A Sharing Economy Strategy for Hotels?

fresh idea
Joshua Meehan
Joshua Meehan
September 11, 2014
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It seems like every day there is a new upstart making waves with a new sharing economy system. This controversial system has companies like Uber and AirBnB all over the news as their platforms grow in popularity. For hoteliers AirBnB might be a big concern. For many travelers, the hotel isn’t the destination, it’s part of the transaction. It’s just a place to sleep and shower and many are testing the alternatives. So with the sharing economy idea taking off, is there a way hoteliers can incorporate it into their property?

If your hotel is hosting a conference or selling rooms to attendees of one, it’s easy to sell out. The only way to increase revenue would is to raise the rates, but that could potentially drive off some business. So how can we adopt a sharing economy system? Chances are when you’re sold out during a convention, a lot of your rooms with two beds only have one guest. That unused bed is essentially missed revenue. If we give guests the option to share their room with another attendee you have the potential to sell out every bed in your property, not just every room.

The Basics

When guests book their rooms online for the conference, they go through the normal process and secure a room at your normal $200 nightly rate. During the booking process they are presented with a discount option offering a “shared” rate at $125 a night per guest, providing the hotel can find another guest attending the conference looking to share as well. The hotel is now making $50 more per night and each guest is saving $75, everyone wins and the hotel now has an additional room to sell. If your property is still charging for WiFi, or any other shared room amenities, it would be ideal to build that charge into the room price for these situations. This will help to eliminate any issues where one guest orders a service and both are charged.

Implementing the Idea

This is where things can get tricky. Thankfully, most modern PMS and Booking Engines can handle this kind of work, but few hoteliers use them to their fullest. The goal is to try and group guests with similar schedules and needs together, so providing special booking codes for conference attendees is going to be the easiest way to segment and qualify your guests. Your Booking Engines can associate these codes with different rate plans which will help keep other guests from accidently booking a shared stay. The information on your Booking Engine will need to be clear that the discount is only applied at check in if another guest opted in as well. Your PMS will play the biggest role in the success of a plan like this. Room Sharing is already a common, but underused feature hoteliers have available to them. It allows two guest accounts to occupy the same room with each guest account using a separate folio, keeping everyone’s personal information secure.

One drawback from this approach is that it will reduce your properties reported ADR. For hoteliers that use ADR as their primary measurement tool, that might put them off from attempting something like this. Thankfully, that is why we have RevPar. A property with a 50/50 split of single and double bedrooms on a sold out night, ADR would decrease 25%, while RevPar increases 12.5%. Does an idea like this sound like something worth trying? What adjustments would you need to make to better fit your property’s needs?

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