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Monday, 19 June, 2017, 14 : 07 PM [IST]
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Micro Stay - A win-win situation for hotels?
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Known by different names like
day-stay, capsule stay, hourly
stay, etc., Micro-stay is a concept
which allows hotels to sell their
inventory on an hourly basis
based on the requirement of
the guest, rather than on a fixed
check in and checkout regimen.
The concept is proved to be a
win-win one for both travellers
as well as hotels in developed
geographies and fast catching up
in India as well. TravelBiz Monitor
tries to gauge the mood of the
stakeholders on this ‘out-of-thebox’
marketing tool. |
Micro stay is a hotel marketing concept believed to have originated
in Europe at the peak of the recession and gradually matured
into a successful one for both travellers
and hotel operators alike later on. There are occasions
when travellers, mostly business travellers, reach a
destination early in the morning for few scheduled
meetings in the city later in the day with a late night
flight to catch to fly back. For reasons obvious, they
might not like to shell out money for a hotel room
for the whole day, considering their requirement of
a room is hardly for couple of hours. The number of
such travellers who use the facilities of an airport or
a railway station to freshen up although hesitantly is
quite large. This is a market segment which hotels
can very well tap if there is a genuine will rather than
keeping the inventory vacant in the expectation of a
booking or for a guest who might check in later in
the day.
Accepting the micro-stay model
In India, the concept of booking a hotel room on
hourly basis is often misconstrued and this can be
one of the major reasons for hotels to shy away from
accepting the micro-stay model. Misconceptions
like these not only affect the revenue of hotels, but
travellers also suffer because of the age-old, rigid
style of hotel bookings that has been continuing over many years. The
micro-stay model will be a breather of fresh air for travellers and can prove
to be a profitable business for hotels once it is implemented thoroughly.
In the last one year or so, there have been attempts to build an ecosystem
of micro stay by few innovative minds. Although they are yet to
gain heights in terms of branding and visibility, SliceRooms, Mi-stay,
Frotels are few names which are aiming big in this space in India now.
Perception
The concept is quite new to India and therefore
it is natural that it will take some time to get the
acceptance from the industry. There are also
perception issues associated with micro stay in
India. Sandeep Jaiswal, Founder of MiStay feels
that a big part of the hotel industry is yet to accept
and implement micro-stay concept. “Some budget
hotels perceive this might attract unmarried couples
as primary customer, while for some hotel chains,
the concerns include the operational dynamics and
additional logistics of managing micro-stay bookings
– all these concerns could be addressed though.”
But, at the same time, several mid-range hotel
chains, such as Lemon Tree Hotels, Ginger Hotels
& Keys Hotels are understood to be promoting
their day-use packages and are offering micro-stay
directly through their website. “Some of the hotel
chains such as Pride Hotel, Mango Hotel, Keys Hotel
and Sarovar Hotel are already our partners and
are offering micro-stay and many others are in the
process of getting onboard,” Jaiswal confirms.
“Consumers (business and pilgrimage travellers)
whom I and my team met by and large are overwhelmed with this concept,”
says Laxman V, Concept Owner of SliceRooms, but the industry as usual is
taking time to accept it, he adds. “But, I really don’t think this is because
of misinterpretation for various reasons. The reason could be the usual
reluctance of accepting new things in India. But I am sure the industry is
not far away in accepting this concept.”
In this fast evolving and highly competitive hospitality environment,
concepts like micro-stays will help hotels to rake in more revenue as they can
sell the rooms twice or thrice a day. Micro stays will attract more travellers
and visitors to hotels as they will prefer spending their time in rooms taking
a nap, shower or freshen up for their travel instead of vigorously waiting at
airports, railway stations or bus stands to kill time.
Micro stay makes absolute business sense for hotels given the opportunity
it provides to the hotels to optimise their inventory and increase their
revenue, opines Jaiswal. “With an average occupancy rate standing
as around 60%, a lot of rooms goes unsold. Through micro-stay, we are
creating a new demand; travellers who might not have booked a hotel
room otherwise will now book as they only have to pay for the hours they
stay.”
