Are hotels becoming more like the airlines when it comes to how they’re pricing their rooms, especially by imposing stricter cancellation policies and other fees?
It depends whom you ask but one thing is clear: Hotels are definitely becoming a lot more sophisticated about how they’re charging guests, and about pricing their product.
The Case For Airlines Inspiring Hotels
“I see them basically taking a page out of the airlines’ playbook,” said Craig Fichtelberg, president of AmTrav Corporate Travel, referring to hotel chains. Fichtelberg sees parallels between airlines’ “extremely restrictive basic economy fares,” and the stricter cancellation policies recently enacted by Marriott, Hilton, and InterContinental Hotels Group.
“That basic economy rate [on airlines] is going to attract the same people who are buying low-cost carrier rates, but the companies we work with at AmTrav are asking that we don’t even show those rates to the corporate travelers because they’re too restrictive,” Fichtelberg said. “From the hotel perspective, I see Airbnb as analogous to the low-cost carriers in the airline world, and the hoteliers are now looking for ways to compete without watering down their corporate business.”
He believes the move toward standardizing cancellation rates is a first step.
“Step one was implementing a standard basic cancellation policy across hotels, and step two is starting to create more defined bundles, similar to what the airlines have done,” Fichtelberg said. “The basic economy bundle for a hotel would be non-refundable and non-changeable, without Wi-Fi and without a free breakfast, for example. By creating these targeted bundles and different price points, they can compete more aggressively with Airbnb pricing.”
Fichtelberg said what hotels are ultimately trying to do is “price discriminate so they charge the right price to the right customer, so corporate travelers pay more than leisure customers for the same room at the same hotel.”
Eventually, he sees hotels serving up different prices for individual hotel rooms, similar to how airlines have already segmented varied prices for different seats, even within economy class.
