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Tuesday, June 17, 2014

Are Room Service And Hotel Mini Bars Becoming Obsolete?

Mini bar included at The Standard Hotel in Los Angeles. (adamjackson1984/Flickr)

Are the goodies in hotel room mini fridges as popular as they once were? (adamjackson1984/Flickr)

The New York Hilton has modified its traditional room service model and has moved to a delivery system after the company has seen less and less room service orders at the hotel.

Hilton has not implemented this across the all of its hotels, as it says different markets have different demands.

But what about mini bars? Are the goodies in hotel room mini fridges as popular as they once were, and are they a profitable business model?

Beth Scott, head of food and beverage for Hilton Worldwide speaks to Here & Now’s Jeremy Hobson about the changes the company has made to its food and beverage offerings.

Hobson also speaks with Bjorn Hanson, dean at New York University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management about the overall changes to room service and the mini bar.

Guests

Transcript

JEREMY HOBSON, HOST:

This is HERE AND NOW. And when you check into a hotel room, what you need? You need a bed, you need a shower. You might need a TV. But do you need a minibar? And do you need room service? Hotels are finding these days the answer is no. In fact, the New York Hilton has cut room service altogether. Beth Scott is the head of food and beverage for Hilton International. And Beth, first, why did you eliminate room service in New York?

BETH SCOTT: Well, guests weren't ordering. So that's one problem. Typically, it was viewed as expensive. It took too long and in a market like New York, guests are in a hurry. And so waiting 45 minutes for their food to come up and then, you know, what they viewed as not a value driven experience, was not helping us, right. So what we did was take what they wanted, which was value driven and quick and easy, and sort of delivered that in a new and interesting way. So what we're doing is giving them what they want, but just in a new way.

HOBSON: Is that something you think that would be New York specific? Or is that something that Hilton is looking across the chain?

SCOTT: Well, we're openly sharing the concept with our ownership groups and our operators. So where it is relevant to a specific market, we'd like to be able to implement the concept in other markets. But we're not rolling this out as a mandatory brand program. It's really about taking a look at what's relevant to a particular market. Airport hotels act very differently than resorts and convention hotels. So what we don't want to do is just roll this out to the mass public and put it in markets where it doesn't really make sense.

HOBSON: So you're saying, in an airport hotel or in a convention hotel, I might be much more likely to order room service?

SCOTT: Definitely in a resort, you know, room service has different meaning for our guests. They're more likely to order a leisurely dinner in their room, for example, if they've come back from a long day at, you know, Disney World or something like that. But airport hotels, convention hotels where people are on the move quickly...

HOBSON: And on an expense account, probably.

SCOTT: And on an expense account - exactly. Sometimes the mere convenience of having that room service outweighs the value that they perceive.

HOBSON: Well, and it makes me wonder, the fact that you brought up the cost and that people think that it's expensive - if it's not worth it to just drop the cost of room service. Would it not be worth it to you to have room service if it cost a lot less?

SCOTT: You know, where the cutoff point is as far as value goes, how much more are you willing to pay for that hamburger than getting, you know, out of the hotel and grabbing it down the street, especially in a market like New York or other urban markets where there are so many choices within walking distance of the hotel - you know, it's a hard one. I mean we've tried dropping prices in certain cases and that doesn't really sway the numbers very much. So, you know, I just think we have to be smarter about how we do things.

HOBSON: What about the minibar?

SCOTT: Yeah, those have been less used for a longer period of time. So I mean we've eliminated minibar as a standard and depending on the market they can either put refrigerator, where guests can put their own stuff in it, or minibar if they feel like that makes more sense for their hotel.

HOBSON: What's the most popular thing on room service menus in 2014?

SCOTT: The hamburger or cheeseburger is still going to be number one no matter what we offer on the room service menu, across the industry.

HOBSON: Beth Scott is vice president of Food and Beverage strategy at Hilton. Beth, thanks so much.

SCOTT: Thank you.

HOBSON: And for the big picture now, let's bring in Bjorn Hanson, who is dean of the Tisch Center for Hospitality, Tourism and Sports Management at NYU. Bjorn, what do you make of what is going on there at Hilton? And does it speak to something that is happening in a broader sense at hotels across the country?

BJORN HANSON: Well, the Hilton decision about room service at the New York Hilton was really bold because the tradition has been at the fairly expensive hotels and especially urban hotels, room service was required. I don't know the numbers for the New York Hilton but a typical hotel loses order magnitude between $500 and a thousand per room per year by offering room service.

HOBSON: So why do they do it?

