Why and how to integrate length of stay diversity into your business model?
Length of stay (LOS) diversity is the ability to use any unit for three nights, 30 nights or 300 nights as well as the flexibility to shift units between stay lengths depending on the guest, occupancy and time of year. Serviced apartment and co-living operators have traditionally focused on an ‘either/or’ strategy when it comes to stay lengths, but with technological advancements and volatile demand factors, now is the time to embrace the revenue stability of mixed-stay.
Why is length of stay important
Maximise occupancy, boost revenue
In basic industry economics, short-stays generate around 30% more per day than long-stays, but are more prone to fallow periods. Longer-stays yield lower rates but come with extended occupancy. Now, thanks to agile software, it’s easy for innovative living companies to offer mixed-use units and get the best of both worlds.
For example, operators can concurrently cater for business travellers on year-long projects, consultants on three-month placements and domestic Monday-Thursday contractors, as well as residents who would like an inclusive service. What’s more, dynamic pricing tools, like Price Labs’ ‘Orphan Gap Filler’, allows operators to reduce the rates and minimum stay duration of units that are ‘in between’ bookings (i.e. the two weeks between two three-month bookings) in order to minimise vacancy and boost revenue.
Shelter from the Covid storm
Covid restrictions decimated the short-term rental market and the current recovery is hindered by the constant threat of a ‘second wave’. However, demand for extended stays increased during lockdown and having a diverse portfolio allows operators to shelter from short-notice, unforeseen shocks.
That’s because both business and residential guests are more likely to want extended stays in times of uncertainty. With length of stay diversity, buildings are both travel destinations and homes at the same time and operators will be able to attract more guests if they know they can easily extend their stay should restrictions be imposed.
Prepare for the future
Yet, length of stay diversity is no one trick Covid pony. In fact, it lays the foundation for future growth regardless of virus shocks. With a diverse portfolio, more traveller types will visit operators’ buildings and get to know their brand. This will not only increase direct and word-of-mouth sales, but also build loyalty: if a business traveller is visiting for two weeks or ten months, they know they can use the same operator. The world is also moving away from a real estate ownership model to real estate membership, so a traveller could pay for access to use your brand and visit three different locations with varying stay lengths.
Furthermore, operators can also shift their focus to guests travelling at a particular time, whether it’s business seasonality - avoiding empty calendars during the summer and Christmas with longer occupancies - or Covid seasonality - attracting younger and less at-risk travellers with medium-stay discounts.
How to integrate it in your model?
Since Covid struck many innovative living operators are embracing the mixed-use model. So, how do you go about it?
- Accommodate for a range of needs - Think about what guests want for diverse stays both inside the apartment - kitchens, laundry facilities, working from home capability - and the building - providing services that encourage longer stays, such as bars, gyms, remote offices, restaurants and activity classes.
- Employ a range of channels and pricing - Use a range of OTAs and long stay channels that specialise in different stay lengths and allow you to fluctuate price according to the length of stay. Operators should consider dropping rates by 30% for over 30+ day, non-serviced stays.
- Embrace a tech partner - The benefits of length of stay diversity have been enabled by dynamic software. At res:harmonics, our platform allows operators to easily manage multiple units and switch unit types depending on occupancy and you can now sign digital contracts during the booking process. With the right tech partner, the transition to mixed-use revenue stability is a doddle.