Digitalization is not a new concept in the hotel industry. However, is putting room vacancies on distribution platforms innovative enough for hotels or Generation Y customers? Probably not.
The sharing economy is affecting large-scale changes on the hotel ecosystem and traditional hospitality business models. The significant dent Airbnb has made in the market has given hotels incentive to rethink their systems and find more innovative ways to attract customers.
Meanwhile, Flow is offering the perfect solution to hotels to help them make sense of what’s going on in the industry and stay on top of the changes, with the mission statement ‘Pay For What You Need’.
By booking hotel rooms using Flow, customers are able to choose their desired check-in time as normal, but rather than booking for a night or more, they can book for a few hours – only as long as necessary. This enables customers to stay in the hotel for a short, flexible period of time, while gaining access to exclusive facilities like the swimming pool without losing an arm and a leg.
The business model Flow is promoting is called the “Daycation”, and it’s been booming recently. The concept is simple: the customer only pays for the time he or she stays in the hotel. Flow’s research has shown that the average person only spends a few hours in the hotel room, even though they have booked it for the entire day.
This business model has opened a new avenue to many underserved clients. For example, a family can treat themselves with a vacation without leaving town, or a business traveler who just needs a place to stay for few hours before moving on to the next destination.
For hoteliers, the Daycation model is a simple and innovative way to increase their revenue. Dividing the standard 2pm to 12pm booking into multiple time-slots allows the hotel to minimize idle time for the rooms. Most importantly, this model also creates a structural change in the hotel’s customer base, making reservations less seasonal.
The hotel industry is currently facing many challenges. Annual reports from a majority of hotel groups have shown that the total number of visitors has been on a decreasing trend since 2014. In addition, 53% of visitors to Hong Kong do not, in fact, stay overnight.
Visitors from Mainland China constitute the majority of overnight bookings, but China’s economy has begun to slow down. This has raised concerns in industry: maybe it is time for the big players to fine-tune their business strategy.
Now, more upper-class hotels are joining the “Daycation” game. Maybe in the near future, Flow will not only disrupt hotel operations models, but change customers’ consumption patterns entirely.