balancing the cost of guest amenities with room rates

From a conversation on the old forum:

Kit – Do you have any advice regarding how to balance the cost of guest amenities with the cost of room rates?

I’ve been evolving my rates and services for the last couple of years.

When I first took over this business in April 2004, I went a little head over heels with guest services.
Breakfast was a combination of made to order and non-cooked buffet.

The made to order breakfasts were quite elaborate. Guests could order French toast, crepes, pancakes, or waffles stuffed with up to half dozen different ingredients. I offered a variety of specialty egg dishes including an Italian vegetable fritatta, a German Baurenfrustuck, an Irish potato souffle, and a French dish called Oeufs Brouilles, which is simply buttered toasted bread topped with scrambled eggs coated with a heavy cream sauce.

The breakfast menu also included bacon, sausage, venison sausage, polish sausage, Pennsylvania Dutch scrapple, corned beef hash, and refried beans.

We even offered two smoothies: peach and berry.

Complimentary guest snacks and beverages included: freshly baked cookies, homemade Danishes, fruit tarts, a bowl of fresh fruit, chips, chocolate, candy, sodas, diet sodas, bottled water, orange juice, tea, and instant coffee.

Our room rates ranged form $40-$60.

Several things became quickly evident.

Food costs were too high. Guests were wasting food. I literally had guests who ordered breakfasts but didn’t eat them because they weren’t hungry.

Room rates were also much too low. (I had upgraded our rooms to include larger beds, cable TV, DVD players, free DSL wireless internet service, water glasses, hangers, and spare blankets – but had kept the former owner’s rates).

I jacked the rates up from $50 to $70 and later raised them from $55 to $80.

Room rates current range from $50 to $90. I’m reluctant to raise them higher because we’re already the most expensive lodging facility in the valley. (Our primary competition are two motels which offer two full sized beds with cable TV for $40/night).

Guests services and amenities have been modified.

We now have two made to order hot breakfast menus. One is complimentary and is very simple with offerings of hash browns or pancakes; scrambled eggs, fried eggs, or a cheese omelet; and bacon, sausage, or refried beans.

The original breakfast menu has been dubbed our “deluxe” breakfast menu. We bill guests a modest $5.00 for this service.

The change in breakfasts alone has helped me preserve my sanity. It’s a lot easier to prep and cook the complimentary breakfasts than the deluxe breakfasts. I’ve also noticed that guests now tend to eat whatever they order – especially if they’re paying for it.

I no longer offer danishes and tarts. Most guests didn’t eat them. Fresh fruit has been replaced with dried fruit (mango, banana chips, apricots etc.) for complimentary snacks. I’ve added sugar free candy to our regular candies (candy sticks and mini-candy bars).

We’ve also done away with bottled water. The guest refrigerator now has a covered pitcher of filtered water. Glasses are available on a side table.

As a result of these changes, our food costs have dropped. Net profit is up. The guests seem reasonably happy.

Our repeat guests haven’t complained about the change in breakfast menus. I was really concerned about what they would say when we first implemented this change. Most of them have order the complimentary hot breakfast but a few have gone for the deluxe.