The Neighborhood Hotel’s Journey to 75%+ Occupancy through PriceLabs’ Minimum Stay Rules

Customer type: Revenue Manager

Property type: Hotel

Region: North America

Products: Dynamic Pricing

Number of units: 26-100

PMS: Mews

Executive Summary

Matthew Shanley, Director of Revenue Management and Operations at The Neighborhood Hotel, faced significant challenges managing revenue for their unique apartment-style hotels in highly seasonal markets like Chicago and Southwest Michigan. By implementing PriceLabs, Matthew optimized revenue management by balancing occupancy and Average Daily Rate (ADR), streamlining operations, and adapting to fluctuating demand. 

Discover how PriceLabs’ dynamic pricing and advanced features helped The Neighborhood Hotel overcome seasonality challenges and maximize revenue without compromising guest experience.

About The Neighborhood Hotel

The Neighborhood Hotel is an innovative apartment-style hotel brand that merges the reliability and professionalism of traditional hotels with the space and comfort of apartment living. Founded in 2020 during the pandemic, the company owns and operates four locations with 72 units across Chicago and Southwest Michigan, with plans to double its portfolio in the next 18 months.

Each property is thoughtfully converted from historic buildings – from old apartment buildings to a former museum – offering guests unique accommodations with amenities like multiple bedrooms, kitchens, and laundry facilities. This hybrid model caters to various guests, including business travelers, leisure seekers, and those looking for extended stays.

Challenges Before PriceLabs

Managing revenue for The Neighborhood Hotel’s unique properties presented several challenges:

• Seasonality Fluctuations: With peaks in summer and significant drops in winter, especially in Southwest Michigan, balancing occupancy and revenue was complex. 
• Length of Stay Optimization: Determining the optimal minimum stay requirements was difficult. Initially, strict minimum stays led to lost occupancy. 

“We were never really allowing ourselves to do bookings of less than two nights, and I think that really prevented some occupancy.”

– Matthew Shanley, The Neighborhood Hotel

• Manual Pricing Adjustments: Without advanced tools, adjusting rates and stay requirements was time-consuming and ineffective, making it hard to respond quickly to market changes.
• Guest Profile Management: Lowering rates too much during slow seasons risked attracting guests who might not respect the property, leading to increased wear and tear and higher operational costs.

PriceLabs as a Solution

The Neighborhood Hotel had already implemented PriceLabs before Matthew joined, but it was through deeper utilization of its features that they began to see significant improvements.

Key Features Utilized:

• Dynamic Minimum Stay Rules: Matthew found the ability to set advanced minimum night rules crucial. 
• Portfolio Occupancy-Based Adjustments: By using occupancy thresholds across all properties, they could adjust prices automatically. 

“We use all of these different occupancy-based adjustments that PriceLabs has.”

– Matthew Shanley

• Orphan Gap Management: The capability to manage orphan gaps (unbooked days between reservations) helped maximize occupancy without sacrificing rates.
• Hotel Weights and Comp-Sets: Depending on the market, they incorporated both hotel and vacation rental data into their comp sets. 

“In Chicago, we weigh a little more on hotels. In Michigan, we do a little bit more vacation rentals.”

– Matthew Shanley

Implementation and Results

Implementing PriceLabs’ advanced features led to tangible benefits:

• Increased Occupancy: By adjusting minimum stay requirements and leveraging dynamic pricing, they filled more rooms without drastically lowering rates. 

“The hotel in Lincoln Park is over 75% occupied in 2024 with a RevPAR $219.91. The one in Little Italy hotel is over 72% occupied in 2024 – our first year operating the hotel. Both South West Michigan hotels are over 50% occupancy for the first time ever in a very seasonal market!”

– Matthew Shanley

• Optimized ADR: Despite increasing occupancy, they maintained a healthy ADR by attracting the right mix of guests and avoiding over-discounting during low seasons.
• Improved Operational Efficiency: Automation reduced the time spent on manual pricing adjustments, allowing Matthew to focus on strategic initiatives.
• Better Guest Experience: By attracting guests who stay longer and value the apartment-style amenities, they improved overall guest satisfaction and reduced property wear and tear.

Advice to Other Hotel Revenue Managers

Matthew’s experience offers valuable insights:

• Leverage Advanced Pricing Tools: Utilize software that offers flexibility with minimum stay rules, occupancy-based adjustments, and orphan gap management. These features are especially beneficial for properties with unique models or those facing seasonality.
• Adapt to Your Market: Incorporate both hotel and vacation rental data into your competitor analysis if operating in a mixed market. This provides a more comprehensive view of pricing strategies.
• Streamline Operations with Automation: Automated tools save time and reduce errors, allowing you to focus on strategic initiatives and enhancing guest experiences.

Conclusion

By embracing PriceLabs’ Dynamic Pricing, The Neighborhood Hotel successfully navigated the challenges of seasonality, optimized occupancy, increased RevPAR, and streamlined operations. The combination of their innovative apartment-style hotel concept with effective revenue management positioned them for continued growth.

“PriceLabs has been the one consistent tool in our tech stack that we’ve relied on since day one, even as everything else has evolved.”

– Matthew Shanley