The tax benefit point is likely invalid in USA. I am pretty sure AI can tell you why so I wont write it here.
When I talked to the fellow Indians running these motels they told me that this breakfast option is something they MUST provide because the brand owners such as Marriott force them to provide it through their contracts. Also the cost of these breakfast per guest comes to ~$5. It also forces cost sensitive guests wake up early and checkout early. As you said, the perceived value for guests is way higher than $5.
It is exact opposite for luxury brands. The contracts forbid them from offering free breakfast. This is because most guests are corporate business travellers and their breakfast is paid for by their employer so, it is much easier to milk them by operating a restaurant on property. They sometimes dont even have free parking.
Additionally, Free Breakfast is second to Free Parking in online search filters for hotels. Such filters matter to the cost sensitive road trippers.
Further, USA has a car centric culture. Road trippers such as myself live in motels on outskirts, sightsee throughout the day with my bags in the car and then drive to next spot in the evening. We rarely stay more than 1 night in any motel even in the same city. For such culture predictability becomes more important than variety. I want to just go there in my pajamas grab something I can eat in car and drive away.
Wild speculation: the food safety regulations in the US make the sorts of quality buffets seen elsewhere cost prohibitive.
Unwrapped local cheese alone could have a county health inspector shutting the dining area down altogether.
And the prevalence of hotel chains with locations across myriad jurisdictions – each with their own idiosyncrasies in regulation – make lowest common denominator offerings the obvious choice.
Could be, but decent breakfasts aren't entirely non-existent in the US. They're just rare. I've never seen breakfasts on the level of mid-level European hotel (which are usually awesome) - though I'm too poor to stay in $400+/night hotels - but decent breakfasts happen from time to time. Usually when there's already a restaurant onsite, which is also used to serve breakfast. Other hotels - including those that do have a restaurant on site - still serve the usual poor parody of a breakfast. I don't think just health codes explain it.
That seems a likely reason to me as well. A lot of the manufacturing companies I have worked for showed similar behaviors, often over reacting to various regulations to make absolutely sure they were not going to fall afoul of them. Mistakes were costly enough, and proper expertise on requirements rare enough, that lots of things didn't happen just in case.
Well, price discrimination yes, but a particular kind -- bundling. Of course some hotels on both continents will choose not to, for reasons of their actual or desired customer mix, or tax law.
The real question is why the breakfast part of the bundle in Europe is opulent and in the US is not. I think I have an answer, and that is the degree of competition for breakfast. It is at least consistent with old observations. In the US there is much competition for breakfast offerings, so breakfast is cheap. The US hotel rationally offers a cheap breakfast as part of its bundle. Try getting a breakfast outside the hotel in Germany! Yes, you can [or could] get an opulent and expensive version. The hotel can offer an opulent and expensive version to compete. I presume with a markup worthwhile for the hotel. It's not so extreme in Britain, Italy or France, IIRC.
Anyway, there is that general relationship between bundling and competition.
I saw an approach to the heavy/light eater problem once, in a Wendy's of all places: you could get the unlimited salad bar for one price, or a single trip for a lower price. For the single trip they gave you a dish that was shaped like a shallow bowl, rather than a flat plate; I was money-conscious at the time and learned that I could improve my single trip with strategic placement of cucumber slices to extend the edges of that bowl.
While not exactly the same issue, a long time ago I visited an all-you-can-eat restaurant where they charged based on how long you were there. This favors fast eaters but, eating speed being equal, doesn't force light eaters to subsidize heavy ones.
Your tax evasion theory perfectly explains the modern professional conference. We live in the era of internet, these events barely make sense for knowledge spreading. However, they make perfect sense as employer-subsidized vacations, held in beautiful, tropical locations, with sightseeing and pub nights.
The irony is that this creates an adverse selection problem: it drives away the people who care about the subject matter, for whom the vacation elements are boring, while attracting Epicureans attendees.
As I understand the tax argument, it would apply only to business travel, paid for by an employer. I have a hard time believing that the Hampton Inn Hilton Head has many business travelers. Yet it offers free breakfast.
As for quality, I do think European standards are just generally higher.
My experience is that business meals are not taxable but companies typically limit food reimbursement. For European executives lavish lodging & dining allowances are a significant perk.
OFFERING the "free breakfast" makes the hotel more attractive at the same price point, but not every guest will necessarily CONSUME the "free breakfast." I always do ... and I always notice quite a few people leaving the elevators and walking right past it, or only stopping to fill a cup with coffee and maybe grab a Danish.
