actually work in that particular industry, rather than from some biz school. Governments really need to work on regulations on how hotels charge these destination fees.

  30. TLS

    One thing is certain, unbundling will never make it cheaper to stay at any hotel, as there's no way they're going to reduce the room rates. This is just another way to charge people more.

  31. Endre

    I mean, I get the idea, but is it really adding value for both, the guests and the owners? Hotels already offer a variety of room types. Hotels also have buy on demand F&B and infotainment. To charge for early checkin and late checkout would kill some loyalty perks, same goes for lounge access, no? And is axing complimentary coffee saving the hospitality industry?

  32. Anthony

    This is false economy. As much as our friend Tyler wants to talk about hurting his bottom line, perhaps he should spend some thinking about the significant savings he accrues by having a brand loyal clientele who book directly, saving anywhere from 9-20% in commissions that would be attributable should we all give up on loyalty and book via major consolidators.

    Let’s be clear: the loyalty freebies will pale in comparison. A classic accountant...

    This is false economy. As much as our friend Tyler wants to talk about hurting his bottom line, perhaps he should spend some thinking about the significant savings he accrues by having a brand loyal clientele who book directly, saving anywhere from 9-20% in commissions that would be attributable should we all give up on loyalty and book via major consolidators.

    Let’s be clear: the loyalty freebies will pale in comparison. A classic accountant who knows the cost of everything but the value of nothing.

  33. Lorenzo

    Is that image the Springhill Suites in Zions National Park? I feel like I slept in that room.

  34. Doug

    So he says it will only work if every hotel chain adopts it. Smells like anti-trust to me.

  35. Aaron

    Just another out of touch CEO who doesn't have the slightest clue on your average consumer behavior.

  36. Louis

    I was surprised to see a $5.00 "Accommodation Fee" at a Hyatt in Sioux Falls, SD. Won't stay there! To me accommodation means to treat a person nicely. That is not an add-on "service" I will pay extra for. As a Globalist, I'll stay elsewhere.

  37. JOHN

    I wonder how many of the hotels in the MCR portfolio have a resort or destination fee that forces guests to pay $10-$40 per night for things they don't actually want.

    What they will deem as optional, your only on the 19th floor do you want to add the optional lift access fee?

  38. Morgan

    That CEO is an idiot, I won't be staying at one of his hotels

  39. Bill

    Yeah, and when will hotels drop the “resort” fees for services you ever use (especially conference goers who are stuck inside a meeting while a lot of the resort amenities things are available).

  40. CmCA

    Ridiculous. I'm staying at a premium resort (Hilton) location.

    They already charge a "resort" fee that includes everything listed. Now they are going to try to unbundle, and charge extra for the pool over the $500/night room fee? Dream on. I am a Diamond member but that wouldn't last if implemented.

    Guy is out of touch with reality.

  41. Troy

    I think what he has missed is that girls have already unbundled services. It's the difference between staying at a motel 6 vs a Hilton.

    The airline industry was pretty fixed with most carriers being fairly similar. In comparison the hotel industry has always had a lot of variation and options for customers to choose from.

    Customers already choose what services are important to them by picking where they stay. If something like a...

    I think what he has missed is that girls have already unbundled services. It's the difference between staying at a motel 6 vs a Hilton.

    The airline industry was pretty fixed with most carriers being fairly similar. In comparison the hotel industry has always had a lot of variation and options for customers to choose from.

    Customers already choose what services are important to them by picking where they stay. If something like a pool is important to them then they will stay somewhere that has a nice pool.

  42. James S

    It's crazy that hotels let you use pillows for free with the room rate. I thought this was America not the soviet union

  43. Textuality

    Is the breakfast thing sarcasm? I ask because in the UK it's common to charge extra for breakfast as so few places offer it... and frankly, I rarely pay it as it's rarely a better option than going to a local cafe.

  44. Clark

    Charging for various amenities is also manifested by the widely hated "resort fees". I am struggling with understanding the position to implement more "per use fees" like resort fees.

  45. magice

    To be fair, American hotels already unbundle a lot, plus have rather high prices, plus require tons of ridiculous fees ("convince fee," for example).

    In Asia (by that I meant Vietnam and India), when you book a 3 or higher star hotel, full breakfast is assumed. Not so in USA, not even at "resorts." All-you-can-eat is virtually non-existent here. Most hotels even near a downtown charge for self parking. Decent internet tends to cost extra...

    To be fair, American hotels already unbundle a lot, plus have rather high prices, plus require tons of ridiculous fees ("convince fee," for example).

    In Asia (by that I meant Vietnam and India), when you book a 3 or higher star hotel, full breakfast is assumed. Not so in USA, not even at "resorts." All-you-can-eat is virtually non-existent here. Most hotels even near a downtown charge for self parking. Decent internet tends to cost extra except with membership (occasionally you need status for that).

