.png)
Innovative living guests are becoming innovative living residents. Driven by market trends and tech developments, longer stays are not only becoming increasingly popular for customers. They’re also increasingly profitable for operators.
In 2023, 87% of serviced apartment operators reported a higher average length of stay year-on-year, with 72% of UK coliving residents intending to stay for at least 12 months, and 92% of build-to-rent (BTR) properties offering 1-3 year leases.
Here’s how you can take advantage of the long-stay bookings trend.
What are long-stay bookings?
Although there’s no fixed definition, ‘long stays’ are typically at least three months of uninterrupted occupancy in one unit. A long-stay could be a year-long BTR tenancy, a nine-month work placement in a serviced apartment or a six-month stay in a coliving property.
Why are long-stay bookings on trend?
Across BTR, serviced apartments and coliving, the popularity of longer stays has grown since the pandemic thanks to three main drivers: flexible working, market dynamics and PropTech.
Flexible working
With 74% of employers offering hybrid working lifestyles and 68% of employees preferring hybrid work, flexible working has now become the norm. Without the need to commute to a fixed office every week, an increasing number of people can work remotely, such as a full-time employee on a three-month secondment or a digital nomad switching cities every six months.
With greater flexibility over their location, more innovative living guests stay for longer either treating their stay as a temporary base or combining work-leisure. For example, 53% of millennials and Gen Z plan to travel for work in 2024 with over a third looking to extend their stay for leisure purposes.
Market dynamics
Innovative living has become a direct alternative to the private rental market. In the UK, for example, the private rental sector shrunk by 400,000 homes during 2016-2023, leading to increased competition and higher rental prices. For young people, long-stay coliving is not only a stress-free alternative (for instance, an inclusive monthly payment covers rent, bills, and amenities such as WIFI), but it’s also a source of community. Meanwhile, potential house buyers or temporary relocators find renting long-stay serviced apartments on a monthly basis easier, rather than finding a private rental home.
For operators, changing market trends makes long-stay more attractive. With cities such as London, New York and Paris clamping down on short-stay (‘Airbnb-style’) accommodation with legislation, regulations and taxes (to free up the city’s housing for long-term renters), long-stay operations are increasingly stable in comparison.
PropTech
Traditionally, short-stay and long-stay operators stayed in their own lanes as they didn’t have the technology to handle multi-stay lengths. However, with modern serviced apartment property management systems, operators can offer any unit for any stay length.
Sliding pricing scales reduce rates for longer stays. Digital long-stay booking processes include verification checks and inventories. Today’s innovative living management software can manage short, medium and long-stays in one centralised system. Operators can therefore take advantage of short-stays’ higher nightly rates and long-stays’ higher occupancies throughout the year.
“Be it booking, paying or communicating, long-stay and short-stay guests have different expectations. Operators previously struggled to accommodate the varying levels of service, but modern management software now simplifies blended stay strategies while making them more lucrative”. Giles Horwitch-Smith, CEO, res:harmonics.
What are the benefits of long-stay bookings?
Higher occupancies
While short stays offer the highest price per unit, they also require the most work (i.e. quick turnarounds), have the lowest occupancy rates and are highly susceptible to seasonal fluctuations. On the flip side, the lower average daily rate (ADR) of long-stay bookings is offset by the high year-round occupancies and guaranteed revenue over consecutive quarters. For example, an increase in longer stays helped Viridian hit 94% occupancy in October 2022.
In addition, dynamic pricing maximises your long-stay rate returns and with UK VAT only levied on rental accommodation for the first 28 nights, you also keep more of the longer-stay revenue.
Lower overheads
Long-stay bookings require a lower workload than short-stays. While short-stay guests have higher expectations regarding housekeeping (i.e. daily linen replacements) and staff responsiveness (i.e. concierge on call 24/7), long-stay guests prefer a homelike experience throughout their stay. They’re looking for less frequent staff interaction and a reduced housekeeping service. In addition, by turning over fewer rooms daily or even weekly, you can run your properties with a leaner staffing model, reducing management overheads and saving costs.
Reliable revenue
Balancing the stability of long-stay bookings with riskier and more lucrative short-stay rentals gives you a more reliable revenue stream for future growth. For example, long-stay bookings not only open up your brand to new customer segments but also diversify your portfolio against shocks. If the short-stay market declines or suffers new regulations, you can use long-stay margins to cover the costs of well-located units and retain inventory until the market recovers.
How to get started with long-stay bookings?
1. Analyse long-stay needs
Before embarking on a long-stay strategy, check which licences are mandatory to host long-term guests in each of your property locations. For example, short-term lets in Scotland require a short-term licence, but long-term lets require energy performance certificates and HMO licences (among others). Second, review your current portfolio and consider which units would fit long-stay needs. For instance, do your serviced apartments have a dedicated working area, ample storage space, a well-equipped kitchen, and abundant natural lighting? Does every coliving unit have a private bathroom? Do BTR units provide access to outdoor space and let residents bring pets?
2. Devise a long-stay strategy
Do you want a 50:50 split between long-stay and short-stay units? What times of the year would you like higher occupancy? Which channels will you use to target long-stay customers? From attracting long-stay guests to satisfying their in-stay demands, map out your long-stay strategy in consideration of how to manage different unit types. For example, long-stay residents are unlikely to want new short-stay neighbours every few days, so decide which floors are best suited for each stay length and guest type.
3. Choose a long-stay PMS
To put this strategy into action, you need a PMS that can handle long-stay operations. These functionalities include:
- The booking process. The long-stay booking process is more like a tenancy application than a two-click confirmation on Booking.com. Look for a PMS that verifies a customer’s background, arranges digital inventories and provides virtual tours as part of the booking process.
- Channel manager. Long-stay guests prefer to search for accommodation on channels like Rightmove rather than short-stay OTAs like Expedia. Choose a PMS with an in-built channel manager that targets (and sets appropriate rates for) channels favoured by long-stay guests.
- Billing methods. Long-stay guests prefer to pay for their stay monthly, while short-stay customers usually pay at booking or on arrival. Select a PMS that caters for long-stay billing preferences and includes deposit protection schemes.
Manage the long-stay booking journey
At res:harmonics, our all-in-one PMS is specifically designed for managing various lengths of stay. You can pursue a ‘blended stay’ strategy without limitations to get the best of short-term profitability and long-term stability.
Download the Ultimate Guide to Long-Stay Bookings to learn how property management software supports long-stays.
Request a demo to speak to someone at res:harmonics about how our software can automate and scale up your innovative living business.
