Hotels experiment with a la carte fees — would you pay $25 extra to use the pool?

Tyler Morse, chairman and CEO of MCR Hotels, just implemented a new business strategy that may change the hospitality industry forever.

In exchange for lower booking rates, the New York-based hotel company — which accounts for about 15,000 rooms in the country including the TWA Hotel at John F. Kennedy International Airport and the High Line Hotel in Manhattan — will be charging guests for services and amenities like pool access and the option to check in early or late, all of which used to be included for free.

Checking in early and checking out late will cost guests $20, for example, while access to the pool on weekends will run $25. Gym access will incur a yet-to-be-determined fee as well.

Approximately 12 of Morse’s independently owned hotels will be adopting this policy. (MCR has 110 hotel properties across 33 states.) It’s considered risky, because competitors don’t yet do this.

An a la carte approach to hospitality

“Not every guest wants every product, and they don’t want to pay for something they were never going to use anyway,” Morse said in a recent statement. “Other owners are fully behind me, but there’s always a fear of change.”

Although Morse anticipates some hesitancy on behalf of hotel guests to accept this pay-for-the-services-you-want approach, he believes the model will be welcomed as a norm eventually. He says that hotel lines that have already begun implementing service charges have received very few complaints from customers so far.

Some hotels will have to undergo a massive technological overhaul to support adding service charges to amenities that were previously factored into the booking rates.

The industry itself is acting tentatively for good reason. Before the start of the summer, the hotel industry was beginning to pick up momentum. But when the delta variant became the dominant strain of COVID-19 across the country, labor shortages — and less overall travel — took a toll on hotels. U.S. economists predict that revenue gained from the hotel industry will not return to 2019 levels until sometime in 2024.

Does this new model serve all equally?

Now hotels need to find ways to both cut costs and squeeze more revenue out of established services.

“Hotel owners have increased spending on sanitizing their properties to prevent the spread of disease,” said Kerry Ranson, chief executive of HP Hotels, which manages about 30 hotels. “Hotels need to recoup those extra costs and losses, and the only way to do that is to charge for things that are convenience items.”

There was a time when it was normal for hotel companies to charge for Wi-Fi, he noted, and that there are companies that charge a fee to access high-speed internet even today. Guests will pay and always have paid for services they believe add to their experience, he argued.

Marriott International and Hilton Worldwide Holdings, which franchise nearly 6 million hotel rooms in the U.S, have said they’re not interested in adopting the pay-per-service model at this time.

Marriott’s chief executive, Tony Capuano, recently said that his customers would more than likely push back if his hotels implemented charges for services and amenities.

“We will continue to be influenced by what we hear from guests and partners,” Capuano said in an interview. “But it would be folly to have a knee-jerk reaction to what may be a vocal minority.”