My wife, kids and I are at DisneyWorld right now for a pre-Christmas vacation. There are 4 of us stuffed into a single room since when we booked it the adjoining room was not available. This happened yesterday so the date was December 18th and we noticed early in the day that the room adjoining ours was actually empty. And, at 5 pm, it was still empty so my wife and I went to the front desk and asked:
- Is that room really empty?
- Can we rent that room as well as ours?
This seems like a simple, straightforward request. Unfortunately it took ten minutes of waiting and two authorization phone calls for the person helping us to write a price down on a scrap of paper and show it to us. The price for that unoccupied room was:
$493 / night
She mouthed some sort of corporate line about how “when she rents it directly to the customer she has to charge rack rate.” So for the four remaining nights of our trip adding this additional room would cost almost $2,000 or more than we are currently paying. Curiously she seemed to know that this price was too high since she seemed mildly embarrassed about giving us the price.
My only response here is: balderdash, poppycock and what a load of hooey! Yes I pulled that from an old episode of Scorpion. But let’s look at this from a business perspective.
Trick Question #1- What is the Value of an Unsold Hotel Room?
This isn’t actually much of a trick question, it is a simple one - the value of an unsold hotel room is $0. Each hotel room is only available for rent for 365 nights a year. A hotel room that isn’t rented for a night is simply lost revenue.
Trick Question #2 - What Are the Additional Costs of Renting It to Us?
Now you could argue that by renting it to us, Disney incurs additional house keeping expenses but, at best, that’s an incorrect argument. House keeping is already paid for since there is a person assigned to the floor anyway. And, under normal circumstances, she would be planning on cleaning that room anyway.
A Business Decision So Bad It Makes Me Sad
The saddest thing of all in this case is that Disney actually knows who we are as customers. My wife is a certified Disney nut and we have been to Disney an embarrassingly large number of times. With the MagicBand system any Disney customer service rep seems to always know everything we spend / have done / etc. As best I can tell our entire purchase history is always available to them. This would have been a fantastic opportunity to reward a loyal customer with something like “Normally I have to rent it out at rack rate which is $493 / night but since you are a regular customer I can rent it out for $300 / night”. We’re here for 4 more nights and that would have guaranteed Disney an additional $1,200 in revenue. Sure it wouldn’t have been the $2,000 they might want but the room isn’t sold and I’d bet that if a room isn’t pre-booked right before Christmas then it is very unlikely to be booked. Now my business background isn’t in hotels and I could be wrong here – perhaps there is a large quantity of last minute, pre-Christmas Disney bookings but I think not.
Note 1: In discussing this with my wife she commented that perhaps Disney did look at our history and saw that we actually spend money with them and wanted to get the potential maximum for the room. That’s an intriguing perspective but I would think that looking at the ratio here would be instructive i.e. if the requested upgrade doubles the overall vacation cost then no one would ever do it.
Note 2: The room is still empty the next day.