The Downfalls of Overcharging for Bottled Water
By Larry Mogelonsky, Managing Director Hotel Mogel Consulting Limited
You've trained your bellman, concierge and front desk staff to a tee. Your guests immediately feel welcome at your property with the awful nightmare of security lines, air travel and bag collection finally behind them. They enter their guestroom, just starting to unwind, and then prominently displayed is a bottle of water with an unmistakably exorbitant price tag. And it is all for naught.
When a commoditized item like bottled water, is commonly understood to be sold at a certain base price – let's say $1 for 300ml for simplicity's case – then any inflated price that's paid forward to the customer will be instantly discernable. And when you charge, say, seven bucks for what generally costs only one in the supermarket, then it is builds distrust in guests' minds.
"This is a blatant rip off! What else are they marking up to pad their pretentious wallets? What other tricks are they pulling to price gouge me? What are they hiding?" These are not the sorts of questions that you want running through your customers' minds. It's not a healthy start to a good relationship and it's just bad business.
Think about it even further. What does such a tremendously large price tag for bottled water say about your property, and importantly, about your sense of hospitality? Moreover, this one singular markup can become a reflection of all other prices for any good or service sold at your hotel. That is, bottled water price gouging may instill the idea in guests' minds that your abode is needlessly expensive, so much so that it hinders said customers from dining at your restaurants, visiting your spa or setting foot in your gift shop.
Besides this deleterious psychological effect, I do indeed understand the rationale from a return on costs perspective. There is a solid argument for affixing a huge price tag on that oversized bottle of water to make up your margins on other costs. Still, though, stop thinking like your hotel's accountant and start thinking like a hotelier – someone that cares about your guests and treats them like they are at home.
In other words, stop being pennywise and pound foolish! Being stingy about small expenditures such as water will ultimately cost you in the long run when it comes to the more important matters such as overall guest ratings. In this particular case, you may indeed get some small returns, but what are you losing in return?
Here's a thought. Take that bottle, remove the price tag altogether and replace it with a tag that simply says, "Our home is your home. Thank you for staying with us. Please enjoy this with our compliments. Sincerely, (name) General Manager; or (name) Executive Housekeeper."
Now, with this tag in place, ask yourself how guests will feel. It sets a good pace for the rest of their stay with you. Moreover, it dispels any concerns they might have had about price gouging elsewhere, thus helping nudge them towards using your restaurant and other amenities. Next, these good vibes may translate to tips for the housekeeper – that is, a morale boost for your frontline – as well as a sure-fire increase to your online review scores.
I was reminded by several veteran hoteliers that success in our business is measured in thousands of small increments. This freebie is just one suggestion that is will go a long towards winning the hearts and minds of your guests.
And as a final aside, if you are completely intransigent when it comes to pro bono features like this, then at the very least consider dropping the price to something that isn't as obvious. This applies to economy and limited-service providers as well as though luxury properties where guests can afford the expensive water bottles. Just because they 'can' doesn't mean they 'should', so please stop this practice before it damages your hotel's reputation any further.