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Why should we give it all away as hoteliers?
For Haakon Herbst, the hot-potato topic of ancillary fees is not just a question of creating value in the face of high cost pressure in the industry. For the president of HSMA Germany, the hotel sales and marketing association, extra fees are also a sign of being held in high regard. ‘Extra’-ordinary performance is only recognised as such when there are extra fees, too.
text: Tinga Horny // photography: Cornelis Gollhardt
Mr Herbst, airlines have taught us how to earn a great deal of money through ancillary fees. Can we apply additional charges to your sector on a direct basis?
Haakon Herbst: Perhaps not one-to-one, but certainly the principle can be transferred. The question, however, of whether the airlines have “earned a great deal of money”, is not one I am able to judge.
What prerequisites must a hotel have, to be able to leverage fees for certain services?
Every hotel provides services that are chargeable.
Is it easier for large international chains to introduce ancillary fees than a domestic medium-sized hotel company?
Due to their market significance, I'm sure that large hotel groups are said to find this much easier. But on the other hand, many chains are also more replaceable. Here, owner-managed individual hotels sometimes have it easier. Besides, successful independent hoteliers often calculate their costs more seriously and more comprehensively. There are rarely issues such as “indirect returns” here.
Which services do guests expect nowadays as a matter of course?
Everything. That’s exactly the problem. Almost everything is to be included in the one-off price – early check in, late check out, superfast WiFi, Sky TV, invoice alteration and so on.
Image that you’re the guest. Wouldn’t you feel that ancillary fees are a kind of robbery?
No, not at all. If I book a tradesman – let’s say an electrician – to install my stove, and then afterwards, ask him to do the TV too, then that’s going to cost extra. That’s to be expected! Why should we give it all away as hoteliers?
As a marketing professional, you must see the opportunities of turning additional fees into a competitive advantage?
The competitive advantage certainly doesn’t lie in the first step, of charging fees, but instead much more in creating healthy value and thereby securing the medium-term future of the company. Let me be even more clear. Services must be paid for, if you want to be able to buy this service the day after tomorrow.
That means
that the hotel industry cannot continue to tolerate price drops in any shape or form. Increasing customer requirements on the one hand, increasing costs on the other, competition stepping up here, a flood of economically costly legal requirements there – if someone doesn’t do their commercial homework, then they simply won’t be on the market tomorrow.
You say that special hotel services can be emphasised through ancillary fees. Which services are you referring to?
Parking, sauna, early check-in, late check-out, faster Internet – these service provisions are not such a big problem. Many people charge extra for speciality coffees at breakfast, this is often taken as a given. But the best area to force the issue at hand is certainly the conference and events sector. Room reconfiguration, overtime for weddings... The list is as long as your arm and can be extended as required. However, I’m looking at the basics: I don’t think that extra fees, initially, can help to positively emphasise extra services. However, ancillary fees do bring the entire topic into focus for the sector.
In practical terms alone, how do you explain to a guest that they need to dig into their pockets again for some service or other?
We explain the effort involved behind one service or another quite pragmatically and openly to those who ask.
Who is more easily encouraged to spend on ancillary fees? Business or leisure travellers?
Guests travelling on business are accustomed to paying for services at some point or other. Here the traveller isn’t the problem, instead it’s the procurement specialist or travel manager. In the case of leisure guests, young ones who travel on the cheap aren’t a problem, provided that costs have been clearly communicated beforehand. Guests travelling on more generous budgets, that aren’t worrying about every last euro, are also not an issue. Informing guests “in advance” and being “transparent” – these are the decisive factors here. The guest needs to know what costs to expect.
Mr Herbst, thank you for talking to us.
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