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Reimaging Hotel Distribution Without Contracts – Image Credit DerbySoft
Let’s imagine you’re planning to open a brick-and-mortar business in the heart of the Upper East Side in New York City. Rent—whether commercial or residential—is high. After all, for many, New York is the epicenter of action. A tangible energy thrums through the streets at all hours of the day, as people from all walks of life hustle to and from subway terminals, sky-high office buildings, cozy corner cafes, and trendy bars and restaurants teeming with patrons and delicious food. In a city like New York, the stakes are high, but so is the potential reward if you play your cards right.
Now, let’s imagine you’ve found the perfect space for your business, but there’s a catch. If you select this location, you can only operate between the hours of 5 PM and 9 AM, meaning your business will be left to sit empty (and unprofitable) during the day. Depending on the nature of your business and the costs associated with maintaining and operating it, this could be a dealbreaker. Yet, this is precisely how hotels have traditionally operated.
With fixed check-in and check-out times (usually around 3 PM) and many guests checking out early and checking in late, hotels are often 30-40% empty during the hours of 9 AM to 5 PM. Perhaps, you could chalk this up to the cost of doing business. But in the world of hospitality, a key indicator of success is utilization, so why should any hotel brand allow their property and its sought-after amenities to remain so underutilized?
Hotels — especially in today’s “on-demand,” tech-enabled landscape—should be viewed as so much more than a “nighttime” product. With the right technology and the right approach, properties can truly maximize their inventory and open their amenities to delight an emerging guest segment and meaningfully boost their bottom line.
Who Really Books a Hotel by the Hour?
The term “day use” or “hourly hotels” has historically invited some questionable associations. So, to understand this segment and shift how it’s perceived by the market, it’s important to first define who the modern “day use” guest actually is.
First, you have local residents of a city who crave a temporary escape in an environment that feels removed from home and their normal day-to-day experience. Even if travel is a priority, many individuals and families might not be able to get away for an extended trip more than once or twice a year. However, with the inclusion of “mini getaways” comfortably within city limits, monthly hospitality experiences suddenly become possible. You might see someone unwinding by the pool before heading home to pick up the kids, or a couple celebrating an anniversary in the middle of a work week.
Of course, we also have the modern business traveler, especially those who frequently find themselves on quick day trips to attend meetings, events, or collaborate with colleagues in unfamiliar cities. Traditionally, these guests have had little option other than to “squat” in hotel lobbies or local coffee shops, with no real amenities at their disposal. So what if, instead, they could rent a quiet room to reset between calls, host a client in an elevated setting, or simply shower and change before their next meeting or dinner invite? For this guest, it’s not just about convenience; it’s about professionalism, well-being, and reclaiming space in a crowded city.
Finally, we have the “in-betweeners”—the layover guests caught in that liminal space between flights or their next destination, with enough time to need a place to go but not enough time for a traditional, overnight hotel stay. After all, most people would trade a stiff plastic chair or hours languishing in a terminal restaurant or coffee shop for a few hours in a comfortable bed, a shower, or the convenience of a well-equipped hotel gym any day. In this scenario, day-use hotels turn otherwise wasted hours into productive, restful, even restorative moments of reprieve.
Each of these archetypes represents a different kind of untapped value for hotels—unrealized bookings captured, experiences reimagined, and new guest relationships formed.
It’s Time to Transform Losses into Profits
If we know that hotels are chronically underutilized during daytime hours, along with their suite of amenities and offerings, it’s not hard to make the business case for optimizing this segment.
By tapping into rooms and amenities that would otherwise remain unsold or underutilized, hotels can generate significant incremental revenue, turning what was once considered a “loss” into a new stream of income. In fact, the revenue from short stays can range from 60% to 70% of the night price, creating a compelling financial incentive for hotel operators.
This shift is particularly impactful in a popular urban hub like New York, where the demand for flexible, on-demand services is rising to suit the evolving needs of modern guests.
That means, the potential market for day-use services is estimated to be around $6 billion annually—a figure that lends context not only to the existing demand for day-use hospitality offerings but also to the future growth potential of this sector.