I'd be interested in seeing any real data on the subject, but my off-the-cuff guess is that less than 1 in 3 guests actually fills up even one plate and sits down to eat it. The hotel gets the advertising/promotion value, but doesn't actually have to deliver to anything like every guest.
You might eat it some days but not others (due to scheduling constraints), or possibly, some members of your party might eat it but not everyone. My husband is much more interested in a big breakfast than I am, so if he can go downstairs for breakfast while I shower and bring me back a container of yogurt or a hard-boiled egg, we both win.
That sounds like me and my wife. I tend to rise early anyway, so I hit the breakfast, have a couple of plates of sausage, eggs, biscuits, gravy, waffles, two cups of coffee -- one I drink with breakfast, one I take back to the room with me. Tamara is probably just then waking up. If she gets anything from the "free breakfast," it's on the way out to wherever we're going, and it's a cup of coffee and maybe a piece of fruit or a bagel or danish.
How many people buy memberships to, say, AARP in part because they see they get restaurant and movie ticket discounts ... and then never end up actually using those discounts?
Hotel A: Bed. Bathroom.
Hotel B. Bed. Bathroom. Pool. Gym. Business Center. "Free Breakfast."
Price difference: Little, nothing, maybe even B<A.
"Well, you know, we might want to take a dip in the pool. And I wasn't PLANNING on hitting the treadmill while we traveled, but hey, it's there. Maybe I'll stay up late one night and knock out that report I'm supposed to have done about the time we get back from vacation. I'll use the business center so you can sleep. And we really should make the most of our vacation, actually get up early and get going, this place has breakfast so we can get a running start."
Family goes to Hotel B. Sleeps. Showers. Maybe uses the pool. Probably doesn't use the gym. Doesn't even notice the sign when they walk past the business center. Sleeps in until breakfast has ended. But any or all of those things may have contributed to choosing Hotel B over Hotel A.
Of course, SOME people choose Hotel B because they actually do want those extra amenities and will use them. But nowhere near everyone. For many of the guests, they are initial attractants, not used benefits.
Those amenities cost hotel B something to provide, so if the hotels are otherwise similar It should be more expensive than A. The question is not why the amenities are worth anything but why they are worth more than they cost to provide.
It's not obvious that they cost more to provide more than they are worth.
It's not like the hotel manager says "OK, we have 100 guests, so we will prepare enough food to feed 100 guests a sumptuous breakfast buffet."
The hotel manager probably has a good handle on how many of those 100 guests will actually eat, and how much they'll eat, and has the hot stuff prepared in stages so that everyone who DOES show gets fed but there's minimal wasted food at the end of it.
If OFFERING the breakfast attracts more guests than not offering it, but if most guests don't take full advantage -- they eat light or not at all -- then the additional guests' fees more than cover the cost of the "free breakfast" promotion.
If I’m on a road trip, I often grab a banana or muffin and then get on the road fast. We can then stop for a sit down brunch after a few hours on the road.
Based on my conversations few years ago the cost of this breakfast is around $5 per room for the motel owner. You have to only go to aisle number 30 in Costco business center to see the real price of the muffins and pancake batter !
Re (2), I wonder if some hotels might feel that it would cheapen the experience if they were to nickel and dime people for breakfast. Cf. budget airlines, where you pay for meals, luggage and seat selection vs premium airlines, where it's all included in the price of the ticket. Personally, I prefer budget airlines but often choose a hotel where breakfast is included, I suppose to lower my transaction/decision/search costs.
I've got no clue about the economic incentives, but golly do I miss the old fancy restaurant Sunday brunch buffets--dudes in chef hats making you waffles and omelets, ham and prime rib sliced right off the roast, cocktail shrimps, smoked salmon, deviled eggs, every kind of breakfast meat/bread/potato, all kinds of juice, full dessert bar. I only had a few years between "Ima just have a full plate of bacon" and their general disappearance in which to fully enjoy them.
One explanation I've heard for the recent decline in quality of US hotel breakfasts is the increase in youth travel sports teams.
If a significant part of a hotel's clientele is large groups of athletic 14-year-old boys who will eat anything that stays still for long enough, they will want to make their breakfast as cheap as possible- while still offering one, because if they don't the team's chaperones will choose another hotel that offers breakfast rather than making the extra effort of getting the team to and from a diner early in the morning.
