Will a subscription service be part of hotels’ future?
 
Will a subscription service be part of hotels’ future?
18 AUGUST 2017 7:39 AM

Everyone seems to want to bring the Netflix business model to different industries, including brick-and-mortar businesses like movie theaters. Could the subscription model make sense for hotels?

Please indulge me just for a few minutes as I go off on a completely speculative tangent, but I’ve got something I’ve been stewing on for the last little bit.

Over the past few days, there’s been a lot of talk online about a newly revamped program called “MoviePass,” which offers subscriptions to consumers and allows them to attend one movie a day at the vast majority of movie theaters across the country for just $10 a month. Not surprisingly, movie theater chains like AMC are already openly worrying that subscribers will ultimately take their frustrations on them if MoviePass goes belly up because the transition back to normal ticket prices will appear to them as a substantial increase or even price gouging.

This opens up a lot of questions about the simple economics behind that sort of program. If you assume the MoviePass folks are paying full face value on those tickets, they’re already in the red if you use the service just once a month.

This seems to be indicative of more and more companies wanting to export that Netflix business model into the realm of the real world.

That begs the question if whether a subscription service evolve in the hotel industry and if it could be the next logical step for hotel loyalty.

I’d imagine the price required to make that feasible would leave only the most hardcore travelers, and likely the “road warrior” frequent business travelers would be the core audience. But is it that ridiculous to think that could be a real option?

Couldn’t a traveling sales person or a construction worker who is on the road the majority of the year just purchase a membership on a monthly or yearly basis at a flat rate that guarantees them a room (depending on occupancy) at a brand like La Quinta, or even select brands under the Marriott, Hilton and IHG families?

It seems pretty logical to me, but I know there’d be problems inherent in it. It would obviously add another complication to the owner/operator-brand relationship as they iron out how much to charge the brands—which I assume would be receiving the primary financial benefit—for redemptions.

Also, you’d likely have to purchase for a timeframe longer than a month or a few months and lock in the rate you’re paying on something like an annual or biannual basis to keep people from subscribing for a month of heavy use then dropping their membership when it’s not as likely to be in use.

The difficulty for this—and for other services like MoviePass—that doesn’t pop up with the original Netflix model seems to be the businesses are financially punished for heavy consumption. That should be obvious in anything that’s built on a flat fee paid for essentially unlimited access. Obviously an all-you-can-eat buffet doesn’t want someone camping out at their restaurant all day and having three meals for the price of one.

But in the original concept, Netflix didn’t experience any meaningful downside from heavy use. If anything, it was a positive because it just reinforced consumers’ reliance on their product. But if someone can theoretically stay for as many as 30 roomnights for a fraction of the normal price, that’s clearly much more problematic for hoteliers.

I’ll be interested to see if someone can make this work or if some bold third party can try to impose this model upon the hotel industry in the same way as MoviePass is attempting to. It could be something truly disruptive in a way I have not heard discussed across the industry.

What do you think? Let me know via email or on Twitter.

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