By providing flexibility and a range of services that private hosts like Airbnb simply cannot match, hotels can recapture guests who might otherwise choose alternative accommodations. Innovative partners like DayBreak Hotels and Hotels By Day are already at the forefront of the day-use hospitality market, by providing a user-friendly booking platform for facilitating flexible stays at hotels throughout popular urban markets, like New York, Los Angeles, Chicago, San Francisco, and Miami.
Yannis Moati, CEO explains,“Our team at HotelsByDay is very bullish on the prospects of this sector as it is estimated to be a $6Bn market by this decade and so far market actors have registered just about 10% market penetration. Combined with a modern guest that requires more flexibility than ever, a challenging economic environment which forces us to adopt new models, and now DerbySoft making this technological connection seamless, the Day-Use sector will experience strong growth, in turn making a substantial impact in hotel PnLs. This is the perfect time for hotels to join us on this innovative model and beat their comp-set”
By connecting hotels with a diverse array of customers – from business travelers looking for a reprieve between meetings to local residents looking for a mini-escape – both companies play an integral role in helping hotels effectively tap into this lucrative market.
DayBreak Hotels leverages a user-friendly platform that enables seamless short-term bookings, empowering guests to enjoy flexible accommodation options and access to hotel amenities like pools, gyms, and lounges—enhancing the overall guest experience for local residents and business travelers alike. Meanwhile, Hotels By Day, also located in the U.S., focuses on offering flexible stays for travelers in transit or those needing temporary workspaces, ensuring that hotels can monetize their rooms during the day. Both companies are committed to transforming the hospitality landscape by connecting hotels with a diverse array of customers, driving significant revenue growth, and responding to the increasing demand for convenience and flexibility. Travel agencies can greatly benefit from partnering with DayBreak Hotels and Hotels By Day, as they provide valuable options for clients seeking unique travel experiences, making them indispensable partners in today’s dynamic travel market.
The Long-Awaited Technology Revolution in Day Use Hospitality Is Here
Traditionally, technology has been a barrier to non-traditional utilization strategies. Legacy hospitality solutions are notorious for their rigid structure, which limits a hotel’s ability to adapt appropriately to the evolving needs of modern guests.
To this effect, it has been difficult—if not impossible—for hotels to capitalize on the burgeoning day-use market because available technology could not distribute or offer a zero rate code. That is, until now.
Today, we find ourselves within a period of significant innovation, which grants hotels the opportunity to discard the shackles of legacy tech in favor of more flexible, dynamic platforms better suited to the current and future landscape.
DerbySoft has been at the forefront of this technological revolution, developing the critical connectivity infrastructure that enables these day-use bookings to become a reality. By solving the previously insurmountable challenge of distributing zero rate codes, DerbySoft’s advanced distribution technology now allows hotels to seamlessly offer and manage these non-traditional booking options.
This breakthrough connectivity solution bridges the gap between hotels’ existing systems and innovative day-use platforms, making what was once impossible not only possible but highly profitable.
With the help of advanced connectivity solutions, hotels can seamlessly integrate day-use bookings into their existing systems to overcome previous operational limitations and offer services that cater to various customer demands.
The availability and integration of more advanced booking systems allow for real-time availability and pricing adjustments, which not only enhance operational efficiency but also elevate the guest experience, making it seamless for customers to enjoy the amenities they desire without the constraints of traditional check-in and check-out times.
The key theme here? Adaptability. With better tech comes better agility in a market that demands constant adaptation to delight travelers who increasingly expect tailored experiences that fit their busy lifestyles.
In essence, the emergence of day-use hotels is a reflection of the evolving hospitality landscape—one that prioritizes flexibility, convenience, and, of course, the guest experience. Moving forward, the ability to capture same-day bookings and cater to a diverse range of guest needs is not just an operational adjustment; it’s a business imperative that gives hotels a distinct advantage in an increasingly competitive and crowded marketplace.
About the Author
Duane Overgaard is the Divisional CEO, Hospitality, of DerbySoft. With over 30 years of experience in the hospitality industry, he has a diverse skill set that includes account management, business development, and contract negotiation. Duane has held various leadership positions at renowned companies such as Sabre Corporation, Wyndham International, and Hilton Hotels & Resorts, where he has demonstrated expertise in hotel management and marketing strategy. He is known for his strong team-building and competitive analysis skills. Duane is currently based in the Dallas area of the United States.
