HotelsByDay: Book your daytime oasis in the middle of the city

We recommend HotelsByDay to many of our client hotels. It is a great additional and truly incremental revenue stream/market segment. It is rare these days to have something in the hospitality space that creates a new source of revenue! Hotels are open and running 24 hours, HotelsByDay is the ideal way to better capitalize and monetize unused space. Hotels have total control on price, time blocks, allocations, conditions. I feel confident that the team at HBD is moving this sector in a positive direction that will impact hotel revenues for years to come!

Jeff Osborne

Greenwich Hospitality Consulting, LLC

I am extremely impressed with Hotels by Day. I am a skeptic by nature. Not only did I get my first reservation within the first day, but they keep coming in. I wish I would've jumped on board sooner.

Al Munoz

General Manager at Comfort Inn, Houston, TX

Hotels By Day has provided a solution to a massive hole in revenue, one that was impossible to fill. We have had no issues maintaining the process and have only profited from this new partnership.

Louis Vasquez

Director of Revenue Management, Avenue of the Arts. Costa Mesa, CA

Investor Q&A

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What does your company do?

Historically, hotels have been unwilling to offer rooms just for the day, sticking instead to rigid check-in and -out times. We created HotelsByDay to make it easy for customers to find and book single day stays. We designed the platform to make it easy for hoteliers to add this new revenue stream and protocol to their current booking system. Intuitively, it makes sense. Financially, it does too – we've brought in $5M+ in gross booking revenues.

Where will your company be in 5 years?

Booking hotel rooms just for the day is a win-win situation for all parties: hotel owners get 50% net revenue of a day room when it would otherwise be empty, guests have flexible options to relax during the day, and we make a 15% commission on each room. We're the day room leaders in North America; we plan to bring our easy-to-use platform to the millions of travelers and hoteliers across the globe.

What is Hotels By Day?

Hotels By Day is a platform that allows customers to book hotel rooms just for the day, without paying for the night stay. My name is Yannis Moati, CEO of HotelsByDay.com. My professional background started as a travel guide, a travel agent then tour operator, and during all these roles, I had customers who wanted a hotel room for a few hours during the day to be able to refresh from a long flight or just take a break. And it was really hard to provide those rooms for the day to our customers, even though in my past experience as a travel guide I knew that many rooms were sitting empty. Our goal launching Hotels By Day is to create a set of protocols and technology allowing hotels to monetize rooms for the day without displacing their overnight guests. It’s a bonus in their revenue stream without inflicting anything on their night stay. That’s the principal reason why hotels don’t offer day rooms today -- because they’re afraid it will interfere with their overnight guests. We’re providing the package so that they can just plug in and play.

Why haven’t hotels rented rooms during the day?

It's a confluence of two main reasons. One, historically, the day room was associated with a romantic stay, and that's when day rooms used to be a small niche. It had a connotation of romance, which would not lead hoteliers to try to develop this segment. But what that thinking doesn’t necessarily take into account is that we live in an ever more dynamic society -- a society that, nowadays, is asking for on-demand everything, where you book everything whenever you want it, from groceries to shopping online for clothes. Hoteliers are being caught like deer in the headlights with this new trend because the model they currently run is very strict: You can only check in after 3:00. You must check out the next day by 11:00. It’s rigid. Essentially, hospitality turned inhospitable for the modern consumer. So while the first thing hotels think is this kind of service is not made for them, we are demonstrating that there's a new frontier for them. The second reason is that, essentially, hospitality technology is focused single-mindedly towards transacting an overnight stay, and not transacting a day stay. Therefore, the current technology landscape actually is a hard sell to plug into our system. So we developed an individual path of connectivity. What a hotelier would not be able to do on their own systems, they can do here. I mean, don't get me wrong, if a customer walks in at a hotel and says, they'd like a hotel room for a few hours, some hotels would be able to provide it for them. But they're not training their front desk to do so, because they've got enough problems to solve already for their night stays. What would the rate be for a day stay? How many hours would you provide for the day stay? How would you be able to check in and check out those rooms? How would you set up the housekeeping around those day rooms? We made it simple for hotel properties to use us. We prepared the whole protocol, train the staff, and everybody's happy. Essentially, these are the issues that kept hotels from doing this themselves, and why they need our company to do it for them and to scale it for them.

How did Hotels By Day begin?

