How the minibar can add to revenue

One aspect of a hotel room that definitely merits more discussion from a profitability and customer satisfaction standpoint is the minibar. Truth be told, I seldom use the minibar when I travel. I like to eat out and experience the city that I’m in, plus there’s the stigma of having to pay exorbitant fees for staple goods. All said, the minibar is one aspect primed for reimagining, and to help kick start the call to action, I sat down with Sandeep Sharma, VP of account management at Minibar Systems.

Larry Mogelonsky: You mentioned automatic bars were becoming an increasingly important business. Explain the impact of this phenomenon and where it is most prevalent.

Sandeep Sharma: One of the biggest expenses that a hotel has is labor. With honor bars, labor expense (in high-labor-cost cities) can run as high as 80% of revenues. Automation drastically reduces a hotel’s labor expense.

LM: I’ve noticed a move towards minibars with automated accounting — remove a bottle and the guest gets charged. What is the feedback from the hotels? 

SS: A hotel that has a well-run minibar department will ensure that the daily routine includes the process of refunding to the guest account all such charges where the attendant identifies that the guest has not consumed the item. Educating the guest about the new amenity is also critical in keeping guest complaints down. This is done by the front desk on guest check-in as well as by having signage and collateral in guestrooms that provide information about the automated nature of the bars. 

There are some growing pains when a hotel that has had honor bars switches to automated bars. However, if properly managed, automation actually has the ability to cut down on minibar-related guest complaints for the following reasons:

  • You are not disturbing those guests who have not moved anything in the minibar. Compare this to honor bars where you have to knock on every occupied room.
  • Billing takes place in real time, so the chances of a guest being billed in error are minimized.
  • Because all activity in the bar is stamped with a date and time and saved, it acts as a deterrent against employee theft from the minibars.

LM: With a trend toward healthier products, how have you guided your hotels in planning their product selection?

SS: Our studies indicate that the trend towards healthy options in the general marketplace does not transfer over to minibars. With the exception of spring water and orange juice, “healthy” items perform poorly in minibars. While we advise that hotels have one healthy item (such as a granola bar) offered in the minibar, for a hotel where profit is the main objective, our advice is against loading the minibar with “healthy” items. The 10 top-selling and most profitable items sold in minibars have mostly remained unchanged over the years.

Despite the reasons given above, we always engineer menus based on the hotel type and guest demographic. For instance, if a hotel is a spa resort, we will engineer a menu that focuses on that particular theme. 

LM: What can a hotel do to maximize return on its minibar capital investment?

SS: This is a very interesting question and one that hotels often struggle with. A majority of hotels do not treat their minibar department as a profit center and never provide the focus and attention it needs. As a result, they have unprofitable minibar departments.  The key to success consists of three simple steps:

  • Procure equipment from a well-established and reputable company.
  • Ensure that the company just does not install the minibars and disappear. It is critical that the company provides technical and operational support for the minibars as well as the point-of-sale system that it installs.
  • If the hotel does not want to dedicate the time and resources needed to manage the operation then partner with a company that has an established track record of providing minibar consulting and management services to the hotel industry.

LM: What is the funniest or most unusual minibar story you can share?

SS: This story comes from Garrett Warren, our senior account manager and minibar expert-at-large.

A guest was checking out of her hotel room and had been automatically charged for all of the minibar items in the external snack basket. When the guest realized she had already been billed, she said she had all of the items in her suitcase and opened it up to retrieve the items. As she pulled out all of the snacks, she also pulled out guest towels, a hair dryer and the hotel room iron. When the front desk agent asked if she wanted to return these items as well, the guest replied, “No, why should I return them if I haven’t been billed for them?” The front desk agent fell over laughing.