Subtracting Value

All right; so how do you subtract value from something as simple as a hotel room? A given location or design may be sub-optimal in many respects (e.g. size, location, convenience), but once you’ve built the building, how do you actually make the facility LESS profitable than it was to begin with?

The first thing that comes to my mind is our old friend, The Second Law of Business: Do Not Annoy the Customer. Admittedly, different things will annoy different people, but there are some that are relatively easy to predict. Not being able to use something I’m paying for, for example. If the hotel’s gym is only open during hours I’m at work, for example, or if the Business Center is not available when I need it, or if the pool is the size of a postage stamp and full of small children swimming in diapers, or if the complimentary breakfast contains nothing I can eat (I’ve seen all of these things on the road), it’s going to annoy the crap out of me. If the restaurant is closed (by the Board of Health or just for repairs) and you can’t hold a meeting in the lounge because there’s karaoke from 1:30 PM to Midnight everyday, that’s going to annoy me. If the reservations people have lost my reservation and want me to pay extra for a higher-priced room because that’s all they’ve got left, that’s going to annoy me. More to the point, any of those things will annoy ANY business traveler, and if even a few of them happen on the same trip, we won’t ever be back…

In the rooms themselves, charging for amenities that the customer thinks should be included in the room rate – or even charging more than the customer thinks is reasonable – can remove all potential value from the items in question. For example, local phone calls don’t have to be free, but when the price for them becomes absurd (I’ve seen $2 plus $.25/minute – for local calls!) not only won’t people use the phone, but you’re also breaking the Second Law again. Mini-bar items are another example; if something you can get for $1 at the market on the corner is $2 in the mini-bar, you might sell some of them. But if it’s $5 dollars you won’t, and if it’s $8 dollars you’re just wasting space. Even worse, though, were bottles of water left in the room that were free on the first day, and $3 each the next day. Not that anyone mentioned that the next one wasn’t on the house, of course. I had to wait and find it on my bill when I checked out.

By the same token, an in-room whirlpool bath, in-room safe, steam bath or sauna that does not work is of no value; one with an extra charge to use it is a negative value; and one where you do not tell the customer there’s going to be an extra charge until they find it on their bill at checkout is illegal in many states. And if a customer has selected your establishment because they wanted one or more of these amenities, only to find they can’t have them (or can’t afford them), you might as well not have bothered in the first place. In fact, one of the only hard and fast rules with all “value added” features is this: “If it costs you money and it does not add value for the customer, it’s actually value subtracted.”

Not quite important enough to be the Third Rule of Business – but it’s definitely worth remembering…