In the highly competitive hotel industry, creating revenue from sources other than the actual room charge itself is critical. Hotel food and drinks are priced substantially higher than what would be considered ‘normal’ retail prices. And anyone that has stayed in a hotel recently knows that movies are priced at exorbitant prices. This is keeping in mind that you are only watching the movie once and not buying it. For me, the selection of movies advertised by the ‘in-room entertainment channel’ is not as extensive or chock full of great ‘new’ movies as they would like to have you believe.
I don’t know at what price movie studio and distributors sell movies to hotel chains but my intuition tells me it ends up being less than $2 per movie against the total price the guest pays per movie. For the hotel chains the more popular movies will supplement the cost of the less popular movies. The hotel guest gets a per movie price of $13.99 (that seems to be most common to me), or in the case of the hotel I stayed at over the weekend – $15.99. I daresay the profit margins are impressive either way.
With internet television rising distribution, I wondered if it’s just a matter of time before Netflix and/or Amazon.com make arrangements with hotel chains to deliver movies off of your own account into your hotel room. The technology and ability to manage have been available to do that for quite some time.
It’s obvious that one big obstacle (maybe THE big obstacle) to having hotels agree to this is that the hotels and movie distributors would sacrifice a too-big profit opportunity.
As far as I am concerned fleecing customers just because you can when there are limited other options is a lousy business model. Of course guests can bring in their own movies and watch them on their tablets, but hotels do not go out of their way to allow you to connect your tablet to the television for obvious reasons.
So I ask, where’s that bold hotel chain that wants to get out in front and offer in-room movies for $5 per movie? Do you think that could impact a hotel chain’s amount of new customers, or increase customer loyalty either initially or eventually?