Downtown hotels now catering to a day-stay clientele

Published on chicagobusiness.com | 24/01/2020 I Direct link

By Danny Ecker

Facing a surge of new competition that's hampered bottom-line growth, more Chicago hotels are offering day stays—despite the "no-tell motel" vibes that such a move might evoke.

Hotel managers try all kinds of marketing tricks to get people to spend the night. But many are now angling to get them to spend the day, too.

Facing a surge of new competition that's hampered bottom-line growth, more Chicago hotels are turning to day stays to drum up extra revenue.

At least two dozen local properties now promote rooms to be booked during business hours, targeting prospective users from single-day corporate travelers seeking quiet space to work or recharge to leisure guests preparing for evening events in the city.

At the new Hoxton hotel in the Fulton Market District, guests can book a room at half-price from 10 a.m. to 4 p.m. Similar deals are posted for properties including the Sotel Chicago Magnificent Mile and Hyatt Centric Chicago hotel in Streeterville on Dayuse.com, a third-party reservation hub for day room rentals.

The number of rooms booked during the day is still relatively small and not transforming anyone's balance sheet, managers say. But the offering is one of the ways downtown hoteliers are trying to bring more guests through their doors as margins tighten from new supply and visitors embrace different types of accommodations like Airbnb and other short-term rental startups.

"It's definitely a trend that has picked up," says Stacey Nadolny, managing director, and senior partner at hotel consultancy HVS. In a downtown market that has roughly 30 percent more rooms than it had a decade ago, she says, day bookings can make use of inventory that will otherwise sit empty by catering to a different type of user. "Privacy is the differentiator here for the person that wants a spot that is going to be reliable and has amenities," she says.

The concept of booking hotel rooms during the day isn't new. It's proverbially tied to seedier uses—think of the so-called world's oldest profession—but is becoming more popular in an era of business travelers proving their demand for workspace-on-the-go from co-working providers like WeWork.

Dayuse says its customers last year booked an average of 12,000 rooms per month at some 700 U.S. hotels, more than double the reservation totals from the previous year. The site, which launched in 2010 in Europe but landed in Chicago just more than two years ago, takes a cut of booking fees that average around $95 apiece.

Customers booked about 8,000 Chicago-area rooms last year through Dayuse. While that's barely a blip compared to the nearly 12 million traditional room-nights rented in downtown Chicago, it rose from around 2,000 in 2018, according to the Paris-based company.

LINES BLURRING

The trend shows the lines are blurring between the office and hotel markets: Just as office landlords inject hotel-like amenities and co-working space into their buildings to accommodate modern tenant tastes, hotel owners are framing their rooms as private offices with all the hospitality built-in, says Melanie Marcombe, vice president of sales at Dayuse.

"The hotel room is the only space where you can feel alone and have a rest, shave, a shower, finish your PowerPoint. . . .It's your own cocoon, and you will never find that in a Starbucks or a co-working space," she says. More than half of the site's bookings in Chicago last year were made the same day.

The company estimates that more than half of all hotel rooms worldwide sit empty during the day. "We're talking about assets that are not used," Marcombe says. "It's the perfect solution to be able to sell those rooms twice."

All Chicago hotel owners are looking for ways to squeeze more money out of rooms as a post-recession surge in revenue per available room has tapered off. The metric, which accounts for both occupancy and room rate, fell by 4.7 percent year over year at downtown hotels in 2019 to $150.82, according to STR, a suburban Nashville-based research firm. That was coming off a boom year in 2018, but marked the third annual decrease in four years—a plateau after six straight years of growth.

The pressure to stand out from the crowd is especially intense for independent and boutique hotels looking for an edge over those affiliated with big chains like Hilton, Marriott and Hyatt that offer popular loyalty programs.

"We are just trying to listen to what the guests are saying they need and trying to see how we can make that work," says Hoxton Chicago General Manager Amos Kelsey.

Kelsey did not provide specific numbers on the number of daytime bookings at the 182-room hotel since it opened last spring in the trendy former meatpacking district, but he says the Hoxton is finding a market in business travelers flying into and out of Chicago on the same day.

The hotel is even trying to encourage travelers to commit to arrival and departure times when they book through its website, guaranteeing their room will be ready if they stick to it. It's promoted as a perk for customers who want to be sure they can get in when they need to, but it also gives the hotel more precise information about the hours they'll have room inventory going unused. That advance notice helps the hotel tweak staffing schedules to make sure a day-rented room can be cleaned and prepared for an evening user, Kelsey says.

"Maybe you get an extra room service order out of it," says Kelsey. "But probably more important is you make a new guest. We're the ones who came through for them, and they might say, 'I like the Hoxton, they didn't rip me off when I used it for two hours.' "

Drawing in daytime room users also comes with some more serious challenges than just trying to maximize revenue. Day room bookings can be considered a red flag that could be tied to cases of human tracking, a recent point of emphasis for the broader hospitality sector through the industry's "No room for trafficking" campaign.

The program aims to educate hotel employees on how to help identify traffickers and potential victims on their properties. The Illinois Hotel & Lodging Association is hosting a training event for its members this month ahead of the mid-February NBA All-Star Weekend, which has been tied in the past to upticks in trafficking cases.