Crain’s New York Business recently reported that the New York Hilton, New York City’s largest hotel, will cease offering room service to its 1,980 rooms starting in August. Citing high labor costs and inconsistant demand, the hotel will offer a “grab ‘n go” self-serve cafeteria to guests instead.
The truth is, hotels don’t often make money offering room service. Crain’s quoted John Fox, senior vice president of PKF Consulting, who said, “I don’t think anyone makes a profit on room service because of its labor costs,” he said, adding, “I’m sure all the big hotels will be looking at what Hilton is doing.”
This may be a surprise to you, as it was to me, since room service is often staggeringly expensive. TripAdvisor conducted a survey of four-star hotels both in the U.S. and around the world and discovered some pretty insane prices. That club sandwich you want at 1 a.m.? In Zurich, it costs $29, on average, which means some of them cost more. A can of Coke runs almost $6 in Honolulu, which is the highest average price in the U.S. but still less than the $7.72 you’ll pay in Oslo.
Add a mandatory service fee and a delivery charge, and room service looks like a gold mine for hotels. But even at these inflated prices, the labor costs are too high. (Hilton is laying off 55 people.) You have to keep enough people on staff to provide room service throughout the day, even though the bulk of business comes in the morning.
So I can see how Hilton execs could decide that room service just wasn’t worth it anymore. But I question their solution. A cafeteria-style eatery is a depressing alternative to breakfast in bed. And in New York in particular, it seems totally unnecessary. After all, what can’t you get delivered here? If I were the general manager of the New York Hilton, here’s what I’d do:
1. Let people order in. To some degree, hotels do this already, but I’d expand the practice and really sell it. You’re the New York Hilton, for the love of Mike—there are literally hundreds of restaurants within delivery range that offer a whole range of cuisines and prices. Ad copy: “Room service? We’ll do you one better.” Guests of the Hilton are within delivery range of ‘Wichcraft, The Palm, Bice, and Bricklane Curry House, to mention a few much, much better dining options.
2. Set up a deal with Seamless/GrubHub. The two online-ordering companies are merging, but get a deal on the books: Let guests of the hotel order via those services and bill it directly to the room. In a perfect world, I’d argue that both parties should do this for free, as Hilton gets a unique selling point (see above) and Seamless/GrubHub gets exposure to thousands of new users.
3. Make an app. Arriving guests could load up their phones with a Hilton app that would provide all these delivery options. Add “concierge picks” if you want to narrow things down for people. The hotel could can add other services, too—housekeeping requests, valet-car delivery, checkout, etc. Let people download the app (via the free Wi-Fi you already offer, right?), or lend them an iPod Touch when they check in.
4. Leave some cutlery in the room. The problem with delivery is that the food doesn’t come as nicely plated as it does via room service. People will just have to get over that, but you could leave some prepackaged plates and cutlery in the room so all guests has what they need for in-room dining. Make it bamboo or compostable cornstarch and get yourself some eco-cred while you’re at it.
If room service is something that both loses money and makes customers feel ripped off, then it’s good to get rid of it. But you don’t have to lose the convenience at the same time—there is a way to turn a perceived negative into a positive. Render unto Ray’s Pizza what is Ray’s.