Originally Posted by
777Brian
I have always wanted to see the financials for the hotel mini bars. I've always thought that the extra cost of the employee to stock the bars, the dollars tied up in product, and the disputes had to make it a losing battle.
And you'd be right in most cases. Unlike previous posts have speculated, the employees are not a "sunk cost" - it takes separate staff hauling carts of mini-bar inventory from floor to floor, checking each bar individually, stocking items, removing expired items (and every item has an expiration date these days), dealing with either manual inventory or electronic inventory, checking liquor bottles like vodka to ensure the guest didn't use them and then fill them with water (!), going back and forth to the storeroom when items need to be retrieved because the cart wasn't stocked properly, and on and on.
I’ve also had some very stale items out of the mini bar – there is not a lot of turn and beer, soda, and candy bars can go bad in less than 6 months. Probably about 15% of the time I end up with a mini-bar charge that isn't mine, I always have wondered if it was a simple error or the billing catching up from a previous guest that consumed an item and wasn't charged. I realize even at the high prices the mini bars aren't profitable but I've always wondered what would happen if some significant changes in the mini bar business model were made. What if prices had been reduced to stimulate demand? I'd certainly pay $1.00 for a soda or a water but not $2.50 or $3.50.
This is how we made it work back in the day. Make sodas $1 to get people to open the minibar; then put local, offbeat items in there so you could mark them up 500% but the typical guest couldn't compare them to the 7-Eleven prices they see every day. It's very hard to sell M&Ms in a minibar because everyone knows what a package of M&Ms costs; it's easier to sell a special package of "gourmet almonds" because no one sees this on the shelf at the grocery store and therefore no one knows the "retail" price.
I guess, what’s the price elastically, if a 50% price reduction generates 200% sales increase then you end up generating more revenue.
That's a pretty big IF/THEN statement. For a lot of items, a 50% price reduction generates perhaps a 10% sales increase.
I also wonder what would have happened if the mix of products in the room were changed, less alcohol and more health oriented snacks. I would also stock at the start of each visit and not daily. It would reduce some of the labor costs, however in order to gain multiple units of the same product assortment would have to be reduced.
If a minibar attendant is already on the floor stocking room 325, now you have a "sunk cost" and the attendant might as well check the other rooms on the floor while they're there.
Two crazy ideas while I'm at it, although these don't help the profitability, but perhaps could be used to increase room rates or drive loyalty - With stocking when guests are scheduled (like I recommend above) perhaps you could stock more perishable items, milk, oj, or perhaps fruit (which might be consumed more). What if as an elite customer you could put in your profile the two or three items you particularly like and those would be waiting in the mini bar at a more "market" price. Limit the possible options to make the program manageable and set some limits, i.e. room must be booked 48 hours or only available on SPG Floors (so the refrigerators can be removed from other rooms).
Crazy ideas can beget realistic ones that could help the whole minibar mess, so keep thinking. Perhaps a less crazy idea might be: Offer an "unlimited" minibar option: Pay an extra $30 a night, chow down on all the stuff in your minibar and have it refilled on request as often as you want. If you choose not to pay you don't get a key and the minibar stays locked. It would probably have to be at least $30 a night to make it feasible for the property.
Edited to add: This would probably have to be non-alcoholic for two reasons: Local liquor laws, and the general tendency of guests (especially some FTers) to covet free booze so much that they would take it all/drink it all/keep it coming forever. I swear some FTers are like dogs, who will eat until they die (in this case, drink until they die if it's accessible).
