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Embracing the Extended Stay Boom: Maximizing Revenue in Indonesia’s Extended Stay Market

Written by Tracy Dong, Principal Industry Consultant, IDeaS

Written by Tracy Dong, Principal Industry Consultant, IDeaS

The extended stay accommodation market is booming, with the sector projected to reach US $166.5 billion by 2032. With more individuals and corporations embracing flexible work arrangements, key Indonesian hotel markets like Bali have seen an influx of long-stay guests often working remotely and taking advantage of the island’s Digital Nomad Visa. 



This has resulted in strong demand for accommodations that support a mobile lifestyle and provide more favourable rates compared to traditional short-stay hotels. However, when it comes to the marketing, operations and revenue management of extended stay properties, there are very distinct differences between their accommodations and traditional hotel rooms, along with number of challenges that need to be overcome.

In terms of physical layouts, extended length hotels and serviced apartments differ from many traditional hotel rooms since the majority of their rooms are equipped with full kitchenettes and an abundance of home-style amenities. The differences between these accommodation types goes beyond the physical as well, not only affecting marketing strategies and operational processes, but also how these properties price themselves and maximise revenue.

Pricing of extended stay hotels and serviced apartments has posed challenges for Indonesian revenue managers in the past, given rates vary greatly depending on the length of stay a guest is seeking. Revenue managers have struggled with forecasting for the different length of stay profiles within the same property, such as transient (typically shorter stay) demand and longer stay demand. Understanding the dynamics of demand by length-of-stay for each market segment, unit type, and the price sensitivity associated with it, is critical in the acquisition of the guests.


Written by Tracy Dong, Principal Industry Consultant, IDeaS


How to apply revenue management into an extended stay property

Forecasting is the fundamental basis for effective revenue optimisation. To build a detailed forecast, property owners should include data that is both historical and forward looking. Historic data should ideally include the number of occupied rooms, the type of room occupied, and whether the room stayed in remained consistent for the duration of the guests stay (eg: did the guest receive a room upgrade.)

The data should also ensure that the number of rooms and revenue on the books by day (and by market segment) for the hotel's booking window is included. If data is collected every day, it will allow the extended length property to clearly understand their booking pace and establish forecasts by segment and day of week, which they will be able to compare to historical data. If this is done consistently it will allow hoteliers to more accurately understand future demand and enable them to tweak their strategies accordingly.

Data insights resulting from accurate forecasting can inform more precise inventory allocation of unit types against the projected demand in a competitive environment. What rates and availability will prospective guests see? Is overbooking acceptable when demand is at its peak, knowing that certain guests are likely to cancel or cut their stays short?

An accurate forecast allows an extended length property, or group, to proactively respond to changing market conditions, supporting effective and informed day-to-day tactical business controls. It is vital that extended stay and serviced apartment property owners are able to forecast and identify potential periods of low demand, as this will allow them to take on more long stay guests and price that demand appropriately. 

In periods where higher demand is anticipated, accommodation providers may not want to take on too many long stay bookings as this may displace higher paying segments which are potentially more profitable. The reverse may also be true, depending on particular market dynamics, costs and business models.


Written by Tracy Dong, Principal Industry Consultant, IDeaS


Target the most valuable business

Optimising revenue for extended stay properties goes well beyond hunches, guesswork and even learning from mistakes. Advanced revenue management strategies and solutions can help a property select the most valuable business, spreading demand across peak and shoulder nights to maximize occupancy. Automated systems can maximize revenues from booking extensions, higher value long-stay enquiries, and help plan for cancellations and non-arrivals. 

There are also market tools available that fold in competitor impacts on long and short-stay demand separately, and assess the impacts of price changes or demand adjustments, which not only helps set better rates, but also helps ensure that one nearly sold out night is not blocking a guest willing to make a 30 night booking that may be ultimately better for revenue long-term.


Written by Tracy Dong, Principal Industry Consultant, IDeaS


Ensure straight line availability

The lack of straight-line availability is a major issue in extended stay properties, because it can translate into missed revenue opportunities. A lack of straight-line availability occurs when a unit type is unavailable for one or more nights during an extended length of stay. For instance, consider your studio room category, which includes two room types: Queen and King. 

On Tuesday, you have only one Queen room left to sell, and on Wednesday, there is only one King room available. Consequently, a guest seeking to book a studio room for Tuesday and Wednesday encounters no availability for your property, despite there being studio rooms available. Addressing this challenge requires the operations team to actively balance inventory across units, ensuring the visibility of popular unit types when guests make bookings.


Integrating extended-stay into traditional hotel accommodation

While diversifying their revenue streams with the inclusion of extended-stay offerings can certainly help traditional short-stay hotel accommodation providers meet the needs of the market, there are some revenue management challenges that come with this added layer of complexity.

For properties that cater to both extended stay and standard overnight guests, dynamic pricing efforts need to consider the holistic impact of their rates—an ultimately higher-value extended stay guest shouldn’t be turned away or priced out in favour of an attempt to yield more from the room on a single high-demand night. That’s easy to say, but in practice this approach gets very complex without the help of an advanced automated revenue management system that can account for the variety of product types offered at a property.


Maximise revenues and guest experiences from extended stay properties

For hotel groups looking to maximize their revenues across their entire portfolios, the extended length accommodation market presents sizable opportunities. However, as the extended length accommodation sector grows, matures and differentiates itself from traditional hotel offerings, the management strategies and operational systems being used by extended length properties also need to advance to ensure that guest experiences and revenues are maximized.

It is critical that hotel groups enhance their approach to pricing for this sector given the revenue opportunities that it presents. Through developing accurate demand forecasts and applying best practice revenue management and operational strategies, an extended stay properties or serviced apartments will not just benefit revenues, it will also see wider impacts across entire operations, optimising wage costs and increasing guest satisfaction.

For more information on how to maximise revenues in the extended stay accommodation sector, please visit: www.ideas.com



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