Derek Picot suggests that hoteliers could charge more for washing our dirty laundry in public.
Why is guest laundry so expensive in hotels across the world? I talked to a 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 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 the real cost of providing a laundry service, 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-£120, so the laundry charge should be £23.75, 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 while consulting 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 in regards to pricing, and that is dry-cleaning should be charged at a 10 per cent premium to laundry. In this way, a shirt that is dry-cleaned is just over £25 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 could come in the offer of free pressing to 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 and shirt, and wants to look 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 on the company tab that it is to sort it out themselves when they get home.
