Startup pitch: HotelsByDay checks in to during the day stay trend
HotelsByDay sees opportunity in the micro-stay trend – hotel stays during the day for a minimum of four hours.
The founders come from luxury hotel and travel technology backgrounds and drew inspiration from single purpose app services such as Uber to try and do something similar for hotels in the US.
The team includes founder and chief executive Yannis Moati, cofounder and chief operating officer Nathan Stevenson and cofounder and chief technology officer Brian Dass.
The startup has so far received angel funding and is planning a another round some time in the Spring or Summer of this year.
HotelsByDay says it is going after an estimated $20 billion global market – the intra-day segment which is the time between early check-outs and late check-ins. It has drawn on findings from various sources showing that 23% of rooms at three, four and five-star US hotels are empty on any given night and a further 11% are available for during the day bookings.
The newcomer doesn’t see any competition in the US although it should be noted that Barcelona-based Byhours calls itself an international booking platform for blocks of three, six and 12 hours. A quick search of Google also throws up France-based DayUse-Hotels (TLabs here) and Belgium-based Between9and5.
HotelsByDay is working on a commission-based model and hopes to gain an advantage by being a first mover in the US in the space.
What problem does the business solve?
HotelsByDay is a solution for both supply and demand:
Supply – around the globe, hotels are under pressure to replace lost ancillary revenues and to find new sources of untapped income. We see this model as a crushing blow to the concept of perishable inventory. There are very few ways in today’s business climate to effect new sources of untapped revenue.
Thanks to the protocols set by HotelsByDay, hotels can proactively address distressed inventory and missed sales opportunities. By selling intra-day inventory, hotels will hyper-elevate ADR and RevPAR, as most PMS Systems do not count intra-day sales as occupied rooms.
Demand – allow guests to rest, shower, refresh, work from the comfort of an elegant hotel room, avoiding cafe’ sittings, or refreshing at health clubs between flights, meetings or family excursions.
For companies seeking to reduce corporate travel budgets, they now have a new option for reducing T&E spend while still providing their employees with first rate hotels to work from.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
Initially the team sought to build a solid product for last-minute users to book exclusively via a mobile app. As HotelsByDay evolved, we realised that we are a sharing economy startup.
We identified this massive shadow market of unused overnight hotel rooms, while at the same time making it easily and instantly available to our mobile and web-based customers. It is central to our blue ocean goal of owning and defining the intra-day booking market.
Why should people or companies use the business?
How many sensitive or confidential conversations happen every day in a crowded coffee shop or bar? HotelsByDay is the only site and app that allows business travelers to quickly and easily reserve a quiet, short-term room to host a meeting, make a sales pitch, or work on a presentation without the local barista screaming in the background.
For leisure travelers and day trippers, HotelsByDay offers an affordable oasis for a daycation, a place to store purchases during an all-day shopping trip, or to freshen up before an event.
Our iOS app is designed to look like a glossy magazine, it is the most visual app in hospitality today powered by an ultra-fast and simple eight second booking path. This combined with our curated offering of great hotel brands means companies and customers will be able to get access to the brands they know and love.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
Our multi-layered marketing strategy consists of distributing original content across a network of 4,500 authoritative websites. We’ll target audience demographics via sophisticated technology. This is coupled with big data-driven travel ad placement and affiliate marketing across the network which will serve as a multi-layered superhighway to the HBD website and apps.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
We see HotelsByDay as the top intra-day booking brand in the US and worldwide. In three years time, intra-day will become mainstream in the consumer and corporate travel markets. We hope to make it possible for Fortune 1,000 companies to cut corporate travel spend by 10-15% while bringing hotels 5-7% more in annual room revenues.
The challenges we anticipate are primarily competition to follow our lead and penetrating the culturally-sealed markets in Asia. But, we believe we are strategically well-positioned for sustained advantage.
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
Hotels are faced with an erosion in revenues to remain competitive. They are being forced to provide previously paid-for perks such as wifi, breakfast, and gym passes for free. At the same time OTAs are exerting downward pressure on room pricing.
HotelsByDay is the only true system to be effective at high occupancy levels (92%+) and to add net new revenues which doesn’t compete with overnight bookings.
Is it also worth mentioning that hotels will now get exposure to customers who may not have normally used their property and it gives hotels another opportunity to take advantage of the billboard effect.
What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style… and why?
There are two companies. As a consumer travel site, HotelsByDay is most like Uber, in that we provide instant access to short-term hotel rooms that can be booked in a few seconds.
For the hospitality industry, we see our model more closely related to Nor 1, unlocking upsell opportunities in areas of the hotel business that need help.
Which company would be the best fit to buy your startup?
It could either be a classic OTA suitor such as a Priceline.com who wants to add another cycle of a traveler’s journey or, an Airbnb to get a foothold in the hospitality business.
Describe your startup in three words?
Intra-day booking pioneer.
This is an interesting niche as thousands of people, both business and leisure, often need somewhere safe and comfortable to rest for a while or work from for not too high a price.
And, it’s clearly something hotel companies have realised themselves as a there are several examples – think Marriott’s workspace on demand initiative and Yotel – which are trying to tap into this need.
So with the supply and demand elements in place, HotelsByDay can hopefully tap into that $20 billion market mentioned above via its online and app-based services.
But, there are already others in the field, although maybe not in the US, so the first mover advantage is perhaps less sure.
Also, you wonder how easy it would be for existing online travel agencies and accommodation giants to set up something similar. Let’s face it, it didn’t take long for Priceline and Expedia to launch same-day services when HotelTonight came to the market.
So, there will be challenges ahead but the team comes from hotel and technology backgrounds so that will count in its favour especially if it provides a really good mobile experience.
Getting volumes of hotels to sign up and spreading the word across business and leisure travel communities will take time and effort but even a slice of that $20 billion could be worth it.
Linda Fox is deputy editor for Tnooz. For the past eight years she has worked as a freelance journalist across a range of B2B titles including Travolution, ABTA Magazine, Travelmole and the Business Travel Magazine.
In this time she has also undertaken corporate projects for a number of high profile travel technology, travel management and research companies.
Prior to her freelance career she covered hotels and technology news for Travel Trade Gazette for seven years. Linda joined TTG from Caterer & Hotelkeeper where she worked on the features desk for more than five years.