    Further unbundling is not at all surprising.

  46. dander

    I don't use the pool much but I don't want to be charged for it. I have status because I want the upgrade early checkin late checkout etc. I will stay for a few dollars more for a hot made to order breakfast. Ract to the bottom without me.

  47. KW

    I agree Lucky, this will be another excuse to keep rates the same while charging for things that used to be included.

    Want to unbundle? Start with the resort fees. I will gladly forego the water bottle, premium internet, and one round of free bowling if you get rid of the $47 resort fee. Please god make that the first option.

  48. Chris

    Given my recent stays it seems to me that some unbundling may make sense:
    1) It seems retaining staff in housekeeping is very tough currently. So a fee for daily housekeeping may actually be sensible.
    2) Several hotels in the NY metro area already charge $15.95 to guests for internet regardless of status.

    However you need to be cognizant of your guest profile. For Police/TSA/Homeland Security/Border Control Guests the Gym seems to be...

    Given my recent stays it seems to me that some unbundling may make sense:
    1) It seems retaining staff in housekeeping is very tough currently. So a fee for daily housekeeping may actually be sensible.
    2) Several hotels in the NY metro area already charge $15.95 to guests for internet regardless of status.

    However you need to be cognizant of your guest profile. For Police/TSA/Homeland Security/Border Control Guests the Gym seems to be an absolute necessity. So perhaps bundle Gym with Government rates but charge Leisure guests for gym access.

    Many Fairfields already have removed "free breakfast" or provide such minuscule amounts of items all are gone in 20 minutes. I notice TownPlace Suites often do have breakfast items available though so it might make sense to formalize that brand distinction with Westin and Marriott properties moving to a breakfast credit where applicable.

  49. crosscourt

    What a fool. Hotels are providing less service eg: housekeeping is not everyday unless you insist, and are charging the same. Hilton offering a $10 credit for breakfast or a drink to diamond members, etc. Service has declined but the hotels certainly have not reduced their rates. The guy has little clue.

  50. Sean

    The thought that the 'poor business traveler' may not use the hotel pool but is subsidizing it is completely absurd. I can't wait to see costs for business travelers dropping while leisure rates increase. Suuuure.

    Also, at what point do these idiots not get that young millennials & gen z are already drawn towards AirBnB and away from hotels? Eliminating the few things that higher-end hotels can offer (daily housekeeping, concierge, pool, gym...etc.) is going...

    The thought that the 'poor business traveler' may not use the hotel pool but is subsidizing it is completely absurd. I can't wait to see costs for business travelers dropping while leisure rates increase. Suuuure.

    Also, at what point do these idiots not get that young millennials & gen z are already drawn towards AirBnB and away from hotels? Eliminating the few things that higher-end hotels can offer (daily housekeeping, concierge, pool, gym...etc.) is going to guarantee this group will never visit your hotels.

    1. DCA Will Always Be “National”

      Not just Millenials and Gen Z’ers…I’m a young Gen X’er and I’ve worked my way through life to be able to afford nice things…things we have all come to expect in a 4- or 5-star hotel. I’ll gladly take my my Gen X dollars elsewhere. F*ck this guy.

  51. Robert Fahr

    These kind of decisions keep pushing me to AirBnBs even more than in the past.

  52. Lars K

    It‘s funny to hear an executive talk about unbundling hotel rooms, when the industry trend has been the exact opposite: MORE bundling in form of resort fees, destination fees etc.

    He very much goes against the grain there.

  53. JetSetGo

    @mike, some luxury hotels do include food/wine in their rates such as Singitas in Africa, Deplar Farm in Iceland, Fogo Island Inn in Canada. Though admittedly these properties are not nearly as big as typical Four Seasons/ Mandarin Oriental.

    I can see mid/lower tier Marriott/ Hyatts/ Hiltons unbundle hotel experience especially the resort ones with captivated audience. For higher end ones like Four Seasons/ Mandarin Oriental, it would be viewed as nickel and diming...

    @mike, some luxury hotels do include food/wine in their rates such as Singitas in Africa, Deplar Farm in Iceland, Fogo Island Inn in Canada. Though admittedly these properties are not nearly as big as typical Four Seasons/ Mandarin Oriental.

    I can see mid/lower tier Marriott/ Hyatts/ Hiltons unbundle hotel experience especially the resort ones with captivated audience. For higher end ones like Four Seasons/ Mandarin Oriental, it would be viewed as nickel and diming which would be extremely turn off at that price point for their target audience.

  54. Sam

    He is forgetting TCV - Total Customer Value

    Most of us are bought into loyalty programs. We lean towards IHG or Hilton or Marriott properties most of the time so we get higher status and benefits. We give them our loyalty, we get an early check-in, late checkout, breakfast, etc. They get a disproportionate share of our business. (MONEY!)

