The Death of Minibar – Data Driven Decision Making

The Death of Minibar - Data Driven Decision MakingI have been a frequent global traveler for much of my professional career. I have stayed in numerous hotels across various countries. While each hotel [or hotel chain to be more precise] tries to give a certain character to its hotels, the minibars across hotels, cultures and countries generally disappoint business travelers in more or less similar ways.

And so, it is not completely surprising that the minibar is dying. We should have seen it coming. Its mental faculties were failing. By all accounts, it lost its ability to think and act a long time back. It had been a long time since it last responded to customer needs. And so this was expected.

Yet, this wasn’t always the case. Minibars came into being in 1974 and were extremely successful in the very first year, adding an extra 5% to the bottom-line of the hotel company that launched them at scale. Now the year 1974 was before I was born, certainly decades before I started to travel on business, and I am told that business travel in those days was different.

When somebody traveled on business, it was somewhat rare and special and the companies did not mind spending a little extra money to make that individual feel a little pampered. It made sense for a minibar to be stocked with obscenely priced things.

Over the years, the profile of the travelers changed, the travel policies of corporate changed (mostly towards more frugal version of their former selves), and even dietary preferences changed (towards slightly more health conscious consumption patterns). Yet, minibars remained unchanged. Over time, both the pricing strategy as well as the value proposition of minibars became totally out of sync with the changing times.

Someone said that “7-Eleven killed the minibar”. I think that the hotel industry killed it by not paying attention to the changing times and evolving profiles of their patrons. In other words the lack of data driven decision making culture in the industry killed it.

However, the minibar hasn’t been the only casualty of the offhand approach of the industry. It has also hurt the customer experience in the process, as well as how people look at the entire “value proposition” of a hotel. Industry incumbents, not paying enough attention to changing times, have also contributed to value chain re-engineering in the hotel industry with some really clever players stealing market share from established players.

Of course, no industry ever stays static and it would be foolish to argue that all change is bad. Yet, I believe that industry could have preserved this little source of revenue that could have easily continued to add a percentage point or so to the top-line every year.

In Conclusion

I think the hotel industry, for whatever reason, has traditionally been lagging on making use of data to drive its decisions. It did nothing to calibrate atrocious outbound land-line calling rates, even after mobiles and over-the-top (OTT) applications such as Skype became commonplace, it didn’t do much to adapt minibar for the changing times, and many hotels seem to be repeating the same mistakes with charges for wi-fi even in the times of USB data dongles.

More than any other industry, the hospitality industry needs data driven decision making, to listen to and understand its customers. I am hoping that now, with a renewed focus on data and analytics, the industry takes a step back and evaluates how it makes tactical decisions.

What do you think about this post? I will be especially keen to hear from you if you work in the industry or are a frequent traveler (well, who isn’t these days?). Please share your thoughts and write to me at manish@suasiveanalytics.com.