Interesting observations. My attempt at answering the three questions: (1) People are in a hurry in the morning and do not have time to wait for a la carte dishes to be prepared. Also, guests may prefer several small portions of various different things rather than one dish. (2) I'm not sure this is true anymore. When booking a room via booking.com, for instance, I usually get to choose between a room rate without breakfast or a higher room rate with breakfast. (3) That is hard to say. I have noticed that premium cabins on domestic US flights are usually very much inferior to premium cabins on Asian and European airlines. First class on US airlines bears little resemblance to first class on Middle Eastern airlines, for instance. Whatever it is that causes this, could it be the same factor that is at play when it comes to hotel breakfasts?
FWIW most standard to cheap Japanese hotels generally charge for breakfast with a discount if you pay for it at the same time as you book the room or when you check in and pay. I'd say about 50:50 on whether it's a buffet or not.
Posh hotels, as in the US, charge quite a lot for the buffet and often more if you decide to forego the buffet and order specific items that may not be in the buffet
Posh ryokan on the other hand always include breakfast in the overnight stay charge and the breakfast, while Japanese, will usually be substantial. Often it is far larger than my usual lunch.
I took my bicycle to Japan in 1992 and rode around Shikoku for a month. Only one ryokan did not serve breakfast, and wouldn't you know it, 5 or 10 minutes after leaving on the next leg of my bike tour, a festival crowd came by, chanting, carrying a platform with a Taiko drummer, and when they saw me, they insisted I take a swig of sake from a bottle ... on an empty stomach! Got a cheer from everybody, I bowed and waved, and they resumed their little parade. I stopped at the first open restaurant and got some breakfast.
Just back from a month touristing and cycling in Czechia and (former East-)Germany. I booked some hotels through Booking.com and they always break down hotels as with or without breakfast. Others I booked through their own websites, and every one offered a no-breakfast option, or priced the breakfast separately, usually 16 to 20 Euros. For the price and convenience, breakfast is my largest of two meals per day. Throughout the trip, the breakfasts were bountiful and even lavish. At my cheapest hotel chain (75euro/night), the 14 euro brekky far outshone anything I have had in Canada or the US. I do notice many light eaters and walk-bys which suggests that not everyone eats like I do.
The tax benefit point is likely invalid in USA. I am pretty sure AI can tell you why so I wont write it here.
When I talked to the fellow Indians running these motels they told me that this breakfast option is something they MUST provide because the brand owners such as Marriott force them to provide it through their contracts. Also the cost of these breakfast per guest comes to ~$5. It also forces cost sensitive guests wake up early and checkout early. As you said, the perceived value for guests is way higher than $5.
It is exact opposite for luxury brands. The contracts forbid them from offering free breakfast. This is because most guests are corporate business travellers and their breakfast is paid for by their employer so, it is much easier to milk them by operating a restaurant on property. They sometimes dont even have free parking.
Additionally, Free Breakfast is second to Free Parking in online search filters for hotels. Such filters matter to the cost sensitive road trippers.
Further, USA has a car centric culture. Road trippers such as myself live in motels on outskirts, sightsee throughout the day with my bags in the car and then drive to next spot in the evening. We rarely stay more than 1 night in any motel even in the same city. For such culture predictability becomes more important than variety. I want to just go there in my pajamas grab something I can eat in car and drive away.
Wild speculation: the food safety regulations in the US make the sorts of quality buffets seen elsewhere cost prohibitive.
Unwrapped local cheese alone could have a county health inspector shutting the dining area down altogether.
And the prevalence of hotel chains with locations across myriad jurisdictions – each with their own idiosyncrasies in regulation – make lowest common denominator offerings the obvious choice.
Could be, but decent breakfasts aren't entirely non-existent in the US. They're just rare. I've never seen breakfasts on the level of mid-level European hotel (which are usually awesome) - though I'm too poor to stay in $400+/night hotels - but decent breakfasts happen from time to time. Usually when there's already a restaurant onsite, which is also used to serve breakfast. Other hotels - including those that do have a restaurant on site - still serve the usual poor parody of a breakfast. I don't think just health codes explain it.
That seems a likely reason to me as well. A lot of the manufacturing companies I have worked for showed similar behaviors, often over reacting to various regulations to make absolutely sure they were not going to fall afoul of them. Mistakes were costly enough, and proper expertise on requirements rare enough, that lots of things didn't happen just in case.
Well, price discrimination yes, but a particular kind -- bundling. Of course some hotels on both continents will choose not to, for reasons of their actual or desired customer mix, or tax law.
