The Free Ride

June 7, 2014

Alan’s Thought For Today, Marketing Examples

Big headlines today about car service Uber raising around $18 billion, surpassing all start-ups except Facebook. Uber is a brilliant idea, but what happens from here?

Obviously, there will be competitive entries from others, offering cheaper rates or particular vehicles. Perhaps cab companies will embrace the technology and use their massive fleets to out-hustle Uber. Perhaps, instead of an app, a competitor will offer something you can carry on your key chain to summon a vehicle.

But here’s another thought: We’re riding around to local restaurants in Beverly Hill for free in the Peninsula Hotel’s Rolls Royce. There is no charge at all, save a tip to the driver. Other hotels around the world do the same thing, though not always with this level of vehicular excellence. (Even in Beverly Hills, a Rolls discharging you at a restaurant draws carefully veiled stares. What show are we producing?)

My point is “the free ride.” The hotel accommodates this expense in return for loyal guests in expensive rooms. They can charge a higher rent to the jewelry stores on the property, and provide more expensive food and drink. They will get more referral business (which they’re getting right here in this column).

What if Amazon or Barnes and Noble provided free books which were subsidized by advertising within them? What if newspapers stopped the inefficient and expensive revenue generator of subscriptions, and relied solely on more expensive advertising rates (spurred by technology’s ability to identify and isolate ideal readers for various offerings)? I’ve often thought that restaurants that charge for valet parking are silly—it ought to be free for “frequent diners” just as hotels should offer it for free to certain guests.

We get free internet access in many airports by agreeing to listen to a 30-second commercial first. Could you run a short-haul air flight for free if there were a product demonstration during the trip? How about a free rental car if you agree to visit a time share demonstration?

Using the house car is a considerable benefit. Although it’s build into the hotel cost structure and charges, it certainly seems free (just as frequent flyer miles seem free). There may be no such thing as a free lunch, but apparently there is a free ride.

And that might just be the next big thing.