Hotel Subscription Model - Exploring the New Hospitality Trend

With the hotel industry being badly hit by COVID-19, regressing to a state similar to one 10 years back, and subscription models making other businesses recover and grow by leaps and bounds, the former had to try it out.  

‘Before the pandemic, we were never in the right position to risk our existing business because market conditions were quite stable. But once your occupancy goes down to single digits, you are emboldened to try new ideas.’ 

• Ernest Lee, CGO, citizenM Boutique Hotels

Furthermore, the pandemic changed the way businesses operate. With more and more companies choosing to follow the ‘work from home’ model, employees are seeking different workstations or even workcations to fulfill their responsibilities, but with a change of locations. 

For these reasons, many famous hotels have come out with their own hotel subscription programs. This would make up for lost revenue and give more financial certainty and stability in some of the most uncertain times. 

Additionally, hotels would be able to offer what the market demands; workcations to digital nomads with all the necessary arrangements and other work or leisure travelers, an assured booking.  

This engagement model could open a wide range of opportunities and possibilities for hotels and guests, alike. 

Must Read: Hotel Pricing Strategies

How do hotel subscriptions work?

Different hotels have rolled out different hotel subscription models, for a reason. Every hotel has its own guest type as well as marketing strategies. Additionally, some hotels have an edge in location, while others might have a legacy advantage. So, understanding own strengths and studying market dynamics, are important aspects of setting pricing strategies and revenue management.  

Therefore, while some hotels charge monthly fees and offer guests access to their properties worldwide, others have come up with yearly hotel subscription programs or rates.  

These hotel membership or subscription programs allow guests to:  

• Enjoy discounts on food, drinks, and amenities, 
• Co-working space access, 
• Preferential room booking and treatment, and 
• Unlimited stays at a fixed price 

Selina, a hostel network based in Panama catered to digital nomads with their hotel subscription model. With 90+ properties in 18 countries, including Latin America, the US, and Europe, it came out with its CoLive subscription package. This package starts at $450 a month for dormitory-style accommodations. This arrangement comes with shared bathrooms, communal kitchens, and common workspaces.  

Whereas private rooms can cost $3,000+ a month, depending on the property location. Guests can spend up to 30 days in one location or change locations up to 3 times during the month.  

‘We saw that this is a once-in-a-lifetime opportunity to become the Netflix of the hotel industry.’ 

• Lennert de Jong, citizenM (CCO) 

The Dutch boutique hotel chain citizenM rolled out a hotel subscription program as well. At $600 per employee per month, a company got to enjoy unlimited access to living rooms, under the hotel’s corporate subscription. Additionally, a company was offered three overnight stays and access to meeting rooms.

Although the hotel has discontinued it, there are chances that it would be offered again in the future and the same would be announced by the hotel.

Similarly, Zoku, a micro aparthotel in Amsterdam looks after digital nomads and remote workers. Their subscription comes at €2,750 for 30 days. However, there are discounts for longer stays.  

While this is the usual hotel subscription model, some hotels have been more experimental and flexible with the concept. 

For example, Chateau Marmont in West Hollywood converted their entire property into a private members-only hotel with something like a timeshare model. This meant that members own equity in the portfolio of properties which can be used at other destinations as well. This was done in the wake of the pandemic.  

Therefore, the hotel subscription model allows hotels to expand operations and business scope with pre-received subscription payments/revenue. Additionally, the guests commit to a long association, which is a bonus for hotels.  

Every hotel sets its own rates and time periods, with some hotels going all in with this concept.  

What does the future hold for hotel subscription programs?

With the pace at which hotels are jumping on the hotel subscription bandwagon, the future for the same certainly looks quite bright.  

And why not? Guests and hotels stand to benefit from it alike. While the hotels are catering to the ever-evolving needs of their guests, the latter gives more financial stability to the former as well as trying out different locations to make work, work, and well, fun! 

‘Changes in consumer behavior — social distancing leading to reduced travel and increased remote work, for example — create opportunities for new offerings and to establish new habits. Now is a great time for experimentation, since the friction ... is low as customers look for new solutions.’ 

• Robbie Kellman Baxter, consultant at Peninsula Strategies  

While the hotel subscription model is a good approach to looking after the guest’s needs and revenue management, it may take time for guests to form their opinion about it and for it to bear fruits. Thus, hotels must be patient with the results.  

If you are a hotelier reading this, now is the right time to explore and experiment! People have come out of one of the most turbulent times of the century and living their life like never before; traveling, taking new experiences, and making memories as if there’s no tomorrow!