I think we can still reconcile this problem with convenience being a missing
component.  While the discussion about the same product that is in the
mini-bar being available at the corner store at a lower price is true - it
doesn't seem to be relevant.

Arguments why they would tend to use the minibar:
Business travelers are the group we are typically talking about -
1- They may or may not know where the applicable corner store is, and would
also be more likely not to have low MC transportation available to get
there.
2- Opportunity cost -whether framed from the perspective of time needed to
finish preparing for the meeting or presentation associated with the trip,
or that when all is prepared a business trip can appear to its "consumer"
more similar to a paid for vacation - the convenience of the minibar could
arguably be worth more to this group on the road.

Now that I have said all this, it occurs to me that the question may
actually be why does this group seem to have a higher price elasticity when
traveling (where if anything it should be lower - if the company is covering
some or all expanses for this group).  Could it be that the MB of each
dollar is not equal (and they have already paid prices which seem out of
bounds for air fare)?

My real question is not if people will whine about the prices in minibars
(they will), but will their behavior change?  Are the reduced shrinkage
estimates mentioned in the article (due to stopping patrons from switching
products) showing lower turnover for products <counting the "switch" as
turnover> (i.e.- do these hardened criminals now purchase the items they
were getting before in the same proportion)?  I suspect most do not now
purchase from the minibar.

As to the hotel bar Vs minibar comparison - the only thing these products
would seem to have in common to me is that they are both alcohol (and/or
snacks).  This is not a preemptive statement that one is better- just that
they seem fundamentally different to me.

Brian Moore
ESI Corporation

-----Original Message-----
From: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
To: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
Date: Thursday, September 14, 2000 12:50 PM
Subject: The Economics of the Mini-Bar


>
>The Thursday, September 14, issue of the Wall Street Journal reports on yet
another consumer anomaly . . .as if we didn't have enough holes in the
once-munster-but-now-swiss-cheese body of economic wisdom.
>
>This week's anomaly of choice:  The hotel mini-bar
>
>As reported:
>
>"Dave Hofert wouldn't think twice about slapping down $7 for a drink at the
hotel bar. But spending anything close to that on an oversized box of M&M's
or a miniature bottle of Jack Daniels from the hotel-room refrigerator makes
him crazy.
>
>"I just don't even go there," says Mr. Hofert, a business development
manager at Sun Microsystems Inc. It isn't that the $5 sack of designer
potato chips would cause trouble on the business-trip expense report. "It's
the principle -- you feel like you're getting ripped off ... a hotel room
beer will cost around $4 to $5 for a Bud -- and all I can think of is 'I
could go buy a six-pack for $3.99.' "
>
>Business travelers will shell out double-digit bills for a half grapefruit
and coffee at a business breakfast without blinking an eye. But they seem to
morph into penny pinchers at the very sight of a hotel-room minibar.
>
>"There's these little psychological quirks we all have and minibars are one
with me," says Neal Boortz, a radio talk-show host in Atlanta. "When you go
to a hotel bar there's a level of service and atmosphere. When you walk into
your room and open a cheap refrigerator, there is no atmosphere and there is
no service and you wonder 'what in the hell am I paying for here?'"  For
beleaguered road warriors, the minibar represents just one more way to be
fleeced. "It just grates on you," says Mr. Hofert.
>
>Fasten your seat belts -- it's going to get worse. Minibars are
modernizing.
>
>Frequent fliers who have fooled the system in the past by taking something
and then replacing it at the corner store for a fraction of the cost might
want to think twice next time a Kit Kat craving strikes. That old
bait-and-switch tactic won't fly with the new generation of automated,
infrared minibar systems.
>
>You heard right. Infrared. Connected to the front desk.
>
>Minibar Systems, a supplier that has installed minibars in 360,000 hotel
rooms world-wide, introduced a model with infrared sensors two years ago.
The AutoClassic, which automatically charges the hotel room when a product
is lifted from the minibar for over 10 seconds, has so far been installed in
20 U.S. hotels, including the San Jose Fairmont, Holiday Inn Wall Street and
the Venetian in Las Vegas.
>
>The systems may seem sneaky to some, but the fact is hotels can't rely on
guests telling the truth about their in-room snacking habits if they really
want to make minibars profitable. After all, hotel guests have been known to
refill Evian bottles and even miniature vodka bottles with tap water to
avoid being charged.
>
>"The problem with the old honor system is there was a lot of shrinkage --
up to 18% of things wouldn't get paid for," says Richard Williams, president
of food and beverage services at HVS International, a hospitality consulting
company in Rockville, Md. "The automated systems bring shrinkage down to
2%." The infrared systems are much more expensive to install, but they also
eliminate the labor expense of hotel staff having to physically check rooms
for minibar usage.
>
>And while the majority of hotel-room minibars in the U.S. still operate on
the honor system, infrared systems are the wave of the future, says Mr.
Williams.
>
>Put off by high-tech junk food guards? The AutoClassic may be
Big-Brotherish, but it's a lot more approachable than the old Robobar, a
vending-machine model that requires hotel guests to punch in a key and lift
a tab to get a product, which is then automatically billed to the room. "The
vending-machine style is on its way out because it adds a barrier to the
customer," says Kevin Ryder, marketing manager at Minibar Systems. "You want
it to look like you can just grab it."
>
>"Grabbing it" is what minibars are all about. Stephen Roussakis, projects
coordinator at the Cancer Research Society in Montreal, doesn't consider
himself a junk-food junkie. Still, when he's traveling and he sees something
in the minibar that looks "enticing," he says, "I'll take it."
>
>"It's like an emergency thing ... like when [there's a fire], you break the
glass."
>
>He doesn't always indulge, but he always opens the door, just to see what's
inside. "It's like, at home, you think about cost, but on vacation you
don't." And that sense of escapism is no different for a road warrior, he
says.
>
>"When I first started traveling a lot, I worried about expense reports. ...
I've gotten over that." Sure, he'd rather pay less, but nowadays he has no
problem with overpriced in-room binging. "I feel ripped off paying $7 for
popcorn at the movies too," he says. "But I buy it anyway."
>
>[END]
>
>New York, NY
>

Reply via email to