Looking at drastically different hotel business models
 
Looking at drastically different hotel business models
24 JULY 2020 7:00 AM

While most industry watchers expect hotels to return to a more normalized environment eventually, what if they used this moment to drastically reimagine the way they do business?

The more I read and report throughout this pandemic, the more I get this message: The hotel industry will eventually return to business as usual. It might take a while, but eventually things will go back to the way they once were.

I’m sure this is very true in many ways. It’s probably unreasonable optimism in many other ways.

But if the end result of this is a (massive) dip before a return to the way things have always been, it leaves me wondering what are some of the more radical ways of doing business that hoteliers could use this moment to transition to?

So, lets use this space for some baseless speculation on the more radical business models that hotels could adopt to have more downturn resilient business models

Subscriptions
We’ve discussed the possibility in the past of how the hotel industry could up the ante with it’s ever growing loyalty programs by turning them into Netflix-style subscriptions rather than earn-and-burn programs. Obviously, this wouldn’t recession-proof the business, as guests would be more likely to cancel in periods they don’t feel comfortable traveling, but it would be interesting at the very least to see how much more resilient revenue streams would be in that circumstance.

I wonder, too, if people would be more eager to return to travel if they were already tied into a network of hotels via a subscription. It would be especially interesting if this model could be tied into other forms of commercial real estate. Imagine if you could rent out a Marriott-branded apartment/condo or run your small business out of a Marriott-branded office space that would then give you the benefit of staying at any of that company’s properties across the globe. I’m sure it wouldn’t be cheap, but it’d be interesting.

Make your money on selling their data
Nobody likes this business model other than the people who do it. Not terribly long ago, some venture capitalists sought to revive the mega-toy store brand Toys R Us by creating a store with a much, much smaller footprint and dotting the store with a ridiculous number of cameras to observe how people behaved while they’re selling that data to whoever wanted it.

Putting aside the incredibly creepy element of building a business model around monitoring children and selling the insights, you could wonder how this model would work in a hotel.

What would marketers or anyone else be willing to pay to know how individual travelers lived (slept, eat, watched television, whatever) while on the road? How much of a discount would you have to offer travelers to have them dive head first into being the star of their own miniature “Truman Show”?

Trying to make all their money on 'ancillary' revenue
Hoteliers have, by and large, resisted the urge to nickel and dime their guests to death for fear of the poor perception that would leave for travelers. But what if that nickel and diming was the entire point? This idea already exists in airlines where the discount carriers charge low fares but more than make up for it by tacking on fees for just about everything.

So how does this look for a hotel? Sure, we’ll sell you a room with a bed, but you’ve got to pay extra to turn the TV on, use the shower or to have pillows and blankets. Want a bed longer than five feet? That’s an upcharge. Looking to charge your phone in the lobby? That’s $5.

Sure, travelers will hate you, but they’ll still stay at your property when it fits their needs.

Alternatively, this model could be targeted less at the discount traveler and instead use hotels as show rooms for high-end furniture, fixtures and equipment, but that’s not a terribly unique idea.

Giving all their rooms away for free
This would definitely generate a lot of good will from guests. Other than that, though, I have to say this is probably a bad idea from a business perspective.

What do you think? Let me know via email or on Twitter.

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