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SOUSED ON MATH AT THE HOTEL BAR
By Michael Matthews
January 10, 2008 -- David Rowell, The Travel Insider, recently chastised the Ritz-Carlton in Istanbul for overcharging its guests. But David was less concerned about being asked to pay 485 euros for an upgrade when he could have done it on the Web for 100 than he was by the cost of the libations at the Ritz bar. David paid $41.50 for a martini, $17 for a draft beer and 18 percent for tax and service!

Okay, Europe (and the Ritz is on the European side of the Bosphorus) is expensive, especially given the weak and wimpy exchange rate for U.S. dollars. But I have to agree with David: What he paid was excessive, to say the least. Then again, all hotel bars are exorbitantly overpriced, none more so than those located in the Ritzs, Four Seasons and other hotels of that "luxury" ilk. I'm not exactly sure why they are more expensive than your local pub. Maybe it's the cost of the uniforms for the barmen or the ghastly harp player in the corner.

Let's take a look at what booze in hotels generally costs. First up: beer. Depending on taxes, a bottle of Budweiser costs a hotel bar or your local pub 65 to 75 cents. At my local pub, they sell Bud for $2.50 a bottle. But at The Ritz-Carlton in San Francisco, a bottle of Bud goes for $7. That's a markup of almost 1,000 percent, a pretty handsome profit. Of course, deluxe hotels do have overhead that is considerably higher than my pub. After all, someone has to pay for the upkeep of all those Hermes-tied executives.

Onto the hard stuff. Most liquor comes in 750ml bottles--or 25.4 ounces to the metrically challenged. That scotch on the rocks you order usually has 1.5 ounces of liquor. So, carefully poured, a good barkeep will squeeze 16 drinks from a bottle.

A bottle of Dewar's Scotch Whisky costs the establishment approximately $26, depending on local tax. It's $11 for a Dewar's on the rocks at the Degrees bar in the Ritz-Carlton Washington. Not bad considering the 1.5 ounces of booze cost the hotel $1.54. Or look at it another way: at $11 a shot, the house is making a nifty $150 of profit on a bottle of Dewar's.

Let's jump to martinis, arguably the world's favorite cocktail. A bottle of Beefeater gin costs the house $22 and a martini should have 3 ounces of gin and a drop of vermouth. Your friendly watering hole can serve eight martinis from a bottle of Beefeater, which means their liquor cost is 86 cents an ounce.

What does the Ritz-Carlton on New York's Central Park charge for a martini? Twenty bucks. That's pretty stiff, even if it is served to you by Norman, my choice for world's greatest barman. I know they have to pay Norman, buy olives and acquire fancy martini glasses, but surely selling something that costs 86 cents an ounce for almost $7 an ounce is a bit over the top. I'm told that martinis yield more profit than any other drink, so it's no wonder that every hotel bar in the world is pushing martinis.

But you say you're a wine drinker. Fair enough. The industry norm is a 5-ounce pour, so bars get five glasses from a 750ml bottle. The Vault bar at The Ritz-Carlton in Philadelphia probably pays $5.50 for a bottle of Benziger Sonoma, a reasonably good house white wine. That's a cost of 22 cents an ounce or $1.10 a pour. The smiling barkeep sells you a glass of Benziger Sonoma for $12. That's a thumping markup of almost 1,100 percent!

As a drinker and a hotelier, I have what I think is a fair question: Would hotels sell more booze if they charged less?

Charlie Bell, a much-loved hotelier who recently passed away, was once the executive vice president of Hilton International, which then operated Windows on the World in the World Trade Center. He ordered that no bottle of wine should be marked up more than double its cost. The result? More wine per customer was uncorked at Windows on the World than anywhere else in the Hilton Empire--or in New York, for that matter. (By the way, Windows' commitment to wine was the topic of a Martin Deutsch column way back in 1983.)

Charlie Bell proved that pricing wine fairly led to more sales, and thus more profit, for his hotel. Sadly, he never got to prove his theory on liquor or beer.

I think I need a drink now. Columnizing is thirsty work. But I assure you that I won't be drinking at my nearby Ritz or Four Seasons. I'll be at my local pub with all the other lushes, paying a quarter of the hotel bar's price.
ABOUT MICHAEL MATTHEWS Michael Matthews has managed and marketed fine hotels around the world for more than 45 years. He spent 14 years in Hong Kong building the legendary Regent International group. He has also worked with St. Regis, Ritz-Carlton and Rosewood hotels. Matthews is currently based in Arizona. He began writing Do Not Disturb in early 2004.

THE FINE PRINT Joe Brancatelli makes this space available to Michael Matthews in the spirit of free speech and to encourage editorial diversity and the wider discussion of important travel issues. All of the opinions and material in this column are the sole property of Matthews. This column may not be reproduced in any form without the express permission of Michael Matthews.

This column is Copyright 2008 by Michael Matthews. JoeSentMe.com is Copyright 2008 by Joe Brancatelli. All rights reserved.