Hotels on Demand: Subscription Sales to Lure Back Guests

Fitness memberships and streaming accounts are things we normally have membership subscriptions to. How about hotels?

Whether for business or pleasure, tour operators are hoping that on-demand stays could be the next must-have membership on your wish list as the travel industry tries to expand its reach.

Accor, InterContinental Hotels Group, and Marriott are some of the major names that have launched or are considering monthly payment plans. This idea comes as hotels try to attract remote workers ready for a change of scene.

Monthly rates can range from $1,100 in Singapore to $1,970 in Indonesia. Guests of the InterContinental can already enjoy different types of access to InterContinental’s workspaces, rooms and facilities under new “work from hotel” packages. Accor is considering “looking at monthly subscription fees” as they also consider repurposing rooms into private gyms and even recording studios. Marriott has not yet announced plans, but they are expected in the coming weeks.

It is not just corporate workers that hotels are after. Subscription giants like Netflix, Peloton and Spotify have soared during the pandemic, and more and more hotels are looking at subscription models for the way forward.

Recently, the luxury travel group Inspirato claimed to become the first operator of its kind to go completely subscription-based sales. They are extending an existing all-you-can-travel model while launching a second one at a reduced rate.

The Denver-based firm lets subscribers stay at 300 accommodations for $2,500 a month anywhere in the world with no nightly rates, taxes or fees. Inspirato is not defining any limit on stays, though the typical subscriber travels every 6-8 weeks for an average of four nights. There is a 60-day maximum stay which does apply though.

Last month, famous hotelier Andre Balazs also said he would turn Los Angeles’ iconic Chateau Marmont into a members-only hotel, following a similar trend.

The Netflix of the Hotel Industry

It is not just high-end brands that are reaching for the monthly model either.

In August 2020, the Panama-based boutique group Selina claimed it would rent 50% of its rooms for monthly rates of around $500. In Europe, the Dutch chain citizenM also launched two different subscription services for its international network of 21 properties.

For approximately $600 per month per employee, a corporate subscription can give companies unlimited access to its signature hotel “living rooms,” plus three overnight stays and the use of meeting rooms. Members can buy a separate global passport subscription which gives them hotel stays of up to 30 days per month for around $1,500, or $50 per night.

These plans are designed for flexible workers and travelers as an alternative to renting properties in big cities. When people work from home, they can really work from anywhere. This could be the opportunity to become the Netflix of the hotel industry and provide unlimited nights at a fixed price.

Travel Bans Limit Subscribers

The travel restrictions that have pushed the industry to its knees in 2020 are still the main hurdle for many of these players.

There are some hotel subscriptions target locals however, but few will find that model scalable. While the appeal for hotels of locked-in monthly revenues and greater customer data is apparent, the benefit for users may be less so.

There is no clear value proposition yet during the pandemic when globally, travel restrictions and consumer sentiment are variable. This crisis has essentially brought the global travel business to a dramatic halt almost overnight and most people are less inclined to lock into something.

Inspirato, for example, persuaded members to continue their payments in March, April and May, at the height of the first wave of the pandemic, in exchange for freezing fees in July, August and September. They were successful in reporting a renewal rate of 97% in June.

Time to Experiment

The need for hotels to adapt is clear. Monthly travel payments could be beneficial for both hotels and consumers.

The travel company Trafalgar is hoping to lock in 2021 travelers with trips paid in monthly installments at today’s rates.

Changes in consumer behaviour are happening now — social distancing is leading to reduced travel and increased remote work — creating opportunities for new offerings and to establish new habits. Now is a great time for experimentation, as customers look for new solutions.

However, subscription profits take time so you have to be in it for the long term.

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