When was the last time your occupancy was 240%?
Most likely never. But that’s exactly what Yotel’s VP of Brand Jo Berrington told Hotel News Now he has seen at his properties.
How, you ask? By selling the same room multiple times throughout a day.
Commonly referred to as “day use,” the practice of selling rooms for small increments of time — anywhere from two to 10 hours — is becoming more and more popular. Once reserved for shady motels with hourly rates, day use is shedding its old perception. Operators understand there are legitimate reasons a guest might need a room for only a few hours, and the prospect of collecting even a small amount of revenue while the room would otherwise sit empty is a no-brainer.
“If we have rooms available, it is in our interest to use them during the day,” Jan Kalanda, VP of development at Rockstar Hospitality Group, told HNN. “It’s revenue we would not have had.”
In France, even luxury hotels are embracing the concept. A site that helps hotels sell daytime inventory, Dayuse.com, counts Accor Hotels and Marriott International as customers and says the total number of hotels using the service doubled in 2016 to about 600.
A manager of one independent Paris hotel told the Financial Times that Dayuse.com delivers 30 to 40 bookings a month.
Legit reasons someone might need a hotel room for a few hours during the day:
- for a photo shoot
- to hold a meeting in a quiet place
- to refresh before an off-site meeting
- to get out of the airport during a layover
- to occupy time before an overnight flight.
And offering rooms for daytime hours only legitimizes the ability to charge for early check-in and late check-out because guests understand the rooms needs to be made available right away.
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Is Day Use Right for You?
Before you take the plunge and start offering hourly rates, there are a number of things to consider.
Most importantly, determine if day-use rates are right for your hotel. Closely examine your business mix to determine average time of arrival and length of stay. Do you serve mostly business or leisure travelers?
Based on these things, your number of empty and clean rooms during the day will vary greatly. And so will the demand for them, as day-use competes with early arrivals and late departures.
For example, day use makes the most sense at airport hotels. But it wouldn’t make sense at the Peninsula Beverly Hills, where check-in and check-out times are whenever the guest requests.
How Can Hotels Prepare For A Dip In The Industry Cycle?
Another challenge is determining what to charge. If you’re an early adopter, you will have trouble identifying a comp set. Will you sell rooms in 4-hour increments? Six-hour increments? Twelve-hour increments? Or will you choose to charge by the hour?
Lastly, you’ll need to look closely at labor costs, as you’ll most likely need a more flexible labor force. Consider the cost of an early housekeeper as well as a late-shift housekeeper to turn rooms as guests check out. You’ll want at least a few rooms ready by 10 a.m., much earlier than what you might ask currently.
Revenue Management at its Finest
Optimal revenue management is critical for day-use hotels.
First, your revenue manager should be able to compare on-the-books data with forecast data to determine upcoming demand. But counter to traditional revenue management, a hotel might take action when demand is high rather than when demand is low, because on compressed dates it might make sense to split rooms up into day parts, therefore increasing occupancy and revenue.
For day-use properties, having the ability to look at same-day pickup is incredibly helpful. And the ability to refresh recommended rates multiple times a day allows revenue managers to flex hourly rates based on supply and demand.
Assigning a rate code to the hourly rate would allow hotels to track the data, run reports and push an optimal rate strategy.
Again, day use isn’t for every hotel. Perhaps your business mix doesn’t afford you the flexibility or you don’t have the resources to manage the added complexity.
But that doesn’t mean it won’t become applicable in the near future as hotel marketing becomes even more transparent to the consumer. After all, it’s not too far-fetched for a guest staying in your hotel for eight hours request he or she pay less than someone staying for 18 hours.