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August 27, 2019

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Today, resort fees are deemed ‘uncool’ and Lioness would like a little more clarification on Samsung’s arbitrary rule, but first…

The Hustle Daily Email

Decelerating RV sales indicate economy is running out of gas

NASDAQ? Who dat? More importantly… Sales of RVs are slowing, which many economists insist means it’s time to buckle up for an economic downturn. 

Just call it the RV Ripple

To understand the RV industry, keep your eye on Elkhart County, Indiana, which produces more RVs than anywhere else in the US of A.

Currently, manufacturers are tightening production as a response to deep dips — 20% so far this year — in wholesale RV shipments.

Because RV dealers don’t want to get stuck with expensive inventory — a deluxe motorhome can go for more than $200k — they cut orders as soon as they see demand softening. And because people who are finicky about their finances avoid big-ticket purchases, it’s easy to see how RV sales became a barometer of consumer confidence. 

Not convinced? RV sale declines preceded the last three recessions.

But wait! There’s more to this story

Tariffs on China, Mexico and Canada have increased the cost of building RVs… sometimes in surprising ways. 

Rising costs for steel and aluminum are widely reported. Less so? The rising cost of those little toilet-seat covers that go in RV bathrooms (yeah you’ll have to pop a squat outside).

Talk about no-so-happy campers
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Hilton and Marriott are sued over deceptive hidden ‘resort fees’ 

Last week, Marriott and Hilton were sued for their use of controversial “resort fees,” which charge customers hidden fees beyond their posted prices. 

The lawsuits, which were the result of an investigation into hotel pricing practices undertaken across all 50 states and DC, accuse the hotel chains of “deceptive and misleading” pricing practices.

‘Drip pricing’ makes it harder for consumers to compare prices

Many hotels advertise one price for lodging online, and then strategically reveal other mandatory fees (drip by drip) later in the payment process.

Because consumers can’t tell the full price, the plaintiffs in the lawsuit argue, this tactic makes it harder for consumers to compare prices and make informed decisions.

Resort fees are a great deal for hotels

Hidden resort fees are common: Research suggests that ⅓ of Americans have paid hidden fees for hotels in the last year. At Marriott, these fees range from $9 to $95 per day; at Hilton, they range from $15 to $45. 

The hotel industry, which collects $3B in resort fees and hidden surcharges each year, has come under fire for deceptive pricing practices before (most recently in an FTC investigation in 2012 and 2013), but pricing practices have yet to change.

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Starbucks borrows billions from its own customers… with gift cards

Starbucks is well known for its rewards programs, which give caffeine junkies a mobile app and gift cards to load up cash, earn stars, and redeem them for more jitter-bean juice.

But what’s less commonly known is that all of the money Starbucks customers load onto their gift cards and into their apps also functions as a $1.6B loan to Starbucks.

And, as Canadian writer JP Koning shows in a detailed blog post (which is worth checking out), it’s a great deal for Starbucks.

Big ’Bucks uses its customers as creditors…

And Starbucks doesn’t have to pay any interest on all that money that customers “lend” it. Starbucks also offers bonds, but it has to pay back its creditors interest of between 0.46% and 4.5%.

But customer gift card totals aren’t just a cheaper way to borrow — they actually make Starbucks money: The Seattle chain brings in $155m every year from unredeemed balances — which means Starbucks’ gift card program effectively lets it borrow cash at a negative 10% interest rate.

So… why doesn’t every company do this?

Some companies try: PayPal, for example, also receives about $20B in loans from its customers — and it pays no interest. 

But it has to keep money in reserve in case its customers withdraw their cash en masse. Starbucks, on the other hand, just has to keep a reserve of… coffee. So S’Bucks can earn waaaay more in interest than PayPal.

Other retailers could conceivably use prepaid gift cards to bring in free financing — although few of them do it as well as Starbucks. 

Walmart, for example, does 20x as much in sales as Starbucks ($500B vs. Starbucks’ $25B), but has a similar amount of gift card cash in its bank ($1.9B).

You can’t spell it without “bucks”

Not again: Samsung removes women’s first smart vibrator from ‘women in tech’ event

Early this year, Lora DiCarlo won the coveted robotics innovation award at CES 2019 for its flagship product the Osé, a cutting edge vibrator that’s supposed to be the “holy grail” of blended female orgasms.

But in October, the award, and the company’s invite to the product showcase, was rescinded after the CTA decided the product was too “obscene.” 

Last week, something similar happened to Lioness, a female-led maker of the world’s first smart vibrator, which tracks how things like stress, medications, and substances like alcohol and cannabis, affect female pleasure — and this time, the decision was made by Samsung.

*facepalm*

Last Thursday, Samsung hosted an event in San Francisco (in collaboration with SF Women in Tech no less) on “Growth and Innovation in the Wearable Device Market.”

Based on emails reviewed by The Hustle, Liz Klinger, the co-founder and CEO of Lioness, was approved by Samsung’s Developer Program to present her company’s flagship product — aptly dubbed the Lioness Vibrator — back in July.

Within the first few hours of the conference, Klinger was asked to remove her product from the event without explanation. Naturally, she wanted answers.

Then came the stonewalling… 

After nearly 4 hours, she finally heard back from a senior director of developer relations at the Samsung Developer Program.

“She said that Lioness shouldn’t be [at the event] because it ‘isn’t women’s health,’” Klinger said. “I explained how the device collects biofeedback and how we’re in the early stages of working with healthcare and research firms because of it — her response was, ‘It isn’t a wearable.’”

In a world of male BJ bots, why the stigma around female orgasms?

“I wish I had the answer.” Klinger said. “This isn’t even the first time: We were literally escorted out of a bank in Berkeley, CA, that personally invited us to discuss setting up a corporate bank account.”

Back in May 2019, the CTA re-awarded Lora DiCarlo with the Innovation Award, and admitted its mistake. After nearly 5 days of radio silence from Samsung, Klinger isn’t banking on the same outcome.

The Hustle reached out to Samsung for comment but hasn’t heard back. 

Talk about bad vibrations
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