Forcing consumers to spend: A wise or foolish business model?

Forcing consumers to spend at times is counterproductive, some customers will leave and those left will have a bigger burden to share which could demand raising the minimum spend again, chasing more customers away. [iStockphoto]

A visit to a coastal hotel during the festive season left my head spinning. You pay in advance and then redeem your money as you spend it. An adult pays Sh600 while children pay Sh300.

As you take your food or drinks, that money is deducted until it is finished or you top up.

What if I take less than the advance payment? You have to convert it into something, I was told.

Clearly, I was being forced to spend or the hotel thought I was an idler. I quickly drove to the next and better hotel. No down payment there!

We sat enjoyed our meals and left satisfied. The other hotel can keep their meals and drinks! The hotel is owned by an institution of higher education.

Forcing Kenyans to spend is becoming common. Members' clubs have a minimum spend per month. You still pay that money even if you consume nothing. Curiously there is no bonus for overspending!

Does forcing us to spend make economic sense?

It does not. In addition to violating consumer rights, it creates inefficiency. Why improve on services when one is assured of income?

Two, consumers are clever, they will just spend the minimum and you lose the extra income. They will feel the injustice and pay you back.

At times it's counterproductive, some customers will leave and those left will have a bigger burden to share which could demand raising the minimum spend again, chasing more customers away.

Hotels and members' clubs are not necessities, the patrons have choices.

It's like a city increasing taxes to raise more revenues. Some residents will leave. Those left have to shoulder a bigger burden. That incentivises more to leave.

Minimum spend for hotels and members' clubs should be done away with - businesses should focus on improving services instead and see excellent results.

It's a lazy method of raising revenues.

Why so much focus on the minimum spend, why not focus on giving bonuses on overspending? What is wrong with being mean, wanting to save, having no money, or simply disliking the services offered?

I wish you a happy 2023. It's your responsibility to make the year prosperous.A