Hotel dayrooms can stand in for office space in certain scenarios. Anna Price, a consultant with Procurigence, explores how organizations can find, manage and pay for them.
The phenomenon of dayrooms is not new. It was an option long before Covid arrived on the scene. This room rate type originally targeted travelers with long layovers, including oil and gas workers on crew rotations, ship crews and airline crews. Covid forced the hotel industry to reinvent itself and subsequently create new revenue streams, and so we see them dusting off the dayroom rate type.
The first hotel to take the leap was Hyatt with its Work from Hyatt dayroom offering. Shortly after, Workspaces by Hilton joined it, followed more recently by Work Anywhere with Marriott. The list of hotels that will add dayrooms to their rate options will probably continue to grow as hoteliers see increased demand.
There are questions associated with dayrooms for corporate managed hotel programs. How do you book one? Are there tax implications to the employee? This type of expense could be considered an office lease (only the cost of the room itself, not incidentals). What is the company policy for reimbursement of dayrooms? When a hotel includes additional amenities (such as a spa treatment) in the dayroom rate, how is the itemized receipt handled? How do dayrooms compete with flexible office spaces? Who owns the relationships with the hotels — procurement, travel or facilities? Answers vary by company.
There are several factors to consider when evaluating the inclusion of dayrooms for a corporate-managed hotel program:
- Dayroom rates are discounted between 45 percent and 75 percent compared with the cost of an overnight stay. Because of this deep discount, it is unlikely hotels will allow for further discount negotiations.
- Organizations will need to update travel policies to allow for booking and reimbursement of hotel dayrooms, and inform travelers about the types of dayrooms that are acceptable.
- The booking process for dayrooms remains complicated. Booking tools and their display logic are limited. This will require tweaking of booking rules to avoid costly mistakes and errors.
- Where providers cannot adjust booking tools, employees may book outside of approved channels by directly contacting the hotel. Additional transaction costs may apply if the employee has to call the travel agency for help with that booking.
- Companies like DayRooms, DayUse, Hotels by Day and Day Break Hotels enable travelers to book dayrooms. The process is similar to booking a traditional room on a hotel website. The content is furnished directly to these sites by the hotels themselves, though rates sometimes get loaded into a global distribution system.
- Booking dayrooms on hotel websites, though, remains difficult. It requires travelers to filter to the specific room rate and enter a special code for the discount.
- Buying hotel dayrooms from one of your preferred hotels may or may not count toward your contract goals.
To understand dayrooms, one cannot ignore flexible office spaces, a staple for many companies with remote workforces. According to a November 2019 article in the New York Post, such “flex space” in the United States increased by more than 600 percent in the previous decade. According to a CBRE report, the flexible office space market in Manhattan during the third quarter of 2019 grew by 30 percent year over year. Flexible office spaces are surprisingly affordable when compared with hotel dayrooms.
Consider how the 40 percent to 75 percent dayroom discount compares with the cost of a dedicated shared office facility. Some of those dedicated offices cost as little as $200 for a month. It’s critical to know the advantages and disadvantages of each approach.
For example, there are tax implications and benefits companies derive from office leases. These include:
- Recaptured rent and property/lease insurance
- Impact of capital gains or recapture tax
- Accelerated depreciation on leasehold improvements
- Moving expenses related to office lease
There are even more questions. Does this service belong in a travel policy or a different policy? If an employee uses that office for quarantine following a business trip, does it become a travel cost? Who takes ownership of category sourcing for dayrooms if they are part of the virtual office extension?
This is a great example of cross-pollination between two important categories controlled by different departments, emphasizing the increased importance of the travel manager’s role.
As our definition of a new office environment, including work-from-home options, evolves, companies will need to reconsider products and services. This is another reason for managing supplier relationships in a more intentional and cooperative way; we must use our positions as buyers to improve procurement and provide new value for all.