    They can go a la carte if they want - but the effect of that...

    He is forgetting TCV - Total Customer Value

    Most of us are bought into loyalty programs. We lean towards IHG or Hilton or Marriott properties most of the time so we get higher status and benefits. We give them our loyalty, we get an early check-in, late checkout, breakfast, etc. They get a disproportionate share of our business. (MONEY!)

    They can go a la carte if they want - but the effect of that is we are free agents - price is king. What do I care if it is IHG/Hilton/Marriott - they all offer a similar experience. The differentiator now is the benefits we get. If we get no benefits, price is the only differentiator. LOWEST price wins.

  55. Steve

    Morse has no credibility. I live in NY and my family gave me a night at the TWA as a birthday present. It was obvious they had no idea how to run a hotel. The bar sat 8 people and charged $15 for a drink in a small airline plastic glass. There was no information on the hotel facilities. The staff that was there were rude and inattentive. The rooms do not have closets, just...

    Morse has no credibility. I live in NY and my family gave me a night at the TWA as a birthday present. It was obvious they had no idea how to run a hotel. The bar sat 8 people and charged $15 for a drink in a small airline plastic glass. There was no information on the hotel facilities. The staff that was there were rude and inattentive. The rooms do not have closets, just pegs on the wall. The "food court" where stands where the check-in used to be. The restaurant was out of all fresh food. I wanted a caesar salad and a steak. OUT OF IT. What did they have - fish and chips, hamburgers, and other frozen delights. They were also out of chicken. We were so disgusted we left without staying the night and challenged the charge.

    Any hotel owner that listens to him should have their heads examined. It was the singular worst hotel I have encountered.

  56. Gregg

    Does anyone have a list of the properties this group manages. I’d like to purposely go out of my way to avoid them on my future travels.

    The penny-pinching bastards…

    1. Andy

      https://www.mcrhotels.com/hotels/

      Feel like it would be a little much effort for me to check which hotels are part of MCR but I'll just make a mental to make sure hotels aren't trying to nickel and dime me for ridiculous things when I decide on one.

    2. ps241

      Thank you for the link to the list of his hotels. I'm bookmarking it and will refer to it before making any future hotel reservation, in order to avoid staying at his properties.

      I think the hotel companies themselves are partly to blame for the trend this guy wants to encourage. If Marriott, Hilton, etc., don't enforce brand standards, their brands will soon have no meaning for members of their loyalty programs and other...

      Thank you for the link to the list of his hotels. I'm bookmarking it and will refer to it before making any future hotel reservation, in order to avoid staying at his properties.

      I think the hotel companies themselves are partly to blame for the trend this guy wants to encourage. If Marriott, Hilton, etc., don't enforce brand standards, their brands will soon have no meaning for members of their loyalty programs and other potential customers. Based on the MCR list it looks like he hasn't infiltrated Hyatt so far, unless I missed one, so maybe Hyatt is still the safest choice.

    3. Open eyed traveler

      Thank you for the list.

      That was the first thing I was thinking of as I read the story.

      You just made it very easy for me.

  57. Regis

    No objections to charging extra for early check-in or late check-out or premium wifi. I draw the line on paying more for pool or fitness center use. That is more akin to charging extra for like sitting on the lobby or using restrooms. I will nevet ever at any of this CEO's hotels.

  58. Babblespeak

    Tell Morse to make resort fees optional without raising room rates at his hotels and get back with how that unbundling works out. But that’s the catch, right? Room rates won’t stay the same. They’ll inch up to be what they are now with the resort fees included, and consumers won’t notice until they do. Like the breakfast cereal industry that shrunk boxes while keeping prices the same, until people bailed wholesale. Airbnb anyone?

  59. Volleyball

    I hate the idea yet the JKF TWA does offer some premium experiences which can justify the cost...They hotel is attached to the airport and has an rooftop outdoor pool practically on the tarmac...It's also heat up to 95f in the winter; for that reason only, I can see why you would charge a fee to visit that pool...Yet any other hotel without any sort of premium experience, it makes very little sense...

  60. derek

    Republicans like this because it is like user fees. Democrats hate this because they want lots of free perks.

    Republicans like this because Black people have to pay. Democrats like this because only the rich people will pay and everyone else it will be free.

    1. greg99

      @derek - You OK dude? I think the pharmacist screwed up your dosage...

  61. Towelie196

    Why would I pay extra to stay in a full service hotel if I'm not getting full service? I'd have a tough time explaining the pool, gym, and other fees to accounting when I submit my expense report.

    1. MDA

      I agree. From a business perspective what a nightmare. Companies that have corporate rates will negotiate the lowest rate possible which would exclude gym etc. Fine if you are away for a night, but if I am in India for 4 weeks (normal pre pandemic), then I want the pool and gym etc.

