New York Hilton's decision to scrap room service creates buzz

New York’s Waldorf Astoria has the distinction of having invented hotel room service. Now, just six blocks away from the Waldorf, another large Hilton Worldwide hotel, the 1,981-room New York Hilton-Midtown, has announced plans to do away with room service.

The move, taken in response to the financial drain of operating 24-hour food and beverage services, has drawn a range of opinions within the travel industry.

The announcement generated a fair amount of discussion at last week’s New York University International Hospitality Industry Investment Conference. Much of that buzz suggested that room service appears to be increasingly less essential to both leisure customers and younger travelers, while becoming a progressively larger financial hit to hoteliers as labor costs rise.

Still, some travel professionals warned that hotels that go down this path risk alienating certain business travelers as well as niche customers, such as those who come to New York for live theater.

Hilton, for its part, used the opportunity to pitch its new grab-and-go food offering at the midtown Manhattan hotel and made it clear that the decision to cut room service would not apply chain-wide.

“Each property is unique, and any such decisions to eliminate room service would be made on a property-by-property basis if we determine that it would allow us to meet the needs of our guests more effectively,” the company said in a statement.

Still, the size and location of the hotel — New York’s largest — ensured that NYU conference attendees would be quick to weigh in on the benefits and challenges of full-service hotel operations in general and room service in particular.

“I commend Hilton for having the courage to do that,” said conference panelist and Ashford Hospitality Trust CEO Monty Bennett. “The labor costs are atrocious, and it’s a big money loser.”

Ashford is a real estate investment trust that owns hotels under Hyatt and Marriott’s full-service flagship brands as well as select-service badges such as Courtyard by Marriott and Hilton Garden Inn.

“On the other hand,” Bennett said, “if you start taking the services away that make it a full-service hotel, you slip into another realm.”

Room service is a major component of an ancillary-services revenue stream that has been narrowing in recent years as guests scale back on in-room entertainment, telephone use and parking.

Last year, hotel revenue from items such as those services and WiFi fell, while food and beverage revenue was little changed, according to consultant PKF Hospitality. Meanwhile, revenue derived directly from room rates rose 4.4% in 2012.

As for food and beverage, many hoteliers, especially in the ever-growing select-service sector, have directed their efforts toward offerings such as self-service food “bars” and free breakfast buffets as a way to cut costs while luring more guests.

The broader result of that trend is that investors are funding limited-services properties more often than they are investing in their full-service counterparts.

The number of limited-service hotel rooms in the U.S. is up about 16% in the past decade, compared with just a 5.7% increase in rooms at full-service properties, according to Smith Travel Research.

Meanwhile, smaller full-service hotels such as boutique properties have often gone the way of outsourcing much of the food and beverage operations altogether while equipping their hotels with chef-driven restaurants.

Caught in the middle is room service, which requires round-the-clock labor without adding to the hotel’s cachet.

Still, some in the industry say hotels that cut room service risk alienating both time-constrained business travelers, who often check in at and work odd hours, or leisure customers with especially busy travel schedules.

Both groups might find the lack of room service especially inconvenient when visiting New York.

“If you work at night, most likely your dining needs fall outside of the normal hotel restaurant hours,” said Andi Henig, partner at Tzell Travel’s A Team boutique travel agency. “My clients are very big on room service, as am I.”

That said, the provision of full food and beverage operations, either via room service or in an on-site restaurant, is a non-issue for many younger professionals who regularly travel, especially those visiting urban locations where social media provides an up-to-date guidebook for nearby eateries.

“For me, price is paramount, and location’s the second most important” factor in a hotel booking, Highgate Hotels revenue analyst Andrew Zenker said while participating on a panel of recent NYU hospitality-school graduates. “Amenities are important, but if you’re located in a city with tons of restaurants near the hotel, it doesn’t matter as much what’s on the property.”

The decision to cut room service isn’t the only recent change at the Hilton. In April, Hilton Worldwide celebrated the hotel’s upcoming 50th anniversary by changing its name to the New York Hilton–Midtown from the Hilton New York. The hotel, which opened in June 1963, is the city’s largest, edging out the New York Marriott Marquis’ 1,957 rooms for that title.

Follow Danny King on Twitter @dktravelweekly.

Hotel room service photo courtesy of Shutterstock.com.