Finding organizations to rent out entire properties can boost hotels during this period of low demand, but pricing and other factors must be right.
GLOBAL REPORT—Some hoteliers have realized that one way to bring in business during the coronavirus crisis is to rent out their entire properties.
This guest type includes non-profits dedicated to fighting the crisis, sports teams, government agencies, or even extended families seeking to quarantine or share a special event together.
Selling out a hotel, however, presents operational challenges and requires careful sales-and-marketing strategies, sources said.
“First, there has to be sufficient demand to guarantee this,” said Amanda Belarmino, assistant professor at the William F. Harrah College of Hospitality at the University of Nevada, Las Vegas. “Second, the hotels have to think about the publicity associated with this type of demand. For example, a hotel that sells out to the state for quarantine purposes may have problems reselling to guests because of perception of safety.”
A full buyout of the hotel is always welcome, as long as it is sold at an appropriate rate for an optimal time period, said Ron Vlasic, chief operating officer at Hostmark Hospitality Group.
Hostmark has fielded leads for property buyouts from government agencies such as state police, the U.S. National Guard and the U.S. Coast Guard, Vlasic said. These groups generally are quoted a rate per room, per night for the duration of the stay. Most book for three nights to a week, with a few longer exceptions. Quite a few have extended their stay due to the work they are doing.
Keeping these stays open-ended has been helpful, he said.
“Anticipating these groups’ needs and taking risks has certainly paid off for the hotels. Forecasting has certainly been a challenge and understanding the unknown needs leads to some risk taking, but overall it has been the right strategy,” Vlasic said.
Messaging in marketing and promotions is critical, sources said.
“All of our marketing channels, which include outbound email, digital and PR, feature our resort buy-outs as a unique amenity to weddings, birthday parties, corporate retreats and extended family vacations,” said Tom Nelson, VP of operations at The Duchamp in Healdsburg, California, which consists of six private suites. “We center the messaging around being at a resort-style property … all while being ensconced in an ultra-private quiet sanctuary that you literally ‘own’ while you are here.”
Each free-standing suite is separated by an eight-foot air gap, has its own air-quality system, and has a separate entrance and patio. Reservations are accepted on a per-night basis and range from two to four nights. The property has a fixed weekend rate of $795 per room per night, plus tax, for a minimum two-night buy-out. As the number of days increase, the rates are modified and weekday rates hover in the $595 range per room, per night.
From a sales and marketing perspective, a hotelier must know and understand the agents and third parties most likely to deliver buy-outs, said Adrian Mooney, director of sales at Kilkea Castle, a hotel and golf resort in County Kildare, Ireland.
“Paradoxically, this can actually be more cost-effective than how one might normally ‘sell’ a property as you are dealing with a smaller audience in the knowledge that their clients are potentially our clients,” Mooney said. “So phones and direct email, good—mass marketing, bad.”
He said he expects the hotel will continue to be booked privately until at least the end of the first quarter in 2021
There are numerous considerations to renting out complete hotels, said Frances Kiradjian, founder and CEO of the Boutique Lifestyle Leaders Association (BLLA).
“Precautions will need to prevail (ensuring clients are COVID-19-free) and communicating the rules and regulations to everyone in the group,” she said. “Rates do not need to be deeply discounted, but might contain upgrades that are very attractive—such as a luxury welcome basket in-room upon arrival, special recognition of the organizer, and such. Thoughtful hospitality must prevail as always, by combining safety, security, health and experience.”
As air travel slowly begins to return, hotel “buyouts” could become a longer-term trend with affluent customers, said Ariela Kiradjian, BLLA co-founder, partner and COO.
Targeted marketing and segmentation are going to be key, she said.
“For example, a buyout of a 15-room hotel secluded is a perfect setting for an affluent family who wants to get away and feel safe. It would also be smart to reach out to private jet services and other luxury amenities to include this as an upgraded package,” she said.
Kiradjian said this trend could continue for one to three years. “We will see a resurgence of buyouts as people navigate these new waters. Small, safe and experiential are the keywords here,” she said.