The Wall-Street Journal has this wonderful video The Money-Making Secrets Behind Hotel Design:
“From vanishing minibars to disappearing closets, hotel rooms are shrinking. With the rise of Airbnb and hotel occupancy rates plateauing, operators are on the hunt for the most profitable design to maximize profits. Take Marriott’s Moxy brand, for example — its rooms are less than half the average size yet can generate up to 20% more revenue than its peers.”
Hotels’ decision can be thought of as choosing a design that maximizes its profit, given the recommendation mechanism that maps hotel designs to demand (and revenue). In the old time, the recommendation mechanism are ratings — consumers can mostly only choose hotel based on the very coarse “⭐️⭐️⭐️” signals that has little information. Nowadays with all the platforms (booking.com, agoda, blahblah) information are more transparent in the way that consumers can (i) observe real hotel quality from reviews and (ii) compare more hotels’ prices, location features. The result is, (a) hotels face a steeper demand curve. (b) as hotels no longer has to appeal to the star-rating mechanism that decides its “quality signal” w.r.t. size of teh closet, they focus on more “practical” design that increases consumer satisfaction (which move “up” the demand curve) so as to maximize revenue.
Traditionally guests used to rely on diamonds and star ratings from groups like AAA and Mobile. To achieve a four-star rating, you have to have a total cubic feet of storage, typically three drawers. But now travelers tend to rely on social media or ratings from site like Google or TripAdvisor. Those rating systems are no longer design parameters…
But even though a hotel can fit in more rooms, those rooms tend to command lower rates. So to improve guest satisfaction and profits, relief are given in public areas. And that also creates and opportunity to sell.
Check the full video here: