in which the behavior has shifted toward needing longer stays, sometimes immediately. The needs might be different, but the outcome is the same, in terms of increased demand for extended stays. The data speaks for itself—the market share for extended stays in January and February (pre-pandemic) was about the same as in 2019, but since then it has increased considerably.
SHARE OF EXtended stays (2020) 32%
Market Analysis and Distribution 18%
18%
9%
7%
10%
17%
19%
28%
25% 14%
11%
But more than anything else, it is very important to be aware of the local regulations in your market; many markets have different tenant laws for longer stays than they do for short-term stays. This can take many forms. For example, if tenant laws apply, you might need a separate permit/license for those or a different contract with the guests. Please look into this; the answer will be different, depending on the location.
Regardless of whether the demand is from traditional snowbirds, families with remote work and school, or essential workers needing a place to stay, it’s hard to deny that extended stays play the steadying hand during low-demand periods. If you’re not already including extended stays in your revenue strategy, that might be something useful to look into. But before you do that, it’s important to understand some revenue fundamentals as well as some operational trade-offs.
If you have not been taking extended stays till now, it might be worthwhile to do some market research to find out a) if extended stays are common in your area and b) what booking channels they come through. For example, Tucson, Arizona, is a popular destination for snowbirds and shows fairly strong demand for longer stays during winter months. Galveston, Texas, conversely, is a popular weekend destination a short drive from Houston. Looking at the mix of bookings in forward-looking market data, it’s clear that a lot of snowbirds have already been booking extended stays through spring of 2021 in Tucson. On the other hand, in Galveston there is hardly any demand for extended stays right now; most bookings come for shorter stays over the weekend. TUCSON, AZ
STAY LENGTH 2 DAYS OR FEWER 3-7 DAYS 7-14 DAYS 14-30 DAYS 30+
Trade-Offs When Considering Extended Stays The most important reason to consider extended stays as a revenue strategy is to reduce your revenue risk: getting an extended stay for the coming months might mean a steady revenue stream—especially if you’re in a market with weaker-than-usual demand. The revenue might not end up being as high as previous years when there was strong demand, but if it can improve what you expect to make with lower short-term demand, then that’s a win! Equally important, extended stays come with lower risk of cancellations, due to the ever-changing dynamics of the ongoing pandemic. That said, if you’re in one of the markets where short-term booking activity is strong enough to meet occupancy goals without discounting rates heavily, extended stays might not be the right way to go. Like so many other things, this is something each manager should evaluate for themselves.
An important thing to consider: though the revenue from extended stays might be lower, the profitability might not be, because these stays have fewer operational costs than shorter stays. The wear and tear on the property also tends to be lower; guests who stay longer have some incentive to treat the property with care.
PROS
IONAL FEWER OPERAT COSTS TEAR LOWER WEAR & E RISK NU VE REDUCED RE
CONS
GAL CONTRACTS / LE D AN M RISK THAT DE CK BA CE WILL BOUN
GALVESTON, TX
NOV 2020
JAN 2021
MAR 2021
MAY 2021
JUL 2021
It’s not just important to know if your market has a demand for extended stays; you will also want to know how and where those bookings are made. Major OTAs like VRBO, Airbnb, and Booking.com have added focus on extended stays recently. Many markets get demand from boutique channels like Furnished Finder or Traveling Nurse Housing, and these might be worth exploring.
Marketing to repeat guests is always a great way to test the waters with guests you trust. It might also be a way to see if you can generate that demand even if market data sources fail to show strong indicators for it in your broader market just yet.
Revenue Risk and Profitability: Discounting Extended Stays Let’s say you’ve thought through the above, and the idea of extended stays checks out on multiple fronts. Before diving in, it makes sense to do some back-of-the-napkin math.
Let’s run through a couple of hypothetical scenarios to help understand this better. For easier math, let’s say you have a property that, on average, sells for $100/night during the upcoming season (some nights might be higher, some lower—we’re looking at the average VRM Intel Magazine | Fall 2020
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