How technology is evolving to help hotels monetize spaces

Beyond the bed, hotel services, hybrid hospitality, call it what you will, hotels are looking to sweat every inch of their real estate. Think anything from spas and day working passes to parking and yoga classes.

Here's the rub: Until recently the technology has not enabled the sale of these sorts of ancillaries in the booking flow, creating a headache across reservations and revenue management teams and a poor experience for guests.

The Social Hub (TSH), an accommodation provider describing itself as a front runner in hybrid hospitality, welcomes students, extended stay guests, city tourists, entrepreneurs and business travelers to its 17 locations across Europe.

But it doesn't just want them sleeping in its rooms and using its space; it wants to create a community and "connect them as actively as possible," said Niels Sauve, chief digital and technology officer. 

"We have been rethinking the concept of beyond the bed and thinking of putting the hotel at the core, but for us it’s one of the product verticals - hotel, extended stay, student and then we have meetings and events, food and beverage, co-working. We really see them as product verticals. We focus on all of them, and we want to focus on cross usage amongst those verticals."

He added that enabling the hybrid concept from a technology standpoint is complex with nothing off the shelf that can support it. Sauve said TSH landed with hospitality technology specialist Mews several years ago.

"For us it’s all about moving room and reservation centricity to much more guest centricity. We adopted Mews mostly because we saw the visions were so aligned in terms of guest centricity and time and space flexibility. The room can operate as a room for certain periods of the day, but there’s also the possibility to swap that into different inventory and sell things by the hour or the month. This was exactly what we were looking for, but it has been complex. It's trial and error, it's a journey. We're not picture-perfect yet, but we have the ability in the booking engine flow to cross use and upsell into the hotel experience."

Space age

Making the most of the space is also about revenue. TSH's properties vary in size between 300 and 800 rooms and made up of half student and half hotel/extended stay accommodation. Without giving much away, Sauve said that non-stay product represents double digital revenue percentages.

"That number is growing gradually and year over year we see double digit growth in what we call the ancillary product we provide. We have so much cross usage we can offer that there's still a lot to gain."

A second Mews customer, Locke, has explored the technology for a number of use cases and employed it for the booking of car parking spaces.

"Car parking was quite a problem because realistically you won’t have a property with the same amount of parking spaces as rooms," said Igor Kostadinov, product evolution and deployment manager at Locke. "We couldn’t control and see that stock. The other problem is we have a centralized reservations department that handles inquiries with customers, and when they were receiving these inquiries, we could not provide the functionality for guests or for teams to handle that. A simple inquiry for a parking spot would take from a few hours to a day for central teams to check the situation with the local team."

Mews provided a solution, initially in back-end systems that saw sales of car park spaces increase 100% on deployment in mid-2022. Since then, it has been integrated into the guest-facing booking engine as well, and at its German property Locke saw a 300% increase in bookings in the first two months.

The company has explored meeting rooms and day-use bookings that, according to Kostadinov, were a game changer during the pandemic. While these are not big revenue earners for Locke because of available space, customer profile and location, he can see the potential for other properties.

"You get a lot with this second service functionality from Mews because it just gives you the whole suite of managing a booking. ... Often you have a space, a building, and in that building you have nooks and crannies that you could sell that are specific by type of property, location and the business you get. This is where it gets a little bit more interesting, if you have a hotel with a swimming pool, you have chaise lounges and umbrellas and you will be selling these." 

Matthijs Welle, CEO of Mews, said the company is seeing increased diversification from hotels.

"More creative [hotel companies] are really diversifying - those catering to the hybrid traveler. If I have a customer on a long stay, I want to book multiple services: laundry, kitchen space. We see a lot more focus on this hybrid traveler."

T.J. Noble, vice president of customer success in connectivity services at travel technology specialist DerbySoft, agreed and said these additional services represent a huge opportunity for hotels.

"Coming from a technology company, we want the business to drive the technology and our model is just that. To us there shouldn't be limitations."

Seize the day

DerbySoft has partnered with Hotels By Day to help properties bring day-use into the booking flow by using the existing zero rate code in a hotel's property management system.

"We have created something that is changing the orthodoxy of revenue management for hotels," Hotels By Day founder Yannis Moati said. "Before zero night meant zero revenue. Zero night now means the potential for additional revenue."

He added that the potential to sell day-use rooms on a direct connect basis is a "game changer." The development is live with a large undisclosed hotel company with a European brand poised to come on stream.

Noble said: "Here we have proven this opportunity that has been live and we’re seeing good production. In this industry there seems to be this idea of 'We’ve always done things this way,' and we’re proving you can actually do it."

The room can operate as a room for certain periods of the day but there’s also the possibility to swap that into different inventory and sell things by the hour or the month.

Niels Sauve - The Social Hub

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Until last year, booking the Hotels By Day inventory was a more manual process with hotel managers going to a different screen and making the booking outside the property management system and computer reservation system. Moati added that while a more modern PMS had the ability to register day-use rooms, the process wasn't joined up and rates were static, meaning hotels could not manage yield effectively.

And, said Moati, there's also the potential to extend the development to other hotel services.

"We're starting with day use, which is already quite an achievement," he said. "Our goal is to create the possibility of additional rate codes to be able to sell pool passes, spa passes, meeting rooms - any kind of amenity and daytime services that can be sold at the hotel."

Mews and DerbySoft are not the only technology players to address the desire to make more of hotel space beyond rooms. At InterContinental London - The O2, the team wanted spa bookings to be integrated within the booking experience. 

The company has worked with Journey's experience management system for a number of years, but the addition of its e-commerce platform enabled the property to "join the operational system with an intuitive guest-facing booking system," according to Stephanie Romero, marketing executive at the hotel.

The development has reduced administration and freed up staff, Romero said.

"Journey’s technology removed all the repeated and manual processes which frustrate guests and staff alike," she said. "Guests previously had to call or email the spa to reserve a treatment, check available times and dates or even for the latest treatment information. This was frustrating for guests who expect information to be at their fingertips and couldn’t always connect with the spa team during office hours."

Retail mindset

As a result of the integration, the hotel has boosted average appointment value by 38%, and 60% of bookings now come via the mobile website. In addition, bookings have increased by 30%.

"But it’s not only that - it’s about making our customer journey smoother, the guests happier and the reviews even better," Romero said. "Our team’s organization and planning has increased so much that it’s good for their well-being; we like planning instead of being reactive all the time."

Simon Bullingham, founder and CEO of Journey, believes hoteliers need to adopt a retail mindset to take advantage of the opportunity, adding that the "convergence of hotel and retail is coming."

"Whilst hotels are adept at upselling room upgrades, opportunity lies in retailing the whole on-property experience online. Name another industry’s online booking experience where you can’t buy multiple items in one shopping basket! In 2024, you’d struggle. Guests demand the highly digital, one-basket experience they get in other parts of their lives." 

Some are already looking to what's next. At TSH, transport, local experiences and curated lifestyle experiences through external partnerships are all in the cards, Sauve said.

"We're also thinking about diversified packages, about the trend around 'work-ations' and the possibilities around hotel stay/co-working environment, meeting space and the amenities of the pool and gym, but also the possibility to connect to a local community. It's an exciting product to create the cross usage proposition that we can bring and sell digitally.

"It diversifies our revenue stream, and the resilience it brings is also crucial. We're strong believers that not only the hotel as core but also really looking at full mixed, multi-purpose usage of the building will only grow in maturity."