A Twitter thread by Patrick McKenzie.

Late check out is such a brilliant business innovation. It takes an industrial byproduct and, simply by naming it and making it available, makes it valuable.

If it isn’t obvious why this works: suppose a hotel has check out at 11 AM and check-in at 3 PM. The hotel is *actually* not in the business of enforcing those times; they are in the business of making sure they can turn over ~100% of rooms prior to the next guest arriving.

But they don’t have to turn over *every* room before *any* guest, right. This is where the magic happens.

Cleaners start IDing and cleaning rooms before check-out time; some folks left earlier, to catch a plane or whatever. They will continue doing so until after check-in.

The hotel knows, based on experience and/or explicitly communicated requests from guests, that it doesn’t need N of its rooms until 7 PM or later, so cleaners don’t actually have to have all rooms released by exactly 3 PM on the dot. They have some flexibility.

Late check out lets them prioritize and monetize that flexibility. Give it to frequent guests. Give it to people paying extra. Give it to a credit card company paying some trivial amount for the privilege ($10 or $20 or whatever) so that they can keep a $$$ client on their card.

In a highly margin-sensitive business this is a 100% margin sideline selling something the hotel already has available every day which would be “wasted” if you allocated it randomly.

Tweets inspired by a Japanese AmEx ad attempting to get my credit card business by promising late checkout at an array of partner hotels. The copy is brilliant: ~ “Don’t you feel like you’re wasting the last day of your vacation? 4 PM checkout with AmEx FooBar. Enjoy the day.”

The ad (which is well done):