1. Are you Scarce or Abundant
Last week I ran a programme in Darwin in Australia’s Northern Territory. I stayed at the Hilton, which at $180 a night is a pretty
decent hotel (in fact good enough for Tony Abbot, the Aussie Prime Minister who was staying a few doors along – something I can’t
imagine happening in London or Washington?). Imagine my shock then when I was told that in-room wi-fi cost an additional $27
per day!
I was offended. My client was paying and, I am sure, would not have even questioned this expense, but I opted to use the 8 hours of
free wi-fi available – to anyone – in the lobby. I figure that Paris already has plenty and I didn’t want to rip my client off.
Are hotels a busted model?
I just don’t understand the logic of this approach. I can walk into the lobby of the Hilton, buy a $5 cup of coffee and surf the net until
my eyes hurt. But if I actually become a staying customer, I have to pay – and pay a rate that takes me for a fool!
Most hotels still run to this model, which is not only outdated, but commercially dumb. Why treat your guests like they are idiots?
We all know that international phone calls are now inexpensive and wi-fi pretty much free, so why continue to insult your customers
with used-car-salesman prices. And why put a convenient supply of drinks in each room and then double the usual prices so that
few people (including corporates) actually buy anything. Surely, waiting for an occasional rock star to ‘go large’ on the mini bar
whilst most of your customers beat a path to the local 7 Eleven can’t be the smartest play.
Hotels then are trapped in a ‘scarcity’ mindset. It assumes we have no choice and will – albeit reluctantly – allow ourselves to be
ripped off. Their problem is that we no longer live in scarce times. As customers, we are now more informed than ever and –
enabled by new technologies – have choices (e.g. make cheaper calls from our own smart phones or access free public wi-fi
networks). Their persistence with this approach means that a typical customer experience is really poor. I’ve paid a lot of money
already and yet, for a few low-cost items, I am again and again asked to pay. I feel, at best, cautious and, at worst, royally ripped off
(something I’ll be sharing with the world on any number of social media outlets)
So what’s the alternative?
We live in a time where businesses need to adopt an ‘abundant’ attitude. It’s about giving more to get more. In his excellent book,
‘Free’, futurist Chris Anderson writes that;
“Sooner or later every company is going to have to figure out how to use Free or compete with Free”
2. Chris was talking about completely free alternatives to paid models (such as free but limited versions of software that we get to
like and then upgrade to a paid ‘premium’ version – e.g. LinkedIn or Evernote). With hotels, they don’t even need to be free, just way
smarter in the way they charge. In my Darwin experience, I know I’d have felt completely different if the room rate was say $20
dollars more and included FREE wi-fi and FREE soft drinks. I’d have gladly paid this (remember I did not pay a penny over the $180
because of my poor customer experience). I think most other guests would have too. The hotel would have a lot more happy
customers – delighted by an ‘abundant’ hotel experience AND increase their profit due to the low real cost of a few cans of
lemonade and a bit of data.
It’s already happening
In London, the Hoxton Hotel near Old Street is pioneering this kind of thinking. It’s a classy hotel in a chic location, yet all calls
(including international) and wi-fi are free and the room rates are flexibly priced so that the earlier you book the less you pay. In
the face of new competition like Airbnb – the Hoxton, like many other hotels knows that it has to offer a different and better
customer experience. The traditional pay-plenty-as-you-go model is heading for extinction.
My question for you?
Is your business operating from Scarcity or Abundance?
Love to know your thoughts.
Mark
