With more than 673,000 hotel rooms available in the UK alone, is the hotel industry capitalising on all of its assets - namely the large numbers of rooms sitting idle during the day?
NB: This is a guest article by David Lebée, CEO of DayUse.
Can daytime rentals be the solution or will the existing sleazy stereotypical perceptions be too much to overcome?
Magic wand solutions rarely occur in the business world. However, a new business model could just do that and capitalise on the UK hotel industry’s sleeping room assets.
Reputation management
Disrupting any market is no mean feat. However, IT can facilitate this by turning the traditional hotel model of overnight booking stays on its head.
One-stop web platforms promoting daytime use of hotels can be created, providing the visibility and accessibility that IT savvy potential users of the service expect and demand.
We started in 2010 and are one of a number of players in the micro-stay space. Our sector is growing, but have we managed to overcome the stereotypes that day time has had historically?
To an extent - pitching the daytime market at luxury hotels and using smart online platforms the sector is helping to turn the image around. It has involved educating consumers and the hotel industry with a strong marketing effort as well.
But today, a large chunk of daytime customers are now mainly using hotel rooms for business meetings, possibly combined with a stopover between flights. Leisure clientele - in the broadest sense - account for just under one-third of its business.
Offsetting the hotel headwinds
Daytime use of hotels is just one example of how hoteliers are looking to make the most of the growing number of business travellers.
The Global Business Travel Association is expecting business travel to grow by 5.1% in Western Europe during 2015. And the 2014 International Travel Management Study from AirPlus reported that 30% of UK travel managers are expecting business trip numbers to increase over the next 12 months.
For hoteliers, daytime use can improve occupancy and the revenue is 100% incremental. This additional revenue will help counter some of the other trends that are currently being forecast for the hotel industry.
PwC forecast occupancy growth rates - in the UK at least - to be moderate for 2015 – 1.5% for London, and 1.6% for regions. Sharing economy platforms are bringing new competitors in the hotel market and has been likened by some to the growth of the budget hotel segment in the 1990s and the emergence of online travel agencies in the 2000s.
Just like other immediate booking services, the biggest driver for daytime growth has been apps - we are seeing 80% of our bookings for daytime use made through our app for on-the-spot booking.
This is great for customers as they can book in for last minute meetings, or if their flight gets delayed they can immediately book and use the room to catch-up on emails or work calls. For the hotelier, rooms can be filled at short notice.
This is of course part of a general trend with technology the key driver of growth for hotel room bookings.
Forecast for the future
So is this a one off, short lived trend? Or is day time rental here to stay?
PwC research suggests that the hotel and accommodation model is changing, as a result of four megatrends:
- breakthroughs in technology and connectivity
- growing environmental conscience
- rising urbanisation
- shifting social preferences
These drivers will continue to create growing consumer interest and demand for daytime use, alongside investor confidence in the sector, in turn opening up more opportunities for hotels.
NB: This is a guest article by David Lebée, CEO of DayUse.
NB2: Hotel ImHotel reception image by Shutterstock