Business Traveller Asia-Pacific Edition — January 2018

businesstraveller.com

DEREK PICOT

A HOTELIER FOR MORE THAN 30 YEARS

AND AUTHOR OFHOTEL RESERVATIONS

OPINION

Takentothe

cleaners

Derek Picot suggests that hoteliers could charge more for

washing our dirty laundry in public

W

hy is guest laundry so

expensive in hotels across

theworld?Italkedtoa

hotel valet the other day

and asked how they price

their laundry lists. He explained that at his

hotel, once a year they phoned around their

competitor hotels and did a price comparison

to their own guest laundry list. Then they

aligned the prices, added 50p (US$0.6) to

each item and sent the list off for printing.

Using this method, at least they knew

if they were being competitive – but I

wondered if it was really an appropriate

pricing method. It might be suitable for a

supermarket where customers are aware of

commodity prices in their neighbourhood,

but do hotel guests ring around to compare

the price of laundered socks?

In Europe and the US most hotels have

an outside contractor to look after guest

laundry, while in Asia the majority of work

is undertaken in-house. Where an outside

contractor is used, the general method

is for the hotel to add a percentage to

its contracted price, and simply take the

premium as profit. But for the shrewder

hotelier, this may not be entirely satisfactory.

Surely the way forward is to understand

therealcostofprovidingalaundryservice,

minimise it, and then add as much profit as

you can possibly get away with?

I have a theory that the cost of laundering

a shirt should be set at a quarter of the

cost of buying a new one. In London I am

assuming that a smart business shirt costs

between £70 (US$94) and £120 (US$161),

so the laundry charge should be £23.75

(US$32), taking the mean average. It’s

expensive, but not quite out of reach. For

those of you wondering where the logic is

behind my theory, there isn’t any. But it

takes less time to calculate prices this way

than ringing around ten hotels, like the

hotel valet does.

This sets the challenge as to how elastic

(pun intended) the price of laundering

underwear can be. I recently had the

opportunity to test out my theory, by

adding £1 (stepping it up once a month) to

selected items on a hotel’s laundry list. After

six months demand had neither increased

nor decreased. Demand for laundering

underwear was found to

be inelastic (as, by the

way, were all the other

laundry items listed).

Consideration then has

to be given to pressing

and dry-cleaning.

This is something that

most hotels can do

themselves, as both of

these operations take up much less space.

The latter has presented hoteliers

with some challenges, as old

machines in the basement

of hotels are being phased

out by 2020, and generally

they now should be vented

at ground level. But if these

requirements can be overcome, the pricing

opportunity is even greater, as the material

cost is less than laundry, and the time taken

to deliver clean or pressed items diminished.

I have another theory with regards to

pricing , and that is dry-cleaning should

be charged at a 10 per cent premium to

laundry.Inthisway,ashirtthatisdry-

cleaned is just over £25 (US$33.5) a shot.

I agree the price has no relation to the cost,

but as a hotelier it’s not bad money if you

can get it, and if your clientele are rich

enough to wear silk.

Surely there is some goodwill that

considerate hoteliers might give to offset the

swizz of high laundry pricing? Generosity

couldcomeintheofferoffreepressingto

those who pay premium room rates. Book a

quality room, and you can get your suit and

two shirts pressed for free. This makes sense

to the business traveller who arrives “relaxed

casual”, but who has usually packed a suit

andshirt,andwantstolook

pristine the next morning.

With the advent of guest

bill analysis, hotel chains

have been able to take a

much closer look at guest

spending and link this

to guest history. When

a reservation comes in

from a regular client, their

preferences can be noted

in advance. So if you use the

laundry service frequently

expect a knock on the door soon

after you arrive. The opportunity

to return home with all of your

shirts, underwear and socks cleaned

and placed in cellophane wrappers might

be a big temptation, even though it doesn’t

make economic sense to make a habit of

this. Still, for some lucky business travellers,

they’re not actually paying – their company

is. And this may explain why some single

businessmen pack their dirty laundry to go

on a trip – it’s a whole lot easier to put it

onthecompanytabthanitistosortit out

themselves when they get home.BT

ILLUSTRATION: BENJAMIN SOUTHAN

This sets the

challenge as to

how elastic the

price of laundering

underwear can be

JANUARY/FEBRUARY 2018

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