Here’s how hotels can pay the cost of living there.
I am a self-proclaimed germophobe. Not some current-event-driven parvenu, but a nearly lifelong adherent. Thankfully, I’m not of the excessively paranoid Howard Hughes variety – just consistently aware and cautionary. Except for my antipathy toward hand-shaking (hopefully, a now-outdated custom which I have reluctantly performed), I function fine.
Germophobia was a lonely place until around 2010. That’s about the time when the cumulative impacts of various health issues caused more people to start paying attention to things that had been wigging out germophobes for years. Things like well-publicized communicable diseases (SARS, MERS, H1N1, Ebola), scary science-fiction movies, news stories about the “gross factor” of hotel cleanliness (throw pillows, colorful bedspreads, TV remotes) – to name a few. Within a relatively short span of time, we started seeing sanitation wipes at shopping cart stands, paper towel dispensers and trash cans at the exit doors to public restrooms, and other similar manifestations of this awareness.
Now comes COVID-19 and there are millions of converted germophobes. It’s safe to say we germophobes now outnumber those who still adhere to the “five-second rule” – you know, if you drop a piece of food on the floor and pick it up within five seconds, you can still eat it (yecch!). This new religious order of germ-fearing people isn’t going away any time soon – maybe ever.
Here’s where the germophobia rubber meets the hospitality road.
Germophobe or not, does anyone doubt that this pandemic is going to have a material and permanent impact on how hotels approach cleaning and sanitation in every area of hotels? Customers will expect and demand increased standards and vigilance. Brands and operators will institute new standards and protocols. In fact, most already have. Employees will rightly expect thoughtful health and safety protections, and unions will demand it. Of course, national, state and local governments also will impose regulations that impact how hotels go about their business.
Naturally, each and every one of these requirements has the potential to add significant costs. There may be some offsets (opt-in housekeeping, for example), but based on the information we are compiling from brands and management companies regarding new standards and operating modalities, we believe the collective net impact will result in materially higher costs.
Yet, if history is any guide, the industry will be too timid to charge rates capable of offsetting these increased costs – especially since this will all be occurring on the heels of an unprecedented economic rout. We’ve all been to the movie: kneejerk discounting prevails in a desperate scramble for customers.
So, what to do?
One answer could be a widely applied “health-and-sanitation” surcharge. Such a practice is not without precedence. They have been accepted more or less readily, by customers depending on what it is for and how it is implemented. Spiking energy costs have resulted in surcharges. Restaurants in markets with rapidly escalating government-mandated labor costs have responded with labor surcharges. Surcharges have been widely applied via resort fees and urban amenity fees to capture additional revenue without raising room rates.
Admittedly, these fees have had mixed results, both in terms of consumer feedback and legal challenges. But those issues have had a lot to do with how such fees were implemented (for example, non-disclosure at the point of sale) and a lack of perceived value by the consumer.
Given the inevitable increase in germ-conscious consumers, I believe a health-related surcharge would be accepted if hotels can credibly demonstrate that it results in improved cleanliness and safety standards. I could even envision it becoming a positive marketing message. Envision, for instance, a statement similar to the following appearing on a hotel’s website:
“The XYZ Hotel [or hotel brand] has taken increased steps to provide a healthy and safe environment for guests and employees by implementing new and advanced techniques in the cleaning of our guest rooms and public areas. Thank you for supporting a surcharge that allows us to provide this increased level of care. For additional information on steps we have taken to protect your health and safety, please click on the link below.”
In fact, if a competing hotel/brand hotel does not charge such a fee, one might wonder what they are not doing to make their property a safer space to be.
Ideally, one or more credible entities would develop a widely accepted certification (beyond standards promulgated by individual brands). AAA and Forbes or, perhaps, a medical institution are potential candidates. There would be no need for gradations (1 to 5 stars/diamonds), just an on/off switch. A hotel either does or does not conform.
I know, I know, here come the ambulance chasers. Already in New York, litigators are trolling for victims of COVID-19 so they can sue any business/person with whom an infected person has been in contact. (speaking of plagues on humanity).
I believe that hotels, hotel companies and would-be certifiers will find exculpatory ways to fend off such nonsense. If the industry, and really all businesses acting in good faith, can’t find ways to thwart malevolent legal pursuits, we should all remain sequestered with our heads between our knees and kiss our you-know-whats goodbye.
Litigation risk notwithstanding, would the now-growing population of germophobes seek out properties with a health certification when they travel, and pay a little more for the added peace of mind?
I know my answer.
Richard Warnick is managing director and co-chairman of CHMWarnick, the leading provider of hotel asset management and owner advisory services. The company asset manages more than 70 hotels comprising approximately 29,000 rooms valued at roughly $15 billion, and is advising on development projects valued at over $2 billion. CHMWarnick’s hotel owner advisory services include asset management, loan surveillance/hotel receivership, hotel planning and development, acquisition due diligence, owner-entity accounting, management/operator selection and negotiation, capital planning and disposition strategy. CHMWarnick has six offices nationwide, including locations in Boston, Phoenix, Fort Lauderdale, Los Angeles, New York and San Francisco. For more information, contact 978.522.7000 or visit www.CHMWarnick.com. For the latest company news, follow CHMWarnick on Twitter @CHMWarnick and LinkedIn.
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