Unlocking Revenue Potential: The Economic Benefits of Extended Stays for Slow Travelers
In recent years, the travel industry has witnessed a growing trend of extended stays among a new breed of "slow travelers." These individuals seek immersive travel experiences and prioritize spending extended periods in a single destination. This shift in travel behavior presents a significant opportunity for hoteliers and property managers to tap into an increasingly lucrative market.
By understanding the economic benefits of extended stays for guests and aligning their offerings accordingly, hospitality businesses can attract more customers and unlock their revenue potential.
The Rise of Extended Stays and the Slow Travel Trend
The modern workforce is becoming more mobile and flexible, with remote work opportunities on the rise. As a result, individuals are seeking destinations where they can work remotely while satisfying their wanderlust. Amenities like high-speed, reliable wifi are becoming as ubiquitous and mandatory as clean linens and air conditioning. Airbnb reports that 1 of every 5 nights booked in Q3 of 2021 was for stays of 28 days or longer, a trend that continued into Q1 of 2022 when long-term stays more than doubled in size from the same quarter in 2019.
However, it’s not just remote work that’s adding fuel to the fire. Economic forces are making extended-stay travel a more financially feasible option than jet-setting. Flights, car rentals, eating out, and accommodation have all seen steep price increases in the past several years. It’s simply more reasonable to forgo taking paid time off (PTO), and instead continue working in a place that combines the cost-saving amenities of home with the adventure of immersing oneself in a new culture.
Accommodation discounts
A June 2022 analysis of 1,000 Airbnb’s by NerdWallet found that, on average, a 7-night stay is 32% cheaper than a 1-night stay (per night), and a 30-night stay is 46% cheaper. This cost-savings is even more pronounced in cities like New York, Scottsdale, and Chicago. Many hotels and properties offer discounted rates for guests who book extended stays to increase occupancy rates while lowering service costs (i.e., housekeeping). By committing to a longer period, guests can negotiate better deals and secure lower rates per night, resulting in a win for both parties.
Reduced transportation expenses
As of January 2023, the cost of renting a car has increased 43% from pre-pandemic levels. The cost of fuel remains volatile, and flights haven’t gotten any cheaper. While charging from city to city, or country to country, is a quick way to add check marks to your bucket list, it’s increasingly expensive and inefficient. More importantly, is spending 16 waking hours chasing Instagram photos from site to site really worth it? Can you truly say you’ve seen a city like Istanbul in a day or two?
Slow travel involves staying in a single destination for an extended period, which means fewer transportation costs compared to frequent travel between multiple locations. Guests save money on airfare, train and bus tickets, and fuel expenses by minimizing the number of trips taken. Instead of spending on transportation, they can allocate those funds towards other aspects of their trip, such as exploring local attractions, dining out, or, more importantly, extending their stay even further.
Lower dining expenses
In the US, food prices increase every year. Food may be cheaper in some countries, but eating out is always going to be more expensive than dining in. Providing guests with kitchens and common appliances allows them to stick to their diets, keep their routines, and save money.
Furthermore, it gives guests the opportunity to shop for local food at local markets and immerse themselves in the culture by cooking the cuisine themselves. Properties without kitchens will be at a disadvantage as they must compete with Airbnbs, 90% of which have kitchens, and most extended stays, which now provide fully equipped kitchens or kitchenettes.
Opportunity for budget-friendly activities
It’s common for travelers to try to squeeze as many destinations into a two-week vacation as possible. They have to get back to work and may not have another chance for leisure until the following year. Instead of enjoying local culture they’re encouraged to bounce from famous sites and museums, to trendy, Instagram-able experiences. Each activity becomes a photo shoot and a transaction. Anyone who has traveled like this understands how exhausting, expensive, and unsatisfying it becomes.
Slow travel encourages deeper exploration of the destination, including seeking out free or low-cost activities and attractions. They have more time to research and discover budget-friendly options, allowing them to take advantage of local parks, public beaches, hiking trails, or cultural events that are reasonably priced or even free.
How Guest Savings Unlocks Revenue Potential
It’s clear that extended stay travel is great for guests, but it’s also a boon to hoteliers and property developers who are willing to adapt to this growing trend. Here’s how:
Increased Occupancy and Revenue
Extended-stay guests tend to book longer stays, resulting in increased occupancy rates for hoteliers and property managers. By attracting guests who stay for weeks or months at a time, properties can fill rooms that may otherwise be vacant during slower periods. This steady stream of bookings translates into more consistent revenue and maximizes the property's earning potential.
Reduced Guest Acquisition Costs
Acquiring new customers can be expensive, involving marketing efforts and advertising expenses. In contrast, attracting extended-stay guests can lead to significant cost savings in terms of guest acquisition. Since extended-stay guests stay longer, there is less need for continuous marketing efforts to attract new guests.
Operational Efficiency
Having a higher proportion of extended-stay guests can improve operational efficiency for hoteliers and property managers. Since these guests stay for longer durations, there are fewer check-ins and check-outs, resulting in reduced administrative work and smoother operations. This allows the staff to focus on providing personalized service and attending to the specific needs of extended-stay guests, enhancing the overall guest experience.
Guest Loyalty and Referrals
The cost of acquiring a new guest is often higher than retaining an existing one, making guest loyalty and referrals an essential aspect of sustaining long-term success. Extended-stay guests who have a positive experience at a property are more likely to become repeat customers and refer the property to their friends, family, and colleagues. Building guest loyalty and generating positive word-of-mouth can be invaluable for hoteliers and property managers.
Ancillary Revenue Opportunities
Extended-stay guests often spend more on ancillary services such as laundry, dining, parking, and other amenities provided by the property. These additional revenue streams can significantly contribute to the overall profitability of the hotel or property. By attracting extended-stay guests, hoteliers and property managers can tap into these opportunities to generate additional income.
Stable Business During Off-Peak Seasons
Extended-stay guests can help stabilize business during off-peak seasons or periods of low demand. While traditional leisure and transient guests may be more influenced by seasonal factors, extended-stay guests are less affected by these fluctuations. Their longer stays provide a steady source of revenue, ensuring a more predictable business performance throughout the year.
Executive Summary
Slow travel not only promotes a deeper cultural immersion but also contributes to increased revenue streams. By catering to slow travelers, hotels can tap into a niche market and generate consistent income through longer bookings, additional amenities, and local partnerships. Furthermore, the economic benefits extend beyond the hospitality sector, positively impacting local businesses, tourism attractions, and service providers. Embracing extended stays for slow travelers can lead to sustainable growth and a more resilient tourism industry overall.