The real question is why the breakfast part of the bundle in Europe is opulent and in the US is not. I think I have an answer, and that is the degree of competition for breakfast. It is at least consistent with old observations. In the US there is much competition for breakfast offerings, so breakfast is cheap. The US hotel rationally offers a cheap breakfast as part of its bundle. Try getting a breakfast outside the hotel in Germany! Yes, you can [or could] get an opulent and expensive version. The hotel can offer an opulent and expensive version to compete. I presume with a markup worthwhile for the hotel. It's not so extreme in Britain, Italy or France, IIRC.
Anyway, there is that general relationship between bundling and competition.
I saw an approach to the heavy/light eater problem once, in a Wendy's of all places: you could get the unlimited salad bar for one price, or a single trip for a lower price. For the single trip they gave you a dish that was shaped like a shallow bowl, rather than a flat plate; I was money-conscious at the time and learned that I could improve my single trip with strategic placement of cucumber slices to extend the edges of that bowl.
While not exactly the same issue, a long time ago I visited an all-you-can-eat restaurant where they charged based on how long you were there. This favors fast eaters but, eating speed being equal, doesn't force light eaters to subsidize heavy ones.
Your tax evasion theory perfectly explains the modern professional conference. We live in the era of internet, these events barely make sense for knowledge spreading. However, they make perfect sense as employer-subsidized vacations, held in beautiful, tropical locations, with sightseeing and pub nights.
The irony is that this creates an adverse selection problem: it drives away the people who care about the subject matter, for whom the vacation elements are boring, while attracting Epicureans attendees.
As I understand the tax argument, it would apply only to business travel, paid for by an employer. I have a hard time believing that the Hampton Inn Hilton Head has many business travelers. Yet it offers free breakfast.
As for quality, I do think European standards are just generally higher.
My experience is that business meals are not taxable but companies typically limit food reimbursement. For European executives lavish lodging & dining allowances are a significant perk.
One other possible factor:
OFFERING the "free breakfast" makes the hotel more attractive at the same price point, but not every guest will necessarily CONSUME the "free breakfast." I always do ... and I always notice quite a few people leaving the elevators and walking right past it, or only stopping to fill a cup with coffee and maybe grab a Danish.
I'd be interested in seeing any real data on the subject, but my off-the-cuff guess is that less than 1 in 3 guests actually fills up even one plate and sits down to eat it. The hotel gets the advertising/promotion value, but doesn't actually have to deliver to anything like every guest.
Why would the free breakfast make the hotel more attractive to people who don't expect to eat it?
You might eat it some days but not others (due to scheduling constraints), or possibly, some members of your party might eat it but not everyone. My husband is much more interested in a big breakfast than I am, so if he can go downstairs for breakfast while I shower and bring me back a container of yogurt or a hard-boiled egg, we both win.
That sounds like me and my wife. I tend to rise early anyway, so I hit the breakfast, have a couple of plates of sausage, eggs, biscuits, gravy, waffles, two cups of coffee -- one I drink with breakfast, one I take back to the room with me. Tamara is probably just then waking up. If she gets anything from the "free breakfast," it's on the way out to wherever we're going, and it's a cup of coffee and maybe a piece of fruit or a bagel or danish.
The key word is "expect."
How many people buy memberships to, say, AARP in part because they see they get restaurant and movie ticket discounts ... and then never end up actually using those discounts?
Hotel A: Bed. Bathroom.
Hotel B. Bed. Bathroom. Pool. Gym. Business Center. "Free Breakfast."
Price difference: Little, nothing, maybe even B<A.
"Well, you know, we might want to take a dip in the pool. And I wasn't PLANNING on hitting the treadmill while we traveled, but hey, it's there. Maybe I'll stay up late one night and knock out that report I'm supposed to have done about the time we get back from vacation. I'll use the business center so you can sleep. And we really should make the most of our vacation, actually get up early and get going, this place has breakfast so we can get a running start."
Family goes to Hotel B. Sleeps. Showers. Maybe uses the pool. Probably doesn't use the gym. Doesn't even notice the sign when they walk past the business center. Sleeps in until breakfast has ended. But any or all of those things may have contributed to choosing Hotel B over Hotel A.
Of course, SOME people choose Hotel B because they actually do want those extra amenities and will use them. But nowhere near everyone. For many of the guests, they are initial attractants, not used benefits.
Those amenities cost hotel B something to provide, so if the hotels are otherwise similar It should be more expensive than A. The question is not why the amenities are worth anything but why they are worth more than they cost to provide.