HANSON: Well, again it just is a tradition for those guests who want room service, it is a satisfier when it's available and a dissatisfying when it is not. But again, as Beth said, over time the usage of room service declined. The satisfaction also declined. So why charge people a lot of money for something that was not getting good guest satisfaction scores and also generating a loss? So it was time for a lodging company or a hotel to take a bold move. And the New York Hilton, you know, was the first mover on this.

HOBSON: And Beth also mentioned that if room service is going away in some way, the minibar is even further on that path.

HANSON: The minibar has always been a challenge. I've worked on about 1,500 row hotels financial statements looking for a profitable minibar operation and never found one. And there were a number of reasons for that. One is that the payroll of sending someone to every room where there's been consumption of a minibar item is just a lot of payroll. So although a $5 can of soda sounds expensive, the payroll of sending someone with a cart and inventory and restocking is also very expensive from the hotel point of view. The second is what's called injury loss, which deals with guests who take things and forgot to notify the front desk upon checkout. And also just outright theft of items and people denying that they actually consumed something. So many hotels that still feel guests are looking for a minibar service have moved to a new model which is free minibar items. So the idea is - it's like almost like an honor system. Take what you want and you use and nothing else. And it turns out that that costs less.

HOBSON: Wait, explain that. What you mean it costs less to take what you want?

HANSON: So the cost of the product was not the expense to the minibar for the hotel. It really was the payroll.

HOBSON: So they might as well just give you a bag of chips and a little tiny bottle of Seagram's rather than have you pay for it.

HANSON: Well, the Seagram's is not included. It's usually is just limited to the food items. But about 1.5 percent of hotels that used to offer minibar service have now switched to, you know, this kind of an honor bar complimentary minibar model.

HOBSON: Is the something generational do you think?

HANSON: That's part of it. Ordering something you would buy at any candy counter wasn't really appealing to millennials. The cost value was an issue and again, even the hotels were losing money on the minibar. When guests look at a $5 or $7 can of soda or a $7 or $9 candy bar or bag of chips or something, it was offensive to many travelers. Plus, the interesting thing was the millennials were emptying the minibar to place other items they had brought with them or purchased locally. When Beth mentioned offering a refrigerator as an alternative, that's a much more popular choice not just for millennials but other age groups and especially for families travelling together.

HOBSON: And often those refrigerators have weight sensors in them so if you take something out to put something else in, that you've brought, it might think that you have taken it and they'll charge you.

HANSON: Right. Those automatic registers created other problems and frankly was interesting to observe what happened with guests who were dishonest. They still found ways of getting around the sensor. So for example, if the bottle Seagram's you mentioned were stored on its side, guests would unscrew the top with a glass underneath, that would empty the bottle - not all of it but half of it at least - and therefore get it for free. And then the next guest would, you know, try to use and find out was empty and who knew who really took the alcohol.

HOBSON: It seems like a lot of work to get a bottle of gin. But Bjorn, let me ask you this - what is still necessary in a hotel room that was 30 years ago?

HANSON: I mean really it all is. And one of the reasons, by the way, the telephone hasn't gone away - many people ask why that is. There are two reasons. One is security. There is just a situation where there could be some kind of a health or other emergency and someone needs to reach the front desk. And the telephone is a way the hotel knows that the guest can reach the front desk easily, not try to find a phone number and call the hotel from a cell phone. The second is, it's often in operation. For example, when housekeeping completes the preparation of a room for arriving guests, many hotels have either it's making a phone call or it's some kind of a digital communication that goes through the hotel phone system that alerts the front office that the room is now available to be assigned to a guest.

HOBSON: So they still need that phone?

HANSON: For the foreseeable future, the phone will be in hotel guestrooms.

HOBSON: Bjorn Hanson is Dean of the Tisch Center for Hospitality, Tourism, and Sports Management at New York University. Bjorn, thanks.

HANSON: Thank you.

HOBSON: And, Robin it's so interesting to think about all the things that we've had in hotel rooms for decades and decades.

ROBIN YOUNG, HOST:

And every single one looks alike.

HOBSON: Right. And do you really still need them? The other thing that's interesting now is that they have these iPod docks that they've installed in a bunch of hotel rooms. And then Apple changed what they use to plug the iPod in. And now, they're useless.

YOUNG: One thing hotels do have - rooms filled with your phone chargers that you left behind.

HOBSON: That's right. They probably have a lot of lost in the lost and found. HERE AND NOW is a the production of NPR and WBUR Boston in association with BBC World Service. I'm Jeremy Hobson.

YOUNG: I'm Robin Young. This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.


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