Because the deal they get on rooms in hotels that tie up someone else's investment capital is too good, so why invest their own money? Yet, they get all the benefits of ownership. Airlines, when they need rooms for crew turnarounds, are the most aggressive, predatory negotiators of corporate and group rates on the planet.
You're usually talking about five rooms per turnaround -- that is, per flight crew per night. That's twenty rooms, if they send four crews per night. If an airline needs enough rooms each night in a given city to fill a small hotel, it will generally establish a crew base in that city, and -- rather than build a hotel -- eliminate much of its need for rooms right there.
Not only do airlines generally negotiate a very favorable rate, but frequently, a group contract with an airline requires that the hotel set aside a certain amount of rooms per night, all night -- and if no flight crews show up to take the rooms, the airline will not pay for them. (Take it or leave it -- if you don't want it, the airline will take its business to another hotel.)
Needless to say, if I ran an average sized hotel near an airport, I'd be less than enthusiastic about such an arrangement. On the other hand, if I had a large hotel in a tight market, and had a vacancy problem; if I rarely rented more than 50% of the rooms in that hotel anyway . . . well, I'd at least think about it: we have to face reality here. And worse could be had, like rowdy locals, or vacant rooms. As long as I can get enough out of them to cover my costs and preserve the value of my property, someone's going to rent those rooms at some price.
Payback time comes on a night with bad weather, or when a plane breaks down, and a flight gets cancelled -- leaving a need for the airline to get rooms for a planeload of people.
Then we do get to fill the oversized hotel. (At their cheap group rate, but still . . . occupancy that high in a hotel that never fills looks impressive.)
Originally appeared on Quora
You're usually talking about five rooms per turnaround -- that is, per flight crew per night. That's twenty rooms, if they send four crews per night. If an airline needs enough rooms each night in a given city to fill a small hotel, it will generally establish a crew base in that city, and -- rather than build a hotel -- eliminate much of its need for rooms right there.
Not only do airlines generally negotiate a very favorable rate, but frequently, a group contract with an airline requires that the hotel set aside a certain amount of rooms per night, all night -- and if no flight crews show up to take the rooms, the airline will not pay for them. (Take it or leave it -- if you don't want it, the airline will take its business to another hotel.)
Needless to say, if I ran an average sized hotel near an airport, I'd be less than enthusiastic about such an arrangement. On the other hand, if I had a large hotel in a tight market, and had a vacancy problem; if I rarely rented more than 50% of the rooms in that hotel anyway . . . well, I'd at least think about it: we have to face reality here. And worse could be had, like rowdy locals, or vacant rooms. As long as I can get enough out of them to cover my costs and preserve the value of my property, someone's going to rent those rooms at some price.
Payback time comes on a night with bad weather, or when a plane breaks down, and a flight gets cancelled -- leaving a need for the airline to get rooms for a planeload of people.
Then we do get to fill the oversized hotel. (At their cheap group rate, but still . . . occupancy that high in a hotel that never fills looks impressive.)
Originally appeared on Quora
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