Should hotels charge for swimming pools?
And what can airlines learn from the latest hospitality pricing trend?
Konichiwa! I went big in Japan and just got back from taking my Mum on a sake-sippin’, bullet-train-zippin’ tour of the Asian powerhouse. Which is why you have not heard from me for a few weeks. Normal service now resumes, with more mind-stretching original airline analysis flying into your Inbox soon.
The mysterious islands of Japan lie at the opposite end of the Eurasian landmass to my home in the United Kingdom. But I was struck by how much we have in common. As island countries we both have quirky traditions, distinctive food, a dry wit, popular monarchs and a healthy scepticism of bolshy continental neighbours who like to throw their weight around.
For just under three weeks my Mum and I explored Tokyo, Osaka, Hiroshima and Kyoto, with side trips for the ancient capital Nara and the splendid Himeji Castle. We went kabuki-viewin’ and Fuji-spyin’; shrine-explorin’ and temple-climbin’; metro-ridin’ and exit-findin’; wagyu-grillin’ and Godzilla-roarin’; and ice-cream-lickin’ and tempura-munchin’.
I paid for the flights with Avios, the loyalty currency of Spanish IAG, who own London-based British Airways and a selection of other European carriers. I used an American Express companion voucher to halve the Avios required. We were ticketed in Club World, BA’s business class, but luckily got a free upgrade at the gate (see article) to swanky First class. Thanks BA!
After hitting the lunch and bar service hard and then sleeping it off during the 16 hour monster flight back to Heathrow, we both recovered quickly from jetlag. This supports my theory that first class is a time machine of sorts (see article).
I am left with great memories, a fabulous model tori (the gate associated with shinto shrines) on my desk, 1,500 photographs to sort and, most importantly, a very happy Mum.
But don’t worry – I am not going to bore you with endless photos or stories from my holiday any more. It is time to think about pricing strategy in travel.
During our stay at the Sheraton in Hiroshima, conveniently located next to the station and with views of the bullet trains a-zippin’ through, I was surprised to see that using the pool was not free. It cost JPY 1,650 (£9.06, $11.01) per person, JPY 3,300 for the two of us.
Levying an extra charge to use the pool at a hotel is something I have read about but not personally experienced before. At the Hilton in Osaka, our previous hotel, the pool was free to use for guests.
At first, after I found out about the charge I was reluctant to pay and, to be honest, a bit miffed. But to be fair the pool did look like a nice one with tasteful mosaic tiling, good views of the city and a jacuzzi fizzing away invitingly by the window. We both decided to splash to cash to have a splash around and handed over the Yen.
I am glad we did.
As I doffed my compulsory swimming cap (remember this is Asia) and jumped in (diving not permitted, again remember this is Asia) to the perfectly warm, beautifully soft water, I began to think about the economics of hotels charging for pools and any relevant lessons for airlines.
The first thing I noticed was that the pool was not busy but it was in use. One lady was swimming away and a chap was sitting in the jacuzzi. The pool is quite long and wide so there was no competition for a lane, no need to overtake and no general sense of hustle and bustle.
It is important to note that the swimming pool was in use. A good price point is one that is high enough to effectively ration the product (i.e. stop the pool being overcrowded) but low enough that people actually pay it. Put bluntly, if you sell everything, you are too cheap. A good lesson for airlines, who should aim to achieve 85% to 90%-ish seat factor, not 99% or 100%.
An empty pool is no good to anyone and hotels who price access too high will end up closing the facility citing “low demand” and making everyone worse off. The same applies to airlines. If you make comfy business class and first class too expensive people will not buy it and fly with somebody else.
When fares are inflated to reflect corporate discounts, airlines should ensure there are cheaper fares, suitably fenced, to ensure that people without discounts can buy the seats for a similar price.
Charging for the pool probably makes swimming a better experience for those who choose to use it. I ended up swimming for longer and using the sauna, steam room and deliciously-cold plunge bath too. I had such a great time that I even went back again the next day for second helpings, which I probably would not have done had the pool been free.
Charging for the pool made me value it more and have a better experience. It reminded me of the on-going debate about whether or not food on the plane should be free. When you stay at a luxury hotel you do not expect the restaurant and the bar to be included – why should it be different on the plane? I could probably get a whole other article out of that…
The price mechanism might be a terrible way of rationing things, but it is better than all the other options. In the pool at the Sheraton Hiroshima it helped me have a great swim and generated a nice little ancillary revenue bonus for the hotel.
This little extra nugget of revenue turns the pool from a cost centre into a revenue generator – with pool access pricing, swimming will probably get to enjoy more and better pools.
I think that hotels like this where the pool is a nice-to-have but not integral part of the experience should certainly consider a similar model of charging for the pool.
But resort hotels or hotels with a feature pool (think the Marina Bay Sands in Singapore for instance, which has a snazzy rooftop pool with views over the island city) should not charge extra for the pool.
Guests in these places are probably considering pool access a reason to book the hotel in the first place and will feel ripped off if the hotel gets too greedy. It would be a bad look for hotels to go crazy with charging for towels, but space on the best loungers might be ripe for the plucking.
But how should hotels charge for pools? There are many things to consider, such as:
1. What is the right price level – 500 Yen, 1,000 Yen, 10,000 Yen? At about the same price as a drink in the bar, I felt that the Sheraton Hiroshima had it right.
2. Should access be charged per person or per room? My Mum and I each had to pay – it would get expensive quickly for a family of four.
3. Should free pool access be a loyalty status benefit? Some chains seem have rather a lot of status customers (think Hilton for example, who practically give it away with credit cards and partnership agreements); meanwhile at other chains (think Accor) earning status means a lot of nights in the chain’s beds – free pool access might be more appropriate for Accor than Hilton.
There is one big drawback for hotels considering charging for the pool – people who do not expect these charges may be upset and refuse to book again.
At British Airways, advance seat reservation is chargeable, even in business class, unless you have status or hold a flexible (read expensive!) ticket. Read FlyerTalk and you will see many first-time bookers who seem to be caught out. On the other hand, it does tend to leave an excellent selection of windows and aisles for late bookers, who tend to pay higher fares.
Few airlines have adopted BA’s seat selection model. I will be interested to see the extent to which charging for the pool becomes chain-standard in the hotel market or not.
oliver AT ransonpricing DOT com