Exploring the value of day-use hotels

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From luxury hotels offering “daycation” room stays to day-use accommodations catering to jet-lagged travellers, this is how – and why –properties are embracing the day-use concept

Gone are the days when a hotel was simply a place to stay the night. Accommodations that offer their rooms and services specifically during the daytime are on the rise – and for good reason. According to STR research, the global occupancy rate in 2018 was 67.5% – meaning 32.5% of rooms (around 2 billion rooms) remained empty. For four-star and five-star hotels in Europe, this corresponds to around $40bn lost annually, according to Eurostat.

To recoup some of this lost income, many hotels are now turning to a new business strategy: day-use accommodation. Offering stays from between 10am and 5pm, these daytime breaks cater to everyone from jet-lagged travellers and professionals, to leisure tourists booking a “daycation” at luxury hotels.

Nap time innovations

Tampa Airport Marriott has recently unveiled flexible day use rooms, while “power nap pods” are popping up in cities, attracting tired business people. Exhausted New Yorkers can catch a 45-minute nap at The Dreamery for $25, while London’s Pop & Rest pods cost from £8 for 30 minutes.

Mauricio Villamizar Rangel set up Pop & Rest in October 2017 and the company has plans to open two more locations across London. “Nowadays people are working longer hours and commuting longer distances – it can leave them feeling burnt out, and coffee isn’t enough, you need a proper break,” he says. “Studies show that if you take a 25 minute nap, you can improve your performance by 34% and alertness by 54%. Our customers – a 50/50 mix of local workers and travellers – include sleep-deprived new parents, people recovering from a night out and international travellers in transit.”

With around 35% of their rooms underutilised, hotels would be wise to jump onto this growing trend. DayBreakHotels.com is a website dedicated to selling hotels’ purely daytime services, such as day rooms, meeting rooms, food and beverage packages and access to the spa and gym. It has almost 4,000 hotels in 16 countries on its site since launching four years ago.

Photo: Jesse Schoff

Photo: Jesse Schoff

“The current definition of a hotel – which is a place for travellers to sleep – is self-limiting,” says Simon Botto, CEO of DayBreakHotels. “A hotel is a nice piece of real estate with a number of services inside – and there’s no reason that these services should be limited to travellers.”

In fact, leisure travellers make up just 35% of customers booking a day-use hotel through the site. The majority (40%) use them for business, with around 25% using it as a place to rest while in transit. Essentially, a customer – both travellers and non-travellers – can transform any hotel into a temporary office, a destination for a daycation (to have a mini-break in their hometown) or a place where they can rest for a few hours.

Maximising your assets

The business case is evident. The greatest asset for a hotel is its rooms – but for the majority of the time (i.e. during daylight hours) most of them are empty. Add to this the fact that many hotels have been hit hard by home-share websites, and the problem deepens. Selling empty rooms – or even selling rooms twice over – therefore makes great financial sense.

A hotel can boost its net profit by 10-15% simply by selling empty rooms, Botto says. Yet most properties are not doing this – he estimates that only 2% of properties advertise day-use rooms and services on their own website. “Most hotels have two key problems with their business: empty rooms and unused services,” he says. “By selling these rooms and distributing these services, hotels can transform unused assets into incremental revenue.”

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Since there’s no extra cost attached to this (ie the rooms are already there), all the incremental revenue is pure profit for the property. What’s more, if you’re selling rooms that would otherwise remain empty, there’s no operational impact.

The day-use concept has more benefits than just reselling rooms; crucially, it also enables properties to reach a new (daytime) customer base. If these new customers have a positive daytime experience, they are more likely to book an overnight stay.

Guest benefits

Day-use hotels also have numerous benefits for the customer. Chiefly, rates are cheaper. Rooms are on average 50% less expensive than night rates (depending on the season). French website Dayuse.com also offers rooms for daytime.

Clicking on its page, a typical Paris experience could be a hotel near the Eiffel Tower charging €79 (£70) from 10am until 5pm. Night-time prices would be double that. Giving access to five-star hotels at a discounted price also means you’re offering customers luxury experiences they might otherwise not have been able to afford.

Day-use rooms also offer a better experience for business people. “If you book a temporary office, all you get is a chair, a desk and a wifi password,” Botto says. “For a similar price, in a day-use hotel you get a room in a four-star or five-star hotel with the comfort of a bed, spa access and the whole hotel becomes your temporary office. You can work in the room, then have meetings in the bar. It’s cheaper, more comfortable and a far better experience for guests.”

The secret to success for a day-use property, according to Mauricio Villamizar Rangel, is where you are on the map. “Location is key,” he says. “Big cities are ideal as people are usually commuting further or in transit. Another tip is to focus on the customer experience. We use special aromas, lighting and music so people feel disconnected from the city as soon as they step through the door.”

Hero image: credit to Rhema Kallianpur

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Globally, hotels have an occupancy rate of 67.5% – meaning that 32.5% of their rooms are underutilised
Day-use hotels attract a new type of customer – principally business travellers looking for a place to work, rest and have meetings
Properties can boost their net profit by 10-15% by selling empty rooms for day use
Operational impact is minimal, since the rooms and services a property is selling are already in place
The guest experience is enhanced through day-use hotels – customers can transform the whole hotel into a temporary office, and afford luxury experiences they might otherwise not have been able to