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?
Great post, Mark. If you can amortize the cost of the movie over two people it’s slightly cheaper than going to a theater, and twice as enjoyable. As for me, I won’t travel anymore without loading a couple of movies onto my iPad. I also have wires to connect to the input of a TV monitor, so I can watch on their screen. It’s likely that hotels might be raising their prices to make up for lost volume from people like myself. I have never rented a movie in a hotel room.
I agree. We used to rent movies in hotels, but lately it is too expensive, and now we have an alternative. I bought a connector from Apple to link my iPhone (with Netflix) to the hotel’s tv. Unfortunately the hotels sometimes throttle their internet so that the movie keeps pausing and I have to restart it. It got so frustrating last time that we used 3G data instead of wifi so that we can watch an uninterrupted movie. It still wasn’t worth it to pay the hotel’s movie prices. If they dropped it down to $5, I’d definitely reconsider buying one from the hotel.