Why Huge Hotel Chains are Now Renting Rooms by the Hour

It used to be that a hotel that rented rooms“by the hour” was not necessarily a place where you would be happy to just hang out.

In fact, in most cases, hourly hotel rooms were something that most people did not discuss at all – and they certainly were not something high-end hotel chains like Marriott would have considered promoting as a business strategy.

However, like so many things in 2020, that has changed. This month, Marriott International Inc. announced it would begin allowing guests to check in for 12-hour shifts at more than 2,000 of its hotels. Who are these “day guests”? Well, they’re remote workers who just can’t take working at home any longer.

Rooms by the hour to give a break from home

Peggy Fang Roe, global officer for customer experience at Marriott, said the program is intended to give remote workers a break from the monotony of waking, working, playing, and sleeping at home. “People are tired of being at home. They want the ability to be in a different space and…stay safe,” she said. “Working out of a guest room is the best of both worlds,” she concluded hopefully.

While it remains to be seen if Roe is right about remote workers feeling “safe” from COVID-19 in hotel rooms they rent by the day, most analysts agree that the hotels have little to lose by trying.

Hotel revenues were down by 47 percent year-over-year this past September, and the larger the market, the worse the numbers. In Miami, where the hospitality and travel industry has taken a $3.36 billion hit since March 2020 when most of the country “locked down” in an effort to slow the spread of the coronavirus, the entire local economy is set to suffer in 2021 if the hotels and restaurants in the area cannot get back on track.

Thomas Zarikian, CEO of luxury business hotel chain EB Hotels, compared the pandemic experience to “switching off the light switch in your room. You go from completely light to dark.” His Miami hotel went from 90 percent occupancy in early March (standard for “high season” in the city) to “almost zero” overnight, costing his hotel valuable employees as well as revenue. The hotel currently is operating with about half the staff it employed prior to the pandemic.

Rooms by the hour actually day rentals

A number of high-end Miami hotels are trying out the “day rental” approach in an attempt to ameliorate the damage. Some provide “Zoom areas” for workers and for kids remote-schooling, while others are promoting close proximity to both a fax machine and popular bars running happy-hour specials. Of course, not every city permits this type of promotion since in some areas of the country, bars are still closed or operating at a limited capacity.

Even if you are not an investor in the hospitality sector, you can still learn a lot from the lengths to which the hotel and restaurant industries are going to lure customers back to their locations. The key, most industry experts agree, is giving consumers a feeling of confidence both that they are safe and that the money they are spending on their “day office” is money well spent and that will yield returns. As a residential real estate investor, the more you can give your potential tenants and buyers this same confidence, the better your portfolio will perform today, during the pandemic, and long after it has ended.

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About the Author

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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