This is assuming that hotels are making enough money to be able to afford to pay more. If margins are thin, they have to increase prices or reduce expenditures in order to get more money. A hotel is not a license to print money; it has to come from somewhere.
This can resolve itself in many ways. The classical outcome is that some hotels go out of business, and the supply of hotel rooms drops to the point where the demand means that a more realistic price level can be reached.
The potentially better outcome is that smaller business that rely on non-wage workers (like family-run businesses) can effectively employ "workers" at a much lower rate in the hopes of outlasting the contraction of the hotel room market.
The worse outcome is that big corporations can allow certain markets to lose money, because they are drawing sufficient income from other markets, and wait out the first culling, which will disproportionately affect local hotels that both rely on wage workers and do not have a capital backstop.
Or, the market can just recover organically due to circumstances completely out of the hotel's control -- the local labor market could contract meaning that workers are willing to take a lower salary, or the tourist market could expand meaning they can book more rooms, or business expenditures for hotel rooms could increase faster than price levels overall.
You also have the lever demonstrated in this article. You institute more automation, self-service, and cut back on services (like daily room cleanings) that a lot of customers don't really value.
Yes, agreed, this method can work, but it isn't magic. I kind of lumped that in with "cost cutting", because in almost every case it results in a lower quality of service. Supply and demand operates on the margins; even though a lot of customers don't value the services, enough might to cut into your income, at least over time, and risk sacrificing some customer goodwill.
Oh. I agree self-service, for example, can either be generally better than dealing with a person (e.g. getting cash at an ATM) or something of a mixed bag (self-service checkout). However, cutting back on room service seems like a general win especially if you'll service rooms on request. After all, there's such a thing as serviced apartments that explicitly only service once a week unless you pay for more.
This can resolve itself in many ways. The classical outcome is that some hotels go out of business, and the supply of hotel rooms drops to the point where the demand means that a more realistic price level can be reached.
The potentially better outcome is that smaller business that rely on non-wage workers (like family-run businesses) can effectively employ "workers" at a much lower rate in the hopes of outlasting the contraction of the hotel room market.
The worse outcome is that big corporations can allow certain markets to lose money, because they are drawing sufficient income from other markets, and wait out the first culling, which will disproportionately affect local hotels that both rely on wage workers and do not have a capital backstop.
Or, the market can just recover organically due to circumstances completely out of the hotel's control -- the local labor market could contract meaning that workers are willing to take a lower salary, or the tourist market could expand meaning they can book more rooms, or business expenditures for hotel rooms could increase faster than price levels overall.