The What, Why, and How of Building A Subscription Model for Hotel Stays

Last weekend, I traveled to Pondicherry, our go-to destination for long weekends. Traveling with our furry baby, Coco means we always choose a pet-friendly resort that caters to all our needs. 

From a special pool for pups to spacious rooms and the lush green farm, it is our favorite place to stay!  

And the extra belly rubs Coco gets from the staff are just the icing on the cake.🐶

This last trip was our sixth stay, and while checking in, the manager mentioned a new subscription model they were offering which could save me thousands of bucks. This piqued my interest as it was a completely new concept for me. 

And after some digging with Coco, let me tell you, it’s a game-changer for the hospitality business!

So, let me dive deep into what a subscription model for hotel is and how you being an accommodation provider can make the most out of it. 

Understanding What A Subscription Model is

A subscription model is basically a business strategy where customers pay a recurring fee, usually monthly or annually, to access a product or service. This model has gained popularity across various industries, revolutionizing how businesses interact with their customers and generate revenue.

At its core, a subscription model focuses on building long-term relationships with customers. Instead of a one-time transaction, it encourages continuous engagement by offering ongoing value. For example, streaming services like Netflix and Spotify have transformed entertainment consumption by providing unlimited access to their vast libraries for a monthly fee. Similarly, subscription boxes like Barkbox and Dollar Shave Club deliver curated products to customers’ doorsteps regularly, creating a loyal customer base.

In the context of the hospitality industry, a subscription model means offering guests a package where they pay a fixed amount to enjoy a set number of stays or services over a specified period. This could range from monthly stays at a particular hotel chain to access to exclusive amenities and experiences. 

For example, Inspirato, a luxury vacation home, offers a special subscription model that allows its members to book unlimited stays in 5-star properties including cruises and their vacation homes. The subscription rates started from 2500$ and for members, they could save on nightly rates, enjoy new experiences, and stay anywhere without spending additional costs. 

Zoku, in Amsterdam, is another example of a micro aparthotel that offers flexible stays for guests with subscription plans starting from 2,750€ per month. 

You can price the subscription plans based on your location, the amenities you offer and a handful of other key factors. But don’t be fixated on a price, remember flexibility is the key. 

Challenges in Traditional Hotel Booking

Traditionally, the hospitality industry has thrived on one-time bookings. Guests research, compare prices and book a room for a specific duration. While this model has served us well, it presents limitations in today’s dynamic travel landscape. Factors like guest acquisition costs, guest loyalty, seasonality, and competition create constant pressure to secure bookings and maximize revenue. 

A subscription model for hotel flips the script, transforming guests into loyal members. Here’s how it works:

• Membership Tiers: Hotels offer tiered subscription plans, each with varying costs and benefits. These tiers might unlock a set number of nights per month, discounted rates on any stay, room upgrades, or exclusive perks like spa treatments or airport transfers.

• Recurring Revenue: Guests pay a predictable monthly or annual fee, guaranteeing income for the hotel and budgeting ease for the guest.

• Building Loyalty: Subscriptions foster a deeper connection between guests and your brand. They become invested in your hotel, enjoying the convenience and familiarity it offers.

Think of it like a gym membership but for hotels. Here’s a Subscription Plan that you can refer to to understand what I am trying to say. 

Guests commit to your brand in exchange for exclusive benefits and a streamlined booking experience. This fosters a sense of community and strengthens guest loyalty, a valuable asset in a competitive market.

The Potential of A Subscription Model in Hospitality

The power of subscriptions lies in their ability to address the key challenges hoteliers face.  

Subscription fees provide a buffer against seasonal fluctuations, guaranteeing a baseline income and financial stability throughout the year. More importantly, it fosters a deeper connection with guests.  

The convenience and predictability of a membership builds trust and loyalty, encouraging repeat business. This shift in focus, from short-term discounts to long-term value, allows hotels to move beyond the price wars that often dominate the traditional booking landscape.  

Subscriptions also offer a solution to empty rooms during slower periods. By providing discounted subscription rates for off-peak seasons, hotels can incentivize stays and maximize occupancy.

Beyond these core benefits, subscription model for hotels offer greater pricing flexibility. You can adjust rates based on demand, ensuring profitability during peak seasons. Plus, subscription models are of great benefits for your guests too, they help them by saving a huge chunk of their money, give additional exclusive perks, and are often flexible too. 

In essence, the subscription model offers a powerful tool for hotels to build a loyal and engaged guest base. It fosters a win-win situation, providing guests with convenience and value, and hoteliers with recurring revenue and a more stable business environment.  

Now let’s understand how to craft a subscription model that will attract your guests.

Designing A Subscription Model for Hotel Stays

Crafting a successful hotel subscription model requires a three-pronged approach: understanding your target audience, creating tiered structures, and enriching the overall value proposition.

• Target Audience:  The first step is to identify your ideal subscriber. Are you catering to business travelers seeking predictable stays, or digital nomads craving a work-from-anywhere haven? Understanding their needs allows you to tailor benefits that resonate.

• Tiered Structures:  Variety is key! Offer multiple subscription tiers with varying price points and benefits. A basic tier might provide a set number of discounted nights per year, while a premium tier unlocks unlimited stays, room upgrades, and exclusive perks. Cater to different budgets and travel styles.

• Enriching the Value Proposition: Think beyond room nights. Subscription plans should be enticing. Consider including additional benefits like complimentary breakfast, early check-in/late check-out options, or discounts on dining and spa services. This creates a sense of value beyond just the room itself, making your subscription the clear choice for savvy travelers.

By following these steps, you can design a subscription model that attracts the right guests and offers a compelling value proposition. 

Tips for Implementing A Subscription Model

The potential of a subscription model for hotel is undeniable, but successful implementation hinges on careful planning and execution. Here are some key tips to guide you:

• Know Your Audience: Before diving in, conduct thorough market research to identify your ideal subscriber. Understanding their needs allows you to tailor your subscription tiers and benefits accordingly.

• Craft Compelling Tiers: Offer a range of subscription tiers with varying price points and benefits.  This caters to different budgets and travel styles. Consider including a basic tier for occasional guests, a mid-tier for frequent travelers, and a premium tier for VIP treatment.

• Highlight the Value: Don’t just focus on discounted rates. Emphasize the overall value proposition of your subscription.  

• Seamless Booking & Management: Invest in technology that streamlines the subscription process for both you and your guests. This includes a user-friendly booking platform, automated subscription management tools, and clear communication channels for inquiries and updates.

• Marketing & Communication: Spread the word! Promote your subscription program through targeted marketing campaigns and highlight its benefits on your website and social media channels.  

• Gather Feedback & Adapt: Don’t be afraid to adapt your program based on guest feedback and usage data. Monitor trends, analyze what’s working well, and be prepared to adjust tiers, benefits, or pricing structures to optimize your subscription model for long-term success.

By following these tips, you can transform your subscription model from a novel concept into a thriving program that fosters guest loyalty, boosts recurring revenue, and positions your hotel at the forefront of the hospitality industry’s future.