Can a hotel pass with UNLIMITED STAYS exist in hospitality?
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.
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.
Hotel-run programs:
Third-party travel subscription programs:
What is new with the Frontier Airlines GoWild! pass is the unlimited number of flights you can take, though within the confines of blackout days and restrictions.
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So the question is, can a hotel pass with UNLIMITED STAYS exist in hospitality? In my view, 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."?Subscription membership services maybe a novelty in hospitality, but this business model is widely used in other industries:?media streaming, transportation, retail, entertainment, etc. I believe there is a real consumer subscription fatigue nowadays since an avalanche of subscription services are being pushed to you every day.
I believe today the novelty of subscription services has worn off and only players with already existing huge captive audiences like Disney, NBC, Discovery, etc. can launch a successful subscription service. 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.
I doubt that a startup hotel subscription service could be successful today since it would require humongous investments at both ends of the equation: a) B2B to convince hoteliers to participate, and b) B2C to convince the traveling public of their value proposition. Impossible task!
In addition, I believe there are serious technological challenges. How do you make a reservation if you a holder of an unlimited hotel stay pass? How do you account for these reservations? How do you keep track of number of roomnights stayed for each pass holder?Current website booking engines, CRS, channel managers and PMS cannot handle such reservations and accounting. Using special rate codes or requesting that pass holders call a specific number is antiquated and awkward. Your staff needs special and constant training to handle these reservations and pass holders.
In conclusion, 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.
I think you might want to correct that to "most PMS systems" :) This is, for me, one of the most fun problems to solve in hospitality (and travel technology), and we're probably the only ones weird enough to try, but I would be willing to bet that within the next decade, most travel brands will have a subscription layer. For me, the main reason is that forecasting demand curves has become fairly easy, and as long as you have enough asset coverage (through your own assets or partnerships), you should be able to effectively plan. I think the fact that hotels have gone for a model of looking at RevPAR, or focusing too much on each individual room sales is part of their undoing, because they should really be looking at total revenue per site for each day, and extrapolate from there. If you do that, then having a subscription program should give you that floor of revenue, and then look at everything else the same way Uber would look at 'surge pricing'. In this way, you'd slowly build up to a portfolio of sales products - subscription individual, subscription group, group leisure, group business, leisure transitory (what normal room sales are today), business transitory, etc. And that's only the hotel room inventory.
Vice President @ Epsilon | MarTech & AdTech Solutions - Travel | Hospitality | Casino Gaming
2 年Great post! Thanks, Max!
CEO/Founder, Skift. Perpetually exhausted dad of three hyperactive kids
2 年I think you are right here.