17 Apr, 2006
Hotel Beds Get Better, But Do They Deliver Returns?
Hotel chains have spent millions of dollars to make their beds more comfortable than their guests can find back home, but evaluating the return on investment is proving elusive.
In attempting to analyse whether the investment has been worth it, hospitality consultancy company HVS International noted that hotel chains like Marriott, Starwood and Hilton had spent millions of dollars on research, product design, and high quality materials and worked with executive housekeepers, mattress and bedding producers, FF&E purchasing firms, designers, owners, and customers to “produce their version of the new bedding package.”
While the investment was certainly worth it for the customer, “in what way and, more importantly, how much did it benefit the hotel companies?” the HVS report asked.
Just as airlines embarked upon a drive to upgrade the quality of their first and business class seats, hotels have been focussing on new bedding products in order to differentiate themselves from the comptition and provide an experience that placed a premium on comfort, a good night’s sleep, and consistency.
According to PricewaterhouseCoopers, the US hotel industry purchased 1.4 million beds in 2005 alone, whereof Marriott bought roundly 628,000 beds for eight of its brands and Radisson purchased 90,000 beds to supply 90% of all their hotels. Marriott will invest around $190 million (reportedly the company’s biggest initiative ever) and Radisson about $20 million.
The HVS report Bjorn Gullaksen, Radisson’s Executive Vice President as saying that the new beds were introduced after focus-group participants said they would be willing to pay as much as $10 a night more for better beds. “The bed is paid for by a $1.89 increase in rate over five years,” he was quoted as saying.
Bill Marriott of Marriott Hotels and Resorts says he expects to be able to charge as much as $30 a night more in Marriott hotels once the new beds are installed. In 2005, the total US average rate is anticipated to have increased by 4.0% to $90.
But, according to Bill Brooks, Hilton’s Vice President for Standard Management and Performance, how much of that increase can be attributed to a more attractive room product is difficult to say. In his experience, satisfaction and loyalty of Hilton customers has definitively increased strongly thanks to the new beds but it is not possible to estimate the return in terms of average rate increases at hotels.
So, instead of trying to determine what rate increases might have been achieved so far, HVS International decided it would be easier to estimate by how much the average rate would have to increase in order to recuperate such an investment.
It did its own calculations and found that a hotel buying 100 beds per year over two years, at an estimated cost per unit of $900, plus 5% in related costs, would require an estimated total investment of roundly $186,000 over a two-year period. To recoup that would require either an extra 3.6% increase in average rate, occupancy, or some combination of the two.
However, the HVS report noted that increased occupancy also meant increased costs of maintaining the new beds, especially laundry.
According to Brooks, the sheet load increased by 50% after the introduction of the new Hilton beds. This is mainly due to the triple-sheeting and the duvet covers that need to get washed after every checkout. Energy costs could not be calculated due to the highly volatile nature of energy prices.
In terms of housekeeping, Brooks estimates that the additional workload of making a bed with either triple-sheeting or, worse, a duvet forfeits roundly one room per person per day. This implies that if cleaning a room took 20 minutes with the old bedding, it would now take 20.9 minutes for a room with the new beds.
According to HVS, hotel companies analyzed the situation with the help of time-motion studies, in order to to try and understand the impact on labour costs and also to be prepared for union negotiations.
It was also discovered that a shorter person faces extreme difficulties changing a duvet-covered bed, which turns staffing into a challenge for executive housekeepers. “At airport hotels, this is somewhat less of an issue; Due to the shorter average lengths of stay triple-sheets are preferred to duvets. However, at resort properties with lengths of stay of four nights or more, duvets are used more frequently,” said HVS. The frequent washing also accelerates wear-and-tear of the linen.
Still, the report said, the new beds are here to stay and bathrooms are next.
Hotel companies are already researching the future hotel bathroom which could feature a separate toilet area, a separate shower, a large bathtub, chrome hardware, marble floors, 100% Egyptian cotton towels, flowers, decorative items, DVD players, and flat-panel televisions.
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