Where an environment is highly competitive, the profitability is always
a nightmare and of course ROI etc. This micro stay concept will facilitate
the hotel to make use of the un-utilised room time and eventually leads to
additional revenue for the room, said Laxman. In general Industry norm
is 70% to 80% of the published tariff is projected as the budgeted ARR
(maintaining an average discount of 20% to 30%, both FIT and CVGR).
An additional sale of rooms @30% of the published tariff will be an added
feather to the cap thereby enhancing the projected ARR. This makes a
business sense through short-stay, he argued.
Targeting the right customers
Micro stay is a feasible option for people who travel to and fro to different
cities for meetings and have to return on the same day or for pilgrims etc.
Even the same yardstick applies to pilgrims at destinations.
Stakeholders also confirm this trend. Adds Laxman, “Our target
customers are business travellers who travels
same day back to the originating location or
travels to the different locations same day and
pilgrims who covers multiple temple in same
day. Apart from the above same day business
and pilgrims travellers, corporates also can
avail these, capsule / micro stay for their short
meetings and Skype meetings, which has
probabilities and possibilities to increase the
other outlet sale such as restaurant, coffee
shop and bar.”
Corporate tie-ups to manage the overall
employee accommodation needs of company
by pack of hours will be a key channel to
reach this segment, says Jaiswal. Apart from
that, strategic tie-up with airlines, hospitals,
etc., would be instrumental in reaching the
other customer segment. Content marketing
will also play a critical role in popularising
the concept directly among the consumers, he
added.
Industry’s outlook
While the upscale and upper upscale hotels
are still reluctant to embrace this concept,
the budget and economy brands have started
embracing the brand in a subtle way. Even those who have accepted it as
one of the many models of room sales are having doubts about taking a
complete plunge.
Commenting on the subject, Rishi Puri, VP, Lords Hotels & Resorts
said, “Offering guests short stays is sure to increase room occupancies,
helping hotels make profits and keep the rooms occupied or better
utilised. Of course, guests too benefit from this offering as it saves them
money while serving the purpose.” He also added that at present there
is no decipherable disadvantage of this concept but would like to tread
cautiously before taking a plunge. The only possible discouraging element
in this concept is that, it may be seen in the wrong light or even exploited
and which may scar the reputation of a hotel. However this perception is
strictly speculative and has no bearing on the concept itself.
“This concept is too new to bring out the real value it may give, but it can
give boost to ARRs in case one has a very clear trend of check-in /check-out
times,” says S Karthikeyan, VP – Sales, Sarovar Hotels & Resorts. He feels
that there may be a limited distribution models
for these sorts of bookings and hence may not
be convenient in terms of lead times, booking
process by the hotel and reconfirmations. “I
don’t see this model scaling up beyond the
budget hotel segment due to operational,
security and logistical issues,” he stated.
Why no takers in the premium segment?
While it is true that the initial takers of
this concept are owners and brands at the
lower levels of the hospitality pyramid, the
industry watchers feels that the concept
will gain acceptance from wider spectrum
of the industry as market segment becomes
sizeable. Laxman doesn’t see any reason as to
why luxury and upper upscale hotels should
shy away from concepts like micro-stays. He
is of the opinion that they should come first as
an industry leader.
“Many five star hotels, especially the
ones located closer to airports, offer dayuse
packages to guests directly and already
practice this model in individual capacity,”
points out Jaiswal. “But, yes most of the
international upscale hotel chains have not
yet implemented this model for online distribution even though some of
them offer it through offline means on direct bookings.”
“We would definitely want to look at implementing the concept at Lords
Hotels & Resorts in the near future. At the outset, this concept seems very
suitable for us mostly for our properties that cater to pilgrims or business
travellers,” Puri clarified his stand.
Karthikeyan is in a mood to wait and watch. “We will be observing as
to how it unfolds. India is a nation of varied consumer behaviours. A lot of
them however disappear just as quickly as they come. We need to see if
this is a sustained behaviour leading to a need or just another fad.”
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