Afternoon tryst or layover retreat? new websites are changing how hotel rooms are rented

The street and allow weary travelers to rent rooms for just a few hours during the day. And they're helping the hotel industry regain revenue lost to Airbnb.

Published on | 03/26/2016 I Direct link

We've all heard of a staycation.

But how about a daycation?

It's a concept that's taking on new meaning in some ways by a crop of startups that are gaining momentum in the hotel industry and in the process, disrupting business as usual.

The idea involves websites such as DayUse and HotelsbyDay, which are specifically designed to market hotel rooms for use during the day, for as little as just a few hours -- perhaps just a morning or midday stay.

It's a notion that often inspires a smirk and invites innuendos about under-the-radar romantic interludes. News headlines about these news sites have read everything from Adulterers Anonymous to Naughty pause after work replaces dirty weekend.

But to view this burgeoning business sector in such a narrow light misses all of the potential usefulness for a wide consumer base and for the lodging industry. Not only do the new platforms allow hotels to leverage unused inventory during the day, thus increasing revenues, but they also fill an unmet need among travelers who want access to hotel rooms outside conventional hours.

Think - layovers, a place to work quietly when visiting a city for the day, and a place to rest and allow your children to nap when out and about on a daytrip away from home. The possibilities are endless.

Hospitality is looking for new revenue streams, explains Maud Chabanier, general manager of DayUse USA. And day use is helping them optimize their revenue. Hoteliers are thrilled about it. They can generate 10 to 15% revenue without new investment.

DayUse is the leading website in the space, a site that started in Europe about five years ago by listing a handful of hotels in Paris. The platform now represents hotels in 14 countries, employs 40 people and has offices in Paris, New York and Sao Paulo.

What's more, DayUse recently raised 15 million euros ($16.74 million), closing the largest European Startup Series A investment round of 2015 and in the process earning the distinction of being one of France's hottest startups.

It wasn't planned, but DayUse is coming to market at the perfect time, says Chabanier.

The hospitality industry at the moment is very concerned about all of the market shares that are being eaten away by the sharing economy and disruptive concepts such as Airbnb, and they are trying to find new revenue streams, she added. We're coming up with a very simple solution - to build revenue during the daytime.

Of course, services like DayUse facilitate the booking but need to rely on strong partnerships with established hotels.

Hotels that start working with us quickly come to realize that financially it's a good opportunity, and it's an opportunity to work with a new clientele they weren't necessarily reaching before, Chabanier adds.

And for those who may have envisioned seedy motels being sold by the hour on DayUse and its peers, think again.

The hotels listed are upscale. In New York City, a market DayUse began tiptoeing into about two years ago, the properties all have three or more stars. The price you will pay for such rooms meanwhile, is drastically discounted. In some cases, the cost is as much as 75% less then the normal nightly rate.

The Sohotel in NYC, for instance, offers a standard double queen room for the afternoon for $139. (The normal nightly rate for the same room is $219) Those who choose to spend a few hours retreating at Sohotel, a three-star property, have access to free Wi-Fi in public areas and hotel rooms with flat-screen televisions, exposed brick walls and wood floors.

DayUse currently offers about 70 hotels in New York City but has ambitious plans to expand in this country. Chabanier says DayUse will be in 15 of America's largest cities by year's end.

''It's the right time for DayUse to take a big step internationally, says Chabanier. We're getting demand from users all around the globe and we need to be able to open all of the various large cities around the globe.

Having come across DayUse during his travels in Europe, industry veteran Yannis Moati was inspired to create a similar hotel booking platform in the United States.

Moati's offering launched a little more than one year ago with the nameHotelsByDay. It's a New York based startup run by a team of hospitality industry veterans, technology experts and entrepreneurs.

We're getting pretty good traction, says Moati. We now have about 350 properties and are growing at about five properties a week.

But contrary to DayUse's experience in Europe where renting hotels by the hour is not such a sensitive subject, Moati says he has come across a bit of resistance from hotels.

The European model is geared toward reinforcing the stigma - the romantic aspect, he says. You can do that when you're selling to the French, Italians and Spaniards. Shamelessly, you can promote a little frill.

In the U.S. however, Moati and his team are working to convince hotels to look at the opportunity in a different light, pointing out that the model is creating value for them.

We have shifted the mindset to be more about the business traveler and we are reaping the results, he continues. We see a lot of business travelers calling us who want to book an early check-in or late check-out.

Additional resistance stems from the various operational issues hotels face, Moati explains, including challenges posed by a hotel's employee unions and the scheduling of room cleaning services.

Still HotelsByDay is making steady progress. It has since expanded beyond New York City to include Chicago, Miami, Los Angeles, San Francisco, San Diego, Boston and more.

And in the process of shifting the mindset of the public and the hotel industry about such platforms, Moati and his peers are also changing the way hotels do business ever so slightly. HotelsByDay and DayUse are definitely disrupting things somewhat, but in a manner that's not about inspiring additional competition for hotels. Rather, the sites are opening additional opportunity, Moati says.

We're breaking barriers, Moati says. We're changing the model on them. And the most aggressive hotels realize there is an opportunity here. And along the way we're bringing hospitality on par with what modern society expects...We are an on-demand society that moves quicker than ever. But yet the hospitality industry has been stuck with 11 a.m. check out and 3 p.m. check in.

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