Love (and hospitality) in the time of economic cholera

In times like these, ripping off your customer will only work once.

Just ask Antoine Medawar. After he checks into a New York hotel, he heads out to a deli to buy a couple of bottles of water. Medawar is managing director of Amadeus Hospitality. He can afford the $6 that a hotel might charge for a bottle of water, but he’s not going to encourage that sort of behavior.

That’s why he was pleased to find a notice at a Spanish hotel that all minibar bottles of soda and mineral water were free. It’s precisely the sort of policy that will win the hearts and loyalty of travelers at a time when business travelers and their employers are watching every penny that is spent on the road.

Travelers aren’t just looking to save money, Medawar says. Just as some travelers flaunted their affluence in boom times, many are now flaunting their frugality.

These new attitudes are explored in a white paper titled “The Austere Traveller: the effect of corporate cutbacks on hotels,” commissioned by Amadeus and executed by the Economist Intelligence Unit, which surveyed 354 business executives worldwide in late 2008.

Only 29% of respondents agreed or strongly agreed that it is “important for the prestige of my company to stay at the best hotels;” 35% said they disagreed or strongly disagreed with the statement. On the other hand, 44% agreed or strongly agreed that “staying at a budget hotel shows my company is being smart in the current climate.”

Hotel customers who might have sought out expensive restaurants or spa services are now more concerned with services that will increase their productivity and help them get the most out of a trip.

According to the survey, the absence of Internet connectivity would prevent 76% of business travelers from staying in a budget hotel. Other criteria are the absence of a quiet room (56%) and good transportation links (54%). At the bottom of the list are entertainment systems and a gym (both 16%) and a good restaurant (15%).

What can a hotel do in this climate to attract business travelers? “If a person finds the same service in another hotel that is free or less expensive, he’s going to stay there,” Medawar says. Noting that many limited-service brands offer free high-speed Internet, he says, “I predict that 80% of hotels will do the same in the next few months.”

An upscale hotel doesn’t need to abandon fees completely, he says. “There’s a very nice hotel in New York where I used to pay $9 for Internet. Now I pay $4.75. You may have to choose between a smaller profit on incidentals and losing the customer. You can maintain your rate, but you should add some services or discount some services, especially if they are incremental in cost.”

Because if a customer feels ripped off, he won’t be back.