Will hotel minibars survive the COVID storm?
Expensive to maintain, yield low revenues, need manpower to stock and monitor— minibars have fallen out of favour over the years. The fear of contamination furthers the reasons why many hotels are pulling the plug on them
Once regarded as the most popular in-room luxury amenity, minibars are now neglected and underused by most guests staying in premium and luxury hotels. Let us admit minibars serve a useful purpose. They provide convenience to guests looking to satiate their untimely hunger cravings or cravings for a drink within the comfort of their rooms.
However, they are no longer a novel concept and add only a tiny fraction to hotel revenues. Some hotels are even lowering the prices of minibar offerings, while others are getting rid of them altogether and some properties are offering a few items at no cost The COVID effect that could spell a death knell.
How we stay and what amenities we use in hotels will forever be changed by the COVID pandemic. Hoteliers are altering spaces to meet the demands of a post-COVID world, whatever that is. They are also focusing on downsizing the content in guestrooms in a bid to stay ahead of the game and provide a hygienic stay.
Services such as the breakfast buffet, coffee stations, excess hangers and linens, even in-room minibars are being eliminated in a bid to lessen the surfaces that can attract the virus. As a precautionary measure, Pullman and Novotel New Delhi Aerocity have, for now, removed the minibars and are not planning to bring them back anytime soon, due to hygiene concerns. “We are replacing the minibar with on-demand minibar items. Customers can place their orders for both the minibar food items and essentials.
A note will be displayed on the minibar informing people about the move,” says Smita Rathod, Director of Housekeeping, Pullman & Novotel New Delhi Aerocity. Much like Pullman, Conrad Bengaluru will continue to offer the amenities upon special request. The hotel’s new digital concierge, Kipsu, will allow guests to place orders from their restaurants or minibars.
“When an order for in-room dining is placed, our team members will not enter the room for delivery. Guests can choose to either call the Conrad Concierge service from their room or chat with us through our digital concierge, Kipsu, which allows you to place orders via text, supporting our initiative towards contactless service. Another thought includes installing vending machines on each guest floor,” says the hotel’s general manager Srijan Vadhera.
When asked about what could replace minibars in the future, he says, “Customised minibar kits with DIY recipes will take the forefront for in-room experiences.” According to Kunal Chauhan, General Manager, The Leela Palace Bangalore, the management of minibars has always been a complicated operation, plagued with multiple problems of highcost investment, huge stock holding, expiration date management, miniature stock availability and multiple entries in guest rooms.
“COVID will further bring down the existing low level of consumption by in-house guests. I think minibars operations will slowly fade away and become a thing of the past. New hotels would not invest in this high CAPEX proposition.”
The challenges of running a minibar
High labour costs, high energy consumption, space-consuming and overstocking resulted in the minibars falling out of favour with hotels.
In a particular study, nearly 500 hotel owners who were surveyed on their experience with minibar management, the owners collectively agreed that re-stocking minibars is a “nightmare,” with 84% reporting guests would dodge bills by stealing items and replacing stocked items with inferior products.
Hotels had to spend on technology to keep track of minibar sales. Some hotels installed motion-sensor technology. When a guest moved a packet of chips or chocolate, the sensor immediately notified
them about the movement and the charges got added to their account.
According to Kunal Chauhan, General Manager, The Leela Palace Bangalore, the problems with their minibar management include expiry management, periodic cleaning and sanitisation of glassware, unavailability of good products with enough expiration time. Besides, the staff had to monitor the expiry dates of products.
A spokesperson from Radisson Hotel Group contends that minibars are labour-intensive and expensive to maintain. Sometimes, consumers complain about having to pay higher prices. Rishi Mehra, Director, Food and Beverage at The Leela Palace New Delhi says, certain items that are in demand have a short span of life. With larger room count, it becomes a challenge to maintain them. “Hence, we stock minibars with products that have a longer shelf life and are widely accepted by our global travellers.”
Minibars might get replaced with more lucrative in-room appliances serving liquor-by-the glass.
Free WiFi over minibars, anyday!
It wasn’t like minibars were doing swimmingly well in the past. Many travellers today find such amenities an expensive deal. In 2017, a CBRE Hotels report found that minibars accounted for a mere 0.4% of the revenue generated by F&B.
A TripAdvisor survey showed that minibars are ranked as the least important amenity. Only 21% of the respondents found the room fridge an important amenity, compared with 89% who wanted a free wireless connection. An InterContinental Hotels Group survey on what was the most important amenity in a hotel room found that 61% picked free Wi-Fi and only 1% plumped for a minibar. A PKF Hospitality Research study revealed that in the U.S., revenue from minibars, which represents just 1% of total hotel revenue fell 28% from 2007 to 2012. Within the same period, hotel bars and lounges saw a 4.9% jump in revenue.
Tracking the revenues
- Conrad Bengaluru generates a nominal amount through minibar sales. However, the profitability of minibars may be sitting between 27-35% globally. According to Srijan Vadhera, GM, Conrad Bengaluru, removing a service offering completely may not serve the purpose. “Hotels should optimise the use of technology to ensure that the guest experience remains uncompromised.”
- The annual revenue generated by The Leela Bangalore through its minibars in 2019 was 1.18 Cr., with the profitability of 40%.
In 1974, the first minibar selling alcohol and spirits was installed in 1974 at Hilton Hong Kong. The hotel was a pioneer in offering a facility then considered a luxury. It benefitted by registering a 500% increase in beverage sales and an additional annual net income of 5%.
The minibar trend was born and by 1980, every 4-or 5-star property boasted a well-stocked minibar as an in-room amenity. For guests, it was a novel experience. However, minibars fell out of favour in the last decade, as guests look for out-of-room experiences rather than in-room ones.
Several hospitality chains prefer to keep vending machines stocked up, rather than fuel up minibars.
New concepts draw guests
In many hotels, mini-bars have gone minimalist. A Radisson spokesperson says, in the post-COVID-19 era, the concept could be reimagined to feature still-life displays of imaginative, eye-catching content on simple trays.
“Minibars might get replaced with more lucrative and guest-friendly in-room appliances serving liquor-by-the glass, on-property shops, etc. Installing high-end appliances in rooms will not only help reduce labour cost but will also reduce wastage. Guests would be able to treat themselves to a glass of liquor instead of an entire bottle.”
The concept can also be utilised as an upsell tool, to enforce guest loyalty by offering a complimentary 'welcome' glass of liquor. Connecting these appliances to a room number and Wi-Fi will help the staff acquire complete information during check-out. Besides, most hotel guests prefer to relax and socialise in the lobby bar with the wine or spirit of their choice, rather than spend time in the comfort of their rooms.
Hotels have realised that guests prefer purchasing drinks and snacks from a small in-house outlet, placed near the lobby, or from a nearby 24-hour convenience store than from the minibar.
The emergence of new concepts is a factor, too, in the decimation of minibars. Hospitality chains such as Premier Inn and Travelodge prefer to keep vending machines stocked than to fuel up minibars. Other operators, including Hyatt Hotels & Resorts, have decided to keep their minibars empty at their convention hotels, while Marriott has eliminated minibars. Yet, we cannot yet sing hosannas to the minbar. According to market research firm Hexa, the hotel minibars will generate $1.49 billion by 2024. Rishi Mehra – Director, Food and Beverage – The Leela Palace New Delhi has the last word when he says, “Looking at the current situation, it is risky to place minibars in the rooms. They might disappear for a while, but will make comeback in the future.”