Dynamist Blog

Hotel Aesthetics and Inflation

When a hotel room improves its aesthetics and raises its rates, should the price hike count toward inflation? If the room is nicer and the price doesn't go up, should that push down the CPI? My new NYT column looks at the dilemmas intangible quality improvements pose for inflation watchers:

Earlier this month, Marriott International unveiled new designs for the rooms in its various hotel chains. These are not routine updates to replace worn-out furniture or carpets. They represent a significant shift from the cookie-cutter standardization that built Marriott into one of the world's largest hotel companies, to a new emphasis on aesthetics and personalization.

"It's a makeover," said a company spokesman, John Wolf.

From granite countertops and aromatherapy shampoos in the bathrooms to piles of pillows on the beds, the rooms aim to please a style-conscious new generation of travelers. The floral bedspreads once ubiquitous in hotel rooms are out. After all, says Mr. Wolf, "Who has one of those at home?"

Marriott is following an industry trend. Over the last several years, hotel chains have been competing ever more intensely to upgrade the look and feel of their rooms. That competition was set off by Starwood Hotels and Resorts with its stylish redesigns of Westin and Sheraton rooms beginning in 1999.

This emphasis on aesthetics goes beyond hotels to all sorts of products and commercial environments, from the design of cellphones and trash cans to the look and feel of stores and restaurants. The quality of goods and services is increasingly judged not only by function but also by style.

These upgrades present real problems for economists charged with tracking inflation. Hotels hope to sell their redesigned rooms at higher rates. If they succeed, should economists count those higher rates as contributing to inflation or simply as consumers' paying for more to get more value?

The rest is here.

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