It's not obvious that they cost more to provide more than they are worth.
It's not like the hotel manager says "OK, we have 100 guests, so we will prepare enough food to feed 100 guests a sumptuous breakfast buffet."
The hotel manager probably has a good handle on how many of those 100 guests will actually eat, and how much they'll eat, and has the hot stuff prepared in stages so that everyone who DOES show gets fed but there's minimal wasted food at the end of it.
If OFFERING the breakfast attracts more guests than not offering it, but if most guests don't take full advantage -- they eat light or not at all -- then the additional guests' fees more than cover the cost of the "free breakfast" promotion.
If I’m on a road trip, I often grab a banana or muffin and then get on the road fast. We can then stop for a sit down brunch after a few hours on the road.
Based on my conversations few years ago the cost of this breakfast is around $5 per room for the motel owner. You have to only go to aisle number 30 in Costco business center to see the real price of the muffins and pancake batter !
Re (2), I wonder if some hotels might feel that it would cheapen the experience if they were to nickel and dime people for breakfast. Cf. budget airlines, where you pay for meals, luggage and seat selection vs premium airlines, where it's all included in the price of the ticket. Personally, I prefer budget airlines but often choose a hotel where breakfast is included, I suppose to lower my transaction/decision/search costs.
I've got no clue about the economic incentives, but golly do I miss the old fancy restaurant Sunday brunch buffets--dudes in chef hats making you waffles and omelets, ham and prime rib sliced right off the roast, cocktail shrimps, smoked salmon, deviled eggs, every kind of breakfast meat/bread/potato, all kinds of juice, full dessert bar. I only had a few years between "Ima just have a full plate of bacon" and their general disappearance in which to fully enjoy them.
One explanation I've heard for the recent decline in quality of US hotel breakfasts is the increase in youth travel sports teams.
If a significant part of a hotel's clientele is large groups of athletic 14-year-old boys who will eat anything that stays still for long enough, they will want to make their breakfast as cheap as possible- while still offering one, because if they don't the team's chaperones will choose another hotel that offers breakfast rather than making the extra effort of getting the team to and from a diner early in the morning.
Has quality declined recently?
When you have small children these breakfast buffets are convienient lifesaver
Interesting observations. My attempt at answering the three questions: (1) People are in a hurry in the morning and do not have time to wait for a la carte dishes to be prepared. Also, guests may prefer several small portions of various different things rather than one dish. (2) I'm not sure this is true anymore. When booking a room via booking.com, for instance, I usually get to choose between a room rate without breakfast or a higher room rate with breakfast. (3) That is hard to say. I have noticed that premium cabins on domestic US flights are usually very much inferior to premium cabins on Asian and European airlines. First class on US airlines bears little resemblance to first class on Middle Eastern airlines, for instance. Whatever it is that causes this, could it be the same factor that is at play when it comes to hotel breakfasts?
FWIW most standard to cheap Japanese hotels generally charge for breakfast with a discount if you pay for it at the same time as you book the room or when you check in and pay. I'd say about 50:50 on whether it's a buffet or not.
Posh hotels, as in the US, charge quite a lot for the buffet and often more if you decide to forego the buffet and order specific items that may not be in the buffet
Posh ryokan on the other hand always include breakfast in the overnight stay charge and the breakfast, while Japanese, will usually be substantial. Often it is far larger than my usual lunch.
I took my bicycle to Japan in 1992 and rode around Shikoku for a month. Only one ryokan did not serve breakfast, and wouldn't you know it, 5 or 10 minutes after leaving on the next leg of my bike tour, a festival crowd came by, chanting, carrying a platform with a Taiko drummer, and when they saw me, they insisted I take a swig of sake from a bottle ... on an empty stomach! Got a cheer from everybody, I bowed and waved, and they resumed their little parade. I stopped at the first open restaurant and got some breakfast.
Wouldn't it be tax avoidance, not tax evasion?
Just back from a month touristing and cycling in Czechia and (former East-)Germany. I booked some hotels through Booking.com and they always break down hotels as with or without breakfast. Others I booked through their own websites, and every one offered a no-breakfast option, or priced the breakfast separately, usually 16 to 20 Euros. For the price and convenience, breakfast is my largest of two meals per day. Throughout the trip, the breakfasts were bountiful and even lavish. At my cheapest hotel chain (75euro/night), the 14 euro brekky far outshone anything I have had in Canada or the US. I do notice many light eaters and walk-bys which suggests that not everyone eats like I do.