Hotel Rooms by the Hour: Bye, Bye Stigma. Hello Commissions.

A new company that provides hotel rooms during daytime hours says there is a place for travel agents to sell its commissionable product. HotelsByDay sells rooms for a minimum of four hours and up to eight hours between the hours of 7 a.m. and 7 p.m.

Currently daytime room rentals are available in 140 hotels in16 cities. The New York-based company, which is just a few months old, expects to be nationwide soon and is looking abroad for hotels that might want to participate.

Back-end access for agents
HotelsByDay was designed with agent bookings in mind, said founder Yannis Moati. “We’ve planned ahead for agents who want to use the site. If you follow our booking path, within two or three clicks you get to a confirmation page where we can track agents so we can pay them commission.

“IATA numbers get registered, and commission tallied up for monthly payments. We have back-end access on our site for agents who sign up with us.

“It’s a novelty for a startup like ours to work with agents but we definitely are eager to do that. We are in conversations with a very large agency but it will take a little more room supply for us to cater to big agencies. We think we will be in that position in a few months.”

A service for clients
Moati said he has been approached by agents who need a room during the day for a variety of reasons. “Some agents see it as a service to clients. Even with commissions we won’t be making the agent rich, but when you put it together with the complete package it’s a strong addition.”

HotelsByDay will pay agents a commission of 7% of a room’s listed rate, according to Moati. For the guest, the room charge averages about 50% of the nightly rate.

The service can also be a time-saver for agents, Moati suggested. “When [agents] get a request like this, they either have to book the night or go through a manual process to see if a hotel offers some kind of daytime option.”

Illicit use?
Of course a question that comes up when you talk about hourly hotel rentals is illicit use of hotel rooms during the day, but Moati said in today’s technology-driven world “that stigma is fading.”

“We live in an on-demand society where you can order everything you want through an app––from a car to groceries. But the hotel industry is fixated on that overnight time period. That doesn’t fit in with today’s lifestyle.”

Also, he said, “the minimum of four hours eliminates a lot of activities that a hotel might not want. And we move away from any stigma by not making a point of it. Whatever happens in a hotel in the day can happen at night.”

How it works
The HotelsByDay mobile app uses geo-location to display rooms available for day rentals based on the user’s location. Users can browse hotels by times available, location, amenities and price. Travelers also have the option of booking up to two months in advance.

Moati said that so far 27% of bookings have been for the same day. The average length of use has been six hours, with afternoons the most popular time, followed closely by mornings. “A small portion converts to a night stay,” said Moati.

Leisure and business use so far has been about even. (See sidebar)

Incremental revenue for hotels
For hotels, the appeal of HotelsByDay is in incremental revenue, said Moati. “They are sitting on all this inventory. The room is sitting empty all day long and is as perishable in the daytime as at night.

“We are never going to be Expedia, but we are exposing the property to the business transient travelers, and we’re offering this at a fraction of the usual cost of customer acquisitions. Even with having to clean the room an extra time they come out with 30% more revenue.”

Moati estimates the size of the daytime hotel room market to be $20 billion globally. In the U.S. alone, he said, 23% of rooms are empty each night, and 11% more are available for daytime bookings due to early check-outs and late check-ins.

There will not be a huge pool of hotels involved, Moati predicted, and those participating will mostly be at the higher end, except perhaps in smaller markets.

HotelsByDay earns its money by charging hotel commissions based on the rate paid.