Business-driven management structure for long/extended-term hotels
The hotel industry took a massive blow during the COVID-19 pandemic, but the past two years have offered huge promise for the sector, with extended-stay accommodations spearheading the recovery. With 38.8% of Arizonians working remotely at the beginning of the pandemic – and 59% of Americans still teleworking in 2022 – it’s only logical that people want to travel more and visit different destinations as they go about their businesses. That’s why extended-stay hotels have shown strength in the past two years, by achieving the highest performance results of any segment during the pandemic.
This trend is projected to continue as the industry gradually returns to 2019 levels. Hence, hotel managers, investors, and industry leaders might want to create the best management structure to ensure they seize the opportunities going forward and provide the best guest experiences.
This article offers a deeper understanding of extended-stay hotels, the most profitable services and products you can offer your guests to achieve the maximum ROI, and the best practices to increase your revenue using extended-length stays.
What’s an Extended-stay Hotel?
When speaking of an extended-stay hotel, we are not referring to a reservation in a specific hotel chain, such as Extended Stay America. Instead, it refers to a particular type of hotel rental. An extended-stay hotel provides long-term accommodation to guests, complete with all the amenities guests require for comfort and convenience. The essence is to offer the types of perks that make them feel at home for several weeks or months even though they are away from home.
As many working-class Americans (construction workers, disaster relief workers, professionals in the energy and tech industries, traveling medical professionals, etc.) travel to various destinations for their career pursuits, they need to stay in specific locations for extended periods without needing to relocate or make a permanent move. Granted, long-term hotels and corporate housing options offer them excellent alternatives to traditional apartment rentals, Airbnbs, and vacation rentals by owners (VRBOs).
Why Should You Consider Extended-Length Stays
As a hotel operator, leveraging extended-length stays can offer a range of benefits, including:
- The opportunity to expand your sources of income – Long-term accommodation enables you to earn additional revenue over a longer period. The secret is to find a winning pricing model that attracts and compels prospective guests to book longer stays.
- Diversify your clientele – Long-term stays also allow you to attract a different target audience besides your traditional short-term guests. For instance, you might have relied on leisure travelers at your establishment and identified the type of travelers that book your conventional hotel rooms. With extended-stay hotels, you have an opportunity to market your products and services to business travelers looking for a place like home for several weeks or months.
Top Amenities that extended-stay guests look for
As a long-term hotel manager, you need to make your establishment conducive and lucrative to extended-stay lodging seekers. Therefore, offer your guests more amenities than a regular hotel.
Very few hotels provide kitchenette or full-kitchen options, and the few offering these amenities often charge extra.
The chances are that your extended-stay accommodation caters to busy professionals, and offering housekeeping services (such as cleaning towels, changing linen, cleaning the bathrooms, etc.) can greatly incentivize them to consider booking a room at your property. It also differentiates your establishment from competitors and other non-rental hotels.
To maximize room occupancy (and profits), include the following amenities in your hotel roster:
- Self-service laundry services
- In-room Wi-Fi and high-speed internet bandwidth
- Smart televisions with streaming apps like Netflix
- Furnished kitchens with all the necessary supplies, utensils and appliances (microwave, refrigerator, oven, etc.)
- Gym with machines and weights
- A swimming pool and hot tub
- Filtered drinking water
- Takeaway breakfast items, snacks, and vending machines
- Conference rooms and business centers with office equipment, such as printers
examples of extended-stay hotels
Many accommodation establishments in Phoenix, AZ, and across the US offer a place like home. Examples of long-term hotels include:
- Extended Stay Premier Suites in Phoenix Chandler Downtown – Nestled in a premier location off Route 101 at 2055 W Chandler Blvd, this hotel provides an excellent place to relax and unwind in spacious suites with all the amenities to make you feel at home.
- Homewood Suites by Hilton Phoenix North – Happy Valley – Homewood Suites lies at 2470 W Charlotte Dr with easy access to I-17. It offers studios, as well as one and two bedroom suites with easy access to shopping, dining, and sports venues.
- Extended Stay America at LaGuardia Airport – A two-star property in New York, this pet-friendly long-term hotel provides clean, special rooms for COVID-19 first responders as well as complimentary breakfast.
- The Residence Inn in Youngstown, OH – This is a three-star property with easy access to hiking trails, fishing, camping, and boating destinations. It also has an indoor pool and BBQ facilities.
- AKA Beverly Hills – A well-furnished, luxury hotel nestled at a premium location; it features ensuite terraces and room services for added convenience.
long-term hotels offer guests more affordable options
Like regular hotels, long-term hotels have varying prices, usually lower than those you’d find in traditional accommodation establishments. The costs of staying in a standard hotel can quickly add up, especially for avid business travelers. For instance, the average nightly rate of a business hotel in Phoenix, AZ, is $110, which totals $770 if you stay for a week.
Most of these hotels don’t offer discounted rates for extended stays because they operate based on a high guest turnover. Thus, they expect visitors to stay for several days and then check out. That can peg you back financially if you plan to stay in a location for weeks or even months.
That’s when your extended-stay hotel(s) comes into play. The costs for a month-long stay at a long-term hotel vary widely – based on factors such as location and the type of establishment. Still, travelers can expect to pay an average of $2,761, which means the daily and weekly rates fall at $92 and $690, respectively. Hence, your extended-stay hotel can offer significant cost-saving opportunities for travelers planning to stay longer in a destination.
Increase Your Extended-Stay Revenue with Revenue management technology
A Revenue Management System (RMS) is a critical tool in the hospitality industry. It can help you streamline your revenue margins, regardless of the type or size of property you own. The primary reason for deploying this technology is its ability to quickly calculate complex problems and track market data in real-time. That’s virtually impossible when working manually.
You can leverage that data to develop an effective pricing strategy for your extended-stay guests. The software makes it easy to adjust prices across various distribution channels without logging in to each of these systems individually. As a result, you can easily track multiple key performance indicators (KPIs), such as revenue per available room (RevPAR). This enables you to attract guests searching for extended-stay hotels to improve your establishment’s bottom line.
An RMS is critical for both small and large properties. If you run a smaller hotel, it’s even more critical to maximize the revenue generated by each room. The technology is equally crucial if you manage a larger long-term hotel. The sheer number of rooms and workload related to managing revenue manually can be time-consuming and sometimes mulled by errors and inaccuracies.
why partner with newgen advisory?
At NewGen Advisory, we provide full-service commercial real estate brokerage services with a high focus on hospitality and lodging assets. With our team of seasoned industry specialists, you get unrivaled access to an extensive network of industry leaders, investors, and lenders to streamline your transaction. Contact us today to gather valuable information on how to implement hotel management structures for extended-stay hotels.