Usually, the mottos used to bookend hotel industry conferences are a little blah, but I was immediately struck by the one employed for the 2024 edition of last month’s Hotel Investment Conference, Central and Eastern Europe, better known as HOTCO.
The slogan was “The end of cheap.”
Cheap, or good value, are words that are hard to really quantify. Cheap is relative to what one has to spend, what one wants to spend and what one has experienced in the past. But it is true to say that we all had it pretty good for the past number of years, whereas now we can be forgiven for suffering from a degree of sticker shock.
In the hotel industry, the end of cheap refers to average daily rates. Although for hoteliers, they must pay higher salaries, face higher supply-chain costs, deal with high interest rates and stomach higher costs for financing. Thus, they probably think I am coming to this from the wrong side.
One side evidently affects the other. Someone has to be the last consumer and pay relevant markups for all of these costs.
Have I been asleep, or have low-cost airlines now shifted the cost of storing a bag or small suitcase in the cabin as a separate line item?
I am planning to see my family in Valencia over the Easter holidays, my first time there since the pandemic. The destination is mostly served by one low-cost airline, at least from the United Kingdom.
The outbound flight price always appears cheaper — or should that be less expensive? — than the return. But when I selected the flights, up popped an option to bring a suitcase onto the plane for almost £100 ($108).
This was not, it seemed to me, an effort to get passengers putting suitcases in the hold, which no doubt for airline staff helps dramatically speed up boarding processes, but rather a new line item.
This service cost on the ticket I bought was more than the ticket if taxes were stripped out, and of course taxes were charged on the entire cost.
That cannot be described with the U.S. saying of “nickel-and-diming,” the additional cost being far higher. Even if there are claims that the "fare" part of the ticket cost is lower, which I am not sure it is, or will be.
I have been told by a colleague that another low-cost airline has been doing this for a couple of years, but the one I am going on has adopted this only recently. My source, sitting on the other side of a rack of computers, added that some bags can be brought on for no charge, so I assume it depends on size and even material.
Airlines, with their simpler business offering, often lead with such “initiatives,” with hotels duly following, so let me hope I do not ask to store my luggage after check-out for a few hours and be presented with a £100 bill.
The end of cheap is not ending soon. Occupancy in Europe now is just about popping its head above the parapet of 2019 levels, and with ADR now much higher than in 2019. There's still space for occupancy to grow, and the traffic is in one direction.
This is a trend across all segments, in an industry blessed to help the curious expand their horizons, and there no doubt is a generation or two who are not used to this level of pricing.
Travel remains the biggest inspiration in many guests’ lives, and long may it continue to be.
Much work is being done to have a percentage of these extra costs, or profits, rolled back into programs that offset carbon and help safeguard fragile communities and ecosystems.
That would be an admirable way of both encouraging knowledge, learning and friendship and sustainability, conservation and climate-change measures.
There is an argument that travel should be expensive — although not too much, please — as a way of encouraging a gentler footfall on the planet, but mass tourism is a juggernaut that has been teetering close to the end of the curb-less motorway for more than 50 years now.
The end of cheap does not necessarily mean the beginning of virtuous deeds.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.