I started working 20 years ago as a tour guide. I moved on to travel agent, and then to tour operator. And, essentially, I realized that there was no simple way for a hotel to be flexible with its room allotments while guests nowadays required a whole bunch of different time bands that hotels were not set up to provide. I was just scratching my head to try to understand why they couldn’t they be more flexible? Back when I was a tour guide in Italy or in France in my youth, after leaving my clients off to a Museum, I walked back to the hotel to plan the days ahead and walked through hallways of rooms sitting empty all day long. Yet, as a travel agent, every time I asked a reservation manager if I could use a day room, the answer would invariably be negative, simply because they did not have the protocols & training to run rooms for the day and turn them over back to a night stay. They’d prefer refusing the extra revenue and sit on an idle room all day long. That mentality is anachronistic in today's society. It doesn't work. Today, inventory sitting empty, anywhere, anytime, makes absolutely no sense. We're here to solve this issue.We launched the company in February 2015, with about 15 hotels as a test model. The first year, we had 2,700 bookings. We realized that customers loved it and wanted more, and we scaled it really fast. In 2016, we moved up to 12,300 bookings. In 2017, we had 28,000 bookings. Right now, we have about 700 hotels, of which 50 were signed in London just last month. We are the day rooms leaders in North America, the world’s biggest market, and now are gearing ourselves up to move out internationally. We have had over 55,000 guest bookings total. So we’re growing pretty dramatically. Also, we are profitable.The reason why we're turning to Wefunder investors right now is because extra funding would allow us to improve our technology, make it more sticky with loyalty programs, and get us to a point where we can scale efficiently at the global level.

How does Hotels By Day work?

The majority of the bookings are generated on the website and apps. And most conversions come to us through Search Engine Marketing and Search Engine Optimization. Additionally, some of those conversions actually are being recommended by the hotels themselves. Sometimes customers have heard of us somewhere but not sure how to find us, they call the hotel directly, but the front desk again is not really trained to spend time on the phone to accommodate a room for the day, so essentially, they just tell those customers to book online through our platform. It's much easier for the hotel to lead the day-stay customer into our funnel and pay us a commission. The commission on average is 13.85%. It varies depending on how many contracts we sign with a hotel group. Finally, more than 35% of our customers are repeat users. They keep booking with us, which lowers our costs of acquisition tremendously and increases our long-term value per guest.

Who are your customers?

About 60% of our customers are leisure travelers who just want to daycation, take a rest, meet somebody in privacy, or use all the amenities of a hotel- the spa, the swimming pool, the breakfast-in-bed type of experience. They just want to rest for a day and take a break. We've got 12% who are business travelers, who essentially just use our hotel rooms to be able to rest for a few hours and work in privacy, get ready for the meeting, report back to headquarters, and all that. A segment that is new, but growing, is that 11% of our customers actually use a hotel room for napping. That's becoming a trend. You might be aware that Arriana Huffington is putting a strong focus on sleep as a part of wellness -- it’s around the concept of being more productive because you took a rest. In this society, we should not be ashamed to take a break during the day, because it actually boosts our mental skills, our productivity, our health, and our well-being in general. Right outside of your office, you can now book a hotel room, just for a few hours, where you can rest and shower, change, or even get ready for a night event, like a black tie or cocktail party that you have to attend. All our day rooms allow for more scheduling flexibility. We also have travel agents. In the last year and a half, we've opened our platform to travel agents to make bookings with us, and we already have 287 members signed up. They're growing the business sector more than the leisure sector so far. Finally, there’s a segment of customers who are saying that they're both leisure and business customers. It’s dubbed ‘bleisure’ and is trending, where you take a business trip but also take an extra few hours or days to enjoy the scenery or the location that you're in.

How much does it cost to acquire a customer?

First, the average rate of return from a hotel is about $75 per month of commission revenue. We have 700 hotels signed up with about 350-450 hotels live in any one day, as they all cycle because some hotels have different booking cycles. So it’s very hard to define a cost of customer acquisition on that side of the marketplace. But on the guest side of things, we can measure the cost of acquisition a lot more precisely. When we launched this business, the cost to acquire a new customer was over $150. It’s now just $8 to acquire a new customer online through search engine marketing. And we’re making, on average, $13 per booking. So we're in the black within the first booking. Additionally, 35% of our customers book multiple times, from twice all the way up to over 90 times.

Who are your competitors?

The large booking sites are not interested in our model because, as I mentioned earlier, the whole day-stay ecosystem does not connect to the hotel central reservations systems. Because of that lack of booking fluidity with the hotels, the large online travel agencies feel that this is not worth the effort. They're making a million times more bookings than us, and so this niche -- the effort of growing this niche and being part of the future and not the present of how people book a hotel and how they travel -- is not on their radar. They are aware that we exist, but they don't necessarily care, because they're definitely at a higher volume when it comes to their traffic. They don't want to be encumbered by a model that does not plug with all hotels automatically. As for other day-time booking operators: if you do a quick search and see how we portray ourselves versus how they portray themselves, you'll realize that when we claim to be a customer excellence company, it's not just empty words. For one, you'll see that we're the only agency in that sector that actually has ratings from our guests. We are being graded by them at very high levels. We're rated on Google, just to give you an example, 4.6 stars out of five, which is absolutely phenomenal. Not even a five-star hotel reaches that level of excellence. Secondly, if you look at our platform versus our competitors, we do not compare the cost of a night stay to a day stay. We think it's misleading to the customer as well as lowering the brand value of the hotel. Our competitors, for the sake of a quick conversion, are ready to compare day-stays rates with night-stays rates. That doesn’t make sense and it's unethical. Our level of honesty, clarity, transparency, customer-centered service, in the American way of servicing a customer, is just simply unmatched. It sounds shallow to say it, but we focus wholeheartedly on our customers and on our guests, and that's the recipe to our success. Guests come back to us over any other platform, allowing us to lower the acquisition cost overall, enabling us to grow and be profitable.

