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Monday, 19 June, 2017, 14 : 07 PM [IST]

Micro Stay - A win-win situation for hotels?

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.

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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