Extended-stay hotels, typically known for their resilience and consistent returns, are looking for a way to boost revenue for the first time in years. Competitive indicators show extended-stay properties stand to benefit from advanced revenue management support now more than ever.
The most significant misconception extended-stay operators have about adopting revenue management technology is that it will require changing their operating model. Extended-stay hotel fundamentals are no different from other hotel segments—with a few important caveats. While extended-stay hotels must overcome slightly more price resistance than the full-service and luxury segments, these properties ask the same questions and use the same data points to optimize revenue and improve their relationship with guests.
When extended-stay hotels operate with data-driven insights provided by revenue management technology, they are more competitive, efficient, and aware of their earning potential. However, investing in this technology is often seen as a significant commitment, even though it doesn’t have to be. Instead, operators should ask themselves whether or not they benefit from these capabilities and allow the investment to pay for itself.
The Right Approach
When considering adopting revenue management technology, hoteliers must be upfront about their commercial approach to selling. How are they reaching out to guests? What are their most significant traveler touchpoints before, during, and after their stay? How do they prioritize short versus long-term stays, and how does it impact their hotel’s bottom line?
With the right systems, data collection practices, and revenue management technology, hotels can accurately analyze the difference in benefits between stays of varying lengths. Historically, extended-stay revenue managers would examine the value of nightly rates based on the length of a guest’s stay. Today, with revenue management technology, hoteliers can apply different pricing logic to various products and services and track each within a range set by the property. This approach enables extended stay revenue managers to find the “sweet spot” for beneficial bookings.
This approach is even more critical in dual-branded or hybrid hotels, which offer a combination of traditional and extended-stay rooms. These properties have a duty to define who they are, who their guests will be, and how operators will reach these guests. This includes determining the lowest rates they are willing to accept and the highest price they will ask for while maintaining the guest experience.
Revenue optimization for these hybrid properties has long posed serious challenges for hoteliers. While it’s easy to see that there’s value in mixing in traditional shorter-stay guests with long-stays, the calculations for determining the ideal price point and other relevant revenue management decisions can quickly become confounding without advanced revenue management tools. With the right system and data in place, hoteliers now have the ability to optimize revenue decisions for varied length-of-stay products holistically.
By driving additional revenue via these automated systems, hoteliers can now pair maximized revenue with the leaner operating model of an extended-stay property—a potent combo for improving bottom-line performance.
Resounding Resilience
Extended-stay hotels are among the most resilient in the industry, and frequently, the enthusiasm of completing a renovation can lead operators of these hotels to stick to aspirational pricing, which may not be applicable–or the right timing. Markets are often fickle, and poor timing or ill-conceived planning can quickly sour a property’s reputation and negatively impact its earning potential. Today’s revenue management technology is designed to help guide operators back on the path to profitability while giving them insight into what is and isn’t working in the context of their property.
Extended-stay operators, like all hotel operators, must keep profit in mind as their goal. Effective profit optimization only sometimes means achieving maximum occupancy or pushing the highest rates. Instead, hotels should seek insight from data analytics to help them leverage the available demand. This tactical task is best managed by automated systems and led by data scientists so operators can prioritize operational strategy and improve the guest experience. However, this technology is rapidly being made available across the entire hotel operations chain, allowing more eyes to help inform revenue management decision-making.
Hotels today are still defining what the hospitality business will look like over the next decade, and revenue management technology is helping them achieve a higher level of competitive efficiency while preserving the autonomy that makes hospitality so endearing and memorable to guests.