What are your goals for the next year?

What we are testing right now is onboarding apartments. It was not part of the original plan, but we’ve realized that apartment owners are a lot quicker in making a decision than hoteliers. They also run the same model as a hotelier, where they run 80% of their occupancy throughout the year and have gaps throughout their booking patterns, whether it be by week or by year, and they wish to fill in those gaps. And we’re the only company that can fill in those gaps. The size of the market in apartment listings is absolutely monumental, and we'd like to tap into that market right now. We're about to sign contracts for apartments in Miami, Boston, Toronto, and New York. It's essentially opening the apartment model for day stays and short stays. We’re very excited by this development.

How will you ensure you maintain good relationships with hotels?

We're incorporating more hoteliers with each passing week and diversifying their income. I think that where we differentiate from some of our industry colleagues: we don't jeopardize our relationship with hoteliers as we're not out there to harm them and pray on them. We're actually bringing them extra revenue that they didn’t even know it existed! We're empowering the little actors, franchisees, and housekeepers. We're now pulling out this passion project called the Generous Envelope, which is about distributing envelopes with inspirational quotes so that people can tip their housekeepers. So on a broad scale, we're more of a customer excellence company that an online travel agent, simply because we don't do things the same way that others do it. That's why we have such good reviews online and such great feedback not just from guests but from hoteliers. We're really out there promoting our core values – our living, breathing values – which is empowering people, showing respect, and boosting hotels’ revenues. If the guests have a good experience at the hotel, they’re more susceptible to stay for the night and book direct. We’re bringing hotels new clients for a very low acquisition cost. While on the surface we just look like we're a revenue optimization company, which we are, we offer benefits that go way beyond that.

How will you keep the business growing?

In some of the key cities, like Toronto, Miami, Boston, New York and Los Angeles, we have more demand than supply, so apartment rentals would be no small feat to onboard. It would unlock inventory in a tremendous way. It would boost the possibilities of selling rooms, and it would allow us to catch up with the latent demand that we have already. That's one of the methods of growing the bookings, because we know that there's so many cases right now where regrettably the guest is not satisfied with inventory. The second phase of our growth plan is training. We're three years in the making. We have acquired the skill in selling our model to hotels and apartment owners alike. We have all the marketing material. We have all the lingo to be able to sell it correctly, knowing what their pain points are and how our solutions can solve them. So we've acquired a lot of knowledge on that front. We've also acquired a lot of knowledge in guest-facing marketplace. We know which keywords convert guests. We know which days are most popular. We know which locations. And we are testing out now, in London, all of those theories. We're training local staff to sell in the U.K., and we are seeing that our model of conversion in London is working out, even in an environment of increased competitive pressure. Soon we will be ready to scale it to English-speaking countries. We've got Australia, Singapore, and Hong Kong in the target. And then, eventually, we’ll move into Europe and Latin America as well.

What do you plan to do with the money you raise from Wefunder investors?

We're seeking to raise $107,000, mostly to invest in our technology, so that we can do more with less. We want to be more fluid with guest conversions by improving our UI/UX, grant the customer more control over the time-band they wish to book, as well as integrate map features, so that the guest need not waste time inserting the hotel address on a different app and stay longer on ours. Our second plan to build stickier apps is to create a user profile and launch a universal loyalty program, which will boost repeats and lengthen the long-term value (LTV) of a customer. Finally, we identified many ways of improving features on our back-office, enabling the hotelier to better track and improve their listing on our channel. We must take advantage of the fact that we’re becoming a steady source of extra income for hoteliers who are increasingly relying upon us to make their ends meet (check our industry testimonials on our website). We plan to spend about 30% of the funding on marketing so we can grow internationally. I mentioned Australia, Singapore, Hong Kong, but also Germany and Scandinavia, and Latin America -- all that takes a lot of effort in training staff correctly, creating a base for our local entrepreneurs to be able to develop a market under our brand HotelsByDay.com so they can become global winners with a formula that we were able to successfully implement in the United States.

What’s your endgame?

To be the uncontested leader in day rooms all over the world. That's what we are working towards today. That's why we wake up every morning. We are the leaders in the U.S. right now, and we will replicate this model successfully all over the world. Eventually, we see ourselves as a branch of a larger travel company. One specifically that has been thought for some time is getting closer and closer to the hotel world, is Airbnb. Here's a huge company that's leading the way in transforming lodging, and we think that we are, in our own niche and in own regard, transforming lodging as well. And so if we keep up that momentum of transformation, we think there is a fit. Thanks to our good ratings and reviews, we also think TripAdvisor, for the sake of being able to acquire new customers against the larger online travel agencies, might also be interested in our model. We’ve seen a few travel companies that might be interested in acquiring us. In having these lines of communication