    2. Nils

      As well you should MDA, the amenities should at least make up for being away from home.

    3. Donato

      Bingo, you nailed the issue perfectly.
      Most of my lodging is at venues that live on the expense account traveler. If included items are removed and charged separately these business nomads will stay elsewhere. End of discussion, end of business!

  62. Brutus

    If you want to make Spirit Airlines your business model, have at it. I'll visit your hotels just as often as I fly Spirit.

    1. Eskimo

      Hey Spirit often puts on a great show.

      No more paying for MMA pay per views, going to Vegas to see fights.
      Just go to Tyler Morse properties with one bottle of alcohol and couple dollar bills. Leave it unattended, go hide, and enjoy the MMA.

    2. jetset

      Spot on - couldn't have said it better.

      In fact - it's a great way to get completely ignored as I don't even look on fare aggregators and would certainly exclude spirit if I did. They would literally have to pay me to fly them.

  63. FF78

    I'm not surprised.

    I've stayed at the TWA Hotel (=The Worst Airport Hotel), and I'm familiar with MCR. In the last 2 decades, the MCR experience represents the single worst hospitality experience I've ever had at a hotel. I go out of my way not to stay at their properties.

    Sounds like this CEO guy is chomping at the bit to race to the bottom. Have at it my friend, but I'm not going to be any part of it. :-)

    1. Greg

      I had exactly the same experience at the TWA Hotel. The building was phenomenal and the views are epic but the hotel elements were mediocre.

      I really want my group to do an event at the hotel (it would be perfect for about 100 people flying in from around the world), but I'm worried that the meeting experience would be similarly mediocre.

  64. AdamH

    I think he thinks this would play out like resort/destination fees. Of course those are not really ancillary revenue as they are non optional -- and I doubt anyone would voluntarily pay for the lackluster services they provide. They are just a "fuck you" to the customer that hasn't been regulated yet to allow them to get away with gouging and messing up price comparison tools.

    I do think search engines/OTA need to do...

    I think he thinks this would play out like resort/destination fees. Of course those are not really ancillary revenue as they are non optional -- and I doubt anyone would voluntarily pay for the lackluster services they provide. They are just a "fuck you" to the customer that hasn't been regulated yet to allow them to get away with gouging and messing up price comparison tools.

    I do think search engines/OTA need to do a better job comparison shopping. Google Flights for instance has gotten better at filtering out no-carry on bags.

    Similarly when comparing hotels/vacation rentals, fees and taxes need to be considered in average nightly rates.

  65. Mike

    Not to mention that the hotel industry works opposite of the airline industry when it comes to what is included. When it comes to air travel, you get more things included the more you spend. You get a lot more included in first class than you do in economy. In hotels, you can pay a fairly low rate at a Hyatt House and get a couple water bottles and breakfast for free whereas you can...

    Not to mention that the hotel industry works opposite of the airline industry when it comes to what is included. When it comes to air travel, you get more things included the more you spend. You get a lot more included in first class than you do in economy. In hotels, you can pay a fairly low rate at a Hyatt House and get a couple water bottles and breakfast for free whereas you can pay a very high rate at a high end full service hotel and nothing is included with your stay. All those things that aren't included, such as breakfast, are also pretty expensive on top of your expensive room rate. If anything, you could argue that hotels should follow the same model in that you get more things included in your stay when you pay more for a luxury full service property.

  66. eponymous coward

    Early checkin and late checkout is monetized for Las Vegas Strip hotels, just like resort fees. This is already happening and spreading… just like resort fees.

Featured Comments Load all 81 comments Most helpful comments ( as chosen by the OMAAT community ).

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Brutus

If you want to make Spirit Airlines your business model, have at it. I'll visit your hotels just as often as I fly Spirit.

Sean

The thought that the 'poor business traveler' may not use the hotel pool but is subsidizing it is completely absurd. I can't wait to see costs for business travelers dropping while leisure rates increase. Suuuure. Also, at what point do these idiots not get that young millennials & gen z are already drawn towards AirBnB and away from hotels? Eliminating the few things that higher-end hotels can offer (daily housekeeping, concierge, pool, gym...etc.) is going to guarantee this group will never visit your hotels.

magice

To be fair, American hotels already unbundle a lot, plus have rather high prices, plus require tons of ridiculous fees ("convince fee," for example). In Asia (by that I meant Vietnam and India), when you book a 3 or higher star hotel, full breakfast is assumed. Not so in USA, not even at "resorts." All-you-can-eat is virtually non-existent here. Most hotels even near a downtown charge for self parking. Decent internet tends to cost extra except with membership (occasionally you need status for that). Further unbundling is not at all surprising.

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