A hotel pass for unlimited stays?
11 experts shared their view
Frontier Airlines, a budget airline based out of Denver, Colorado, announced an "all you can fly" promotion that offers pass holders unlimited domestic flights, including to Puerto Rico.
The so called GoWild! passes are valid for 12 months and are available at the introductory price of $599 per person. Applicable taxes and fees as well as options like bags, seats and other products are available for an additional cost.
The pass is not transferable and includes a number of blackout dates in 2023 and 2024.
The question is, will any hotel brand - big or small - or independent hotel follow suit and introduce a hotel pass with unlimited stays?
The concept of a pass with 'unlimited stays' makes no sense for an individual property. However, for a large chain with multiple locations, a modified version might be viable. Before dismissing the idea out of hand, consider a pass with the limitation of no more than one, two-night's stay at any property per quarter. This pass would apply to the lowest priced, standard room, double occupancy and possibly with a long-term booking requirement. Black-out periods would apply, of course. In this way, the pass would function in a similar fashion to the airlines. The pass would be more of a publicity stunt than a money maker. But again, the promotion wizards could certainly figure something out, and if the room redemption does not displace real income, it might work.
While undoubtedly a great marketing gimmick, an unlimited hotel pass would ultimately lead to more customer dissatisfaction than satisfaction. The types of restrictions needed to make it work (blackout dates; limits on the number of consecutive, and perhaps periodic, nights in each location; availability challenges; local and city taxes; etc.) would make the reality very different to the promise, leading to disappointment and frustration. The subscription model (fixed number of nights for a monthly fee) offers more potential for those looking to innovate in their pricing structure.
Unlimited stays? sounds like a great alternative to paying rent!
And I guess that's the challenge... the headline offer is great (for PR and buzz) but the restrictions will need to be locked down.
What I love about the unlimited-stay idea is it would require a hotel to ramp up revenue from ancillaries and attributes. Those fees would need to be greater than the base room cost for this to work - just as they are for some airlines . That's a superb ambition and with support from players like Mews and Sabre, can perhaps be achieved 5yrs from now.
Why not? Some have already applied the model to the hospitality space.
Anantara launched such an intiative during COVID for unlimited stays. 'Unlimited' being relevant to the amount of money to offset a realistic number of room nights or stays. In this example $30K USD.
The simlar approach is the membership oriented relationship. Inspirato and others based their business model on the approach with properties spread arond the globe. $2500 per month. Graduate Hotels offered a simlar model for a monthly date range in a low demand season, as a hybrid of the model. Nordic Choice offered the same approach in the Summer of 22. CitizenM as well for annual stays with monthly limits.
I suspect there will be more of the model in the future particularly in less sophisticated accomodation products where the fluctuation in demand/pricing is not volatile and working on a average rate contribution is feasible.
"All you can fly" may work well for budget airlines because they charge additional fees for every tiny thing/service. Generally, the cheaper the fairs are, the more fees an airline would collect to make up the revenues. On the one hand, hotels' pricing structure is different. Many hotels only charge limited or no itemized fees for a stay. On the other hand, people fly when they need to travel, usually for long-distance trips. People do not need to travel far for a staycation. Additionally, people can live in a hotel comfortably rather than in an apartment with "all you can stay."
Furthermore, many hotel chains operate a diverse portfolio, ranging from economy to luxury hotels. Then, will it be feasible for these hotel chains to offer one "all you can stay" promotion that allows travelers to stay in any tier of their hotels? If not, shall hotels offer multiple "all you can stay" promotions and add sophisticated and often difficult-to-understand terms in the fine print? These are just a few challenges that hotels must overcome before coming up with a clear "all you can stay" promotion. Hence, I do not suspect "all you can stay" will work for hotels.
I dont see this taking off. too many variable against it with little or no revenue return. Different ownership models, brand vs non brand, international vs national, displacement, etc.
Frontier Airlines annual airline travel pass is a variation of the subscription business model that is not a new concept in the travel industry, where subscription programs and travel clubs have existed for over five decades. In hospitality alone, there are a number of hotel-operated, OTA-operated and specialized third-party subscription programs with annual fees or enrollment plus monthly subscription fees.
What is new with the Frontier Airlines GoWild! pass is the unlimited number of flights you can take.
So the question is, can a hotel pass with UNLIMITED STAYS exist in hospitality? There are major business, technological and consumer psychological impediments facing a concept like this one in hospitality.
To begin with, the general public is already experiencing the so called "subscription fatigue." In travel, in addition to the existing subscription clubs (Tripadvisor, Odigeo, CitizenM Hotels, etc.), only major hotel chains like Marriott and Hilton, or OTAs like Booking..com and Expedia, each with hundreds of millions of loyalty members, can launch a viable subscription service with LIMITED STAYS per year.
With the current pen-up travel demand in the post-pandemic environment, I doubt that any hotel company - big or small - has the incentive to introduce a pass for unlimited stays.
Related article by Max Starkov
Airlines are in a better position to offer this type of promotion as they can recoup incremental revenue via additional fees for luggage, seat allocation and more.
Hotels are not likely to be able to charge incremental fees for these types of services, at least not yet. Hotels with a high percentage of repeat guests, may be able to offer this type of promotion, but they need to be careful not to cannibalise their existing repeat business.
A very interesting promotion for this airline, but I don't see this transferring to a hotel model.
Why wouldn't a hotel company do this? I'd argue they already do today. First, let's define "unlimited." Frontier's "unlimited" promotion is a misnomer, containing plenty of limits: roughly 30 blackout dates; no guaranteed availability; all fees and taxes paid by the traveler; upgrades are extra. Each constrain the airline"s costs and provide opportunities to increase profits using otherwise wasted inventory. Oh, and Frontier automatically renews membershipo every year for $1,200 unless the flyer opts out.
A similar approach seems like a no brainer for hotels. In fact, hotel companies already offer comparable benefits when guests use loyalty/reward points to book rooms. Creating a similar program would require guests to purchase points in advance, using hard currency, instead of earning points over time. In theory, that's a math problem, ensuring the right purchase price for sufficient points. One key question is whether this move would upset truly loyal customers who earned their points the hard way — and damage the brand.
Still, I'd expect some loyalty exec to fashion a similar program where it make economic sense for their company/hotels. It's "simply" a question of how they align it with their brand proposition and make the numbers add up.
An unlimited pass or a monthly subscription to enhance your experience? Or both? These are legitimate questions to ask nowadays in the Hospitality Industry. Is this also part of the awaited [re]evolution of the old earn|burn-based loyalty programs or I should say the new retention strategy? Isn't this becoming the most important objective of any Hospitality group: how do I retain my existing customers by enhancing their 360° end-to-end experience? It is the time also to move from linear growth to exponential growth and these new sources of revenue for brands will support this. Living-Working-Travelling is now a standard combination for most hotel customers. Expanding the service offer away from a room night to a menu of exciting experiences will allow offering interesting value to a Pass-Subscription model for both the consumers and also the brands, the ideal win-win solution! Why this is great for the Hotels? Launch a new acquisition channel that will be cheaper than OTA distribution fees, will diversify the sources of revenue for the hotels, increase the Customer Intelligence to optimize personalization = better conversion (CVR), and increase customer lifetime value (CLV), enhance customer profiles and finally drive incremental direct business!
The "unlimited pass" ties in with the wider trends of the subscription economy popularized by Netflix and Amazon and now common across almost all consumer goods. Payment flexibility has accelerated in the hospitality industry since the pandemic, including buy-now-pay-later and payment installments and I believe this will be commonplace for hotel purchases within the next few years.
As travel rebounded in summer 2021, there were several examples of the "unlimited pass", with Graduate Hotels offering a "Hall Pass" for unlimited use across 30+ hotels for a month and costing $500. There's also Inspirato Pass, dubbed "the world's first luxury travel subscription" for $2,500 per month.
It can be a very effective method to drive repeat guests for hotel brands and I can see the value for the guest, assuming the terms and conditions aren't so restrictive that it becomes frustrating for guests who can't use the pass when they want to. For an independent hotel I don't see a valid use. A more effective strategy would be gift card sales, with similar benefits of "cash up front" and less concern over guests choosing stays during peak periods that could have been filled by higher ADR guests.
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