How low can you go? This budget hotel lets guests pay what they want
A newly opening budget hotel has decided to boost its visibility and patronage by offering an unusual promotion for the hospitality industry: It is allowing guests to offer to pay what they want for a room.
At the 538-room Ibis Singapore on Bencoolen, part of the French Ibis chain, rooms usually cost about $92, but for a short period each day, the hotel allows customers to go to its website and enter the price they feel like paying. A little countdown clock on the main page lets them know when the next opportunity window will open.
The idea is a temporary promotion (in fact, bidding comes with a random-draw giveaway of a stay) that ends March 15, and is not a permanent pricing system. Hotels don't want to risk sustaining themselves over the long term by sticking to this pricing system. Anyone who has ever seen their low bid rejected by Priceline, which has a major name-your-own-price component, knows that there are limits to how low hotels are willing to go.
But when you think about it, this idea isn't quite a high-wire act of good faith. There isn't a whole lot of overhead to a single budget hotel room. Restaurants have to buy ingredients, but a hotel room is already built and few raw materials are being spent. You're mainly paying for time, and I think we'd all be shocked to learn just how few dollars would be required, per-room, to pay the staff at a large budget hotel when it's full. In the Ibis' case, if you buy breakfast (Ibis being French, serves magnificent baguettes) or any other meal, the hotel will recoup some of its expenses.That ancillary income is a big reason why Disney's grand plan to give away free admission on your birthday in 2009 isn't the risk it may appear to be at first.
But don't make the mistake of thinking that name-your-own-price product experiments result in disaster. Two years ago, the band Radiohead decided to introduce its album In Rainbows as a price-optional download. On the name-your-price promotion alone, the band made more money than it had on any previous album, and once the album was finally released as a physical CD, it sold another 1.75 million at a retail price. And to everyone's surprise, the album distributed some 3 million copies altogether, which was a real coup, promotionally speaking, for a band that normally sold in the hundreds of thousands.
Granted, that was before the economy started wheezing so badly. Given the option of paying nothing or entering what they think is a fair price, I wonder how many more people would go for broke.
The idea is a temporary promotion (in fact, bidding comes with a random-draw giveaway of a stay) that ends March 15, and is not a permanent pricing system. Hotels don't want to risk sustaining themselves over the long term by sticking to this pricing system. Anyone who has ever seen their low bid rejected by Priceline, which has a major name-your-own-price component, knows that there are limits to how low hotels are willing to go.
But when you think about it, this idea isn't quite a high-wire act of good faith. There isn't a whole lot of overhead to a single budget hotel room. Restaurants have to buy ingredients, but a hotel room is already built and few raw materials are being spent. You're mainly paying for time, and I think we'd all be shocked to learn just how few dollars would be required, per-room, to pay the staff at a large budget hotel when it's full. In the Ibis' case, if you buy breakfast (Ibis being French, serves magnificent baguettes) or any other meal, the hotel will recoup some of its expenses.That ancillary income is a big reason why Disney's grand plan to give away free admission on your birthday in 2009 isn't the risk it may appear to be at first.
But don't make the mistake of thinking that name-your-own-price product experiments result in disaster. Two years ago, the band Radiohead decided to introduce its album In Rainbows as a price-optional download. On the name-your-price promotion alone, the band made more money than it had on any previous album, and once the album was finally released as a physical CD, it sold another 1.75 million at a retail price. And to everyone's surprise, the album distributed some 3 million copies altogether, which was a real coup, promotionally speaking, for a band that normally sold in the hundreds of thousands.
Granted, that was before the economy started wheezing so badly. Given the option of paying nothing or entering what they think is a fair price, I wonder how many more people would go for broke.
Reader Comments (Page 1 of 2)
2-05-2009 @ 2:50PM
vgkflc said...
Ok lets see about ten scents to wash the sheets and two bucks for the time it takes to change them and drag a vacuum over the rug. a nickle for the sliver of soap and drop of shampoo. Yeah thats about ot and then add about two bucks for the electric per day. For under 15 bucks they can keep each room going and we are paying hundreds??? And if no one is in it, NOTHING. The rooms around it will keep its temp ok and you dont even need to turn on the light. So add up all the rooms and how many stay rented and go from there.
Reply
2-05-2009 @ 5:09PM
rachelemc said...
ten SCENTS? Do you mean cents?
2-06-2009 @ 9:47AM
sam said...
if you think hotels are big proffitable business, why don't we all buy hotel and find out? It is not just laundry expense, their is lot more than that. Union pay, med. insurance, property tax and insurance. repair maintenance, big franchise fee. bigest of all is mortgage payment.
2-06-2009 @ 10:40AM
Tom said...
Lets not forget about theswe costs
Workmans comp insurance
Auto insurance
Electric bill
Gas bill
Stollen property
Maint. repairs
Outside maint.
Upgrades to facility
Water Bill
State taxes
Fed Taxes
Local Taxes
Insurance on the builoding
I Guss you feel we are up to 20 dollars
This is true with every business- It is called OVERHEAD
Get Real
I guess you feel now we are up to 20 dollars
2-07-2009 @ 3:37PM
Me said...
If it so easy why don't you do it ? You have "No Clue" !
2-05-2009 @ 3:19PM
adam said...
i choose to pay.....NOTHING!!!!!!! LOL!
Reply
2-05-2009 @ 3:29PM
Bob said...
I did that one time at my restaurant, you paid what you felt it was wortk, made more than menu price. Course, got an "Adam" like above and paid a $1. There is always a few.
Reply
2-05-2009 @ 5:37PM
Seymour said...
I wonder if the big hotel chains will drop their prices due to the economic situation and stop charging us an arm and a leg just to stay in a room. NAW!!! That's too much to ask from a greed-driven hotel owner. It would be nice, though.
Reply
2-08-2009 @ 2:34PM
Carolyn said...
Actually, you can always negotiate hotel prices. Many rooms are left empty every night. They'd rather get something, then nothing.
2-05-2009 @ 5:47PM
drgata25 said...
I also choose to pay nothing.
http://makesomemoneynow22.blogspot.com/
Reply
2-05-2009 @ 6:05PM
BANCHEE said...
have you ever been to tired to drive than PAY WAY TOO MUCH when you woke up you we afraid to get in the shower ? my wife and i did that when we were just married in ABLINE
That was 20 years ago ,these should have paid us to stay there !!!!! NEVER AGAIN !!!!!!!!!! IF I DON'T LIKE IT I WILL LEAVE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! BANCHEE
Reply
2-06-2009 @ 10:24PM
Mtylspldrttn said...
Ten cents to wash sheets? You have not been to a laundromat in a while have you? I work in an hotel that has a very prime location with 57 rooms, it is small compaired to big chain hotels but I can tell you the electric bill alone is 5000.00 a month winter, spring , summer, and fall. The utilities must be left on year round to insure the comfort of guests when they do arrive. Not to mention the house keeping staff must clean rooms in the off season as they do in the peak season. Even if no one has stayed in the room it still gets dusty and needs cleaned. You may think there is low overhead but no there is not. Staff must still be paid year round. Yes we make most of our profits in the peak season but we are here every day 24/7/365.
Reply
2-05-2009 @ 7:44PM
Jess said...
Electric bills are not the same year round, that is ridiculous. When the hotel is empty all the rooms air conditioners/heaters are not running. The tvs, radios, and water are not running, thus electric and water bills go way down during off seasons. Also many hotels hire seasonal labor. I do not know how much it costs to wash sheats at hotels, but many now do not even wash the sheets every night! They say we are being green so we will only wash them every 3 days or between guests. Comparing the costs to laundromats is silly too because you are talking about paying per a load versus bulk discounts. So the hotel is either outsourcing a large bulk for big discounts or washing them onsite. I am not saying it costs 10 cents a load, but the majority of the cost is on the mortgage on the building.
2-06-2009 @ 10:23AM
Circus Tim said...
I find f you walk into a hotel on a weekday, and the parking lot is empty , you can negociate with most managers, especially if you will be staying several days or plan on returning on a regular basis. I have aquired $200. rooms for $60. a night in NYC by agreeing to take a room with no view, and have beds made daily but sheets only changed every two or three nights.. The average I pay nationwide is $46.00 per night, and ussually get free breakfast.. Rule one is never negociate if other guests are near by (They don't want to start a landslide) Rule two Don't insult the manager or the hotel, but let them know you will prefer their location, but are willing to walk to the competitor
Reply
2-06-2009 @ 7:33AM
tt-rexxx said...
I remember back in the 70's a friend gave me a master key to all the rooms in a motel with a bar.On friday nights it was like shooting fish in a hot tub. one night used one room at 6 and another at 12 with different guests AAAHHH THOSE WERE THE DAYS.
Reply
2-06-2009 @ 7:57AM
WTRE428476@AOL.COM said...
WOMEN PERFORM BETTER ON CLEAN SHEETS ...lol
Reply
2-06-2009 @ 8:53AM
jnzcram@aol.com said...
Move over Motel 8 you have company
Reply
2-06-2009 @ 10:53AM
Sara said...
Be reasonable...it could happen again ! towels..I use a lot, sheets, clean bedspread..I insist... Do you realize the bedspread is usually dirty...now how much food can someone eat..I know some eat just because they can, and get ill...anyway be reasonable...some would be boobs and pay nothing !
Reply
2-06-2009 @ 11:00AM
Aaron said...
Vgkflc add in unemployment, liability, and property insurance. Then add property and business tax. Is the place union? If so add in additional labor cost and the cost of medical insurance. Is it a franchise? Add in a franchise fee. Next consider the mortgage. Finally grasp the idea that free enterprise is what made this country what it is. The owner is entitled to a profit for having taken the PERSONNAL RISK of starting a business. Remember the value of any product or service is what you can get a customer to pay for it.
Reply
2-06-2009 @ 11:26AM
Jess said...
The economy is terrible and I think everything is negotiable. I do most of my shopping online through an online shopping mall that gives out promo codes or free shopping on about 500 of the top online sites (including, Walmart, Target, Bloomingdales, Old Nay, Sephora, Drugstore.com). The site is http://www.fatcrumbs.com and they also give you back cash on your purchases form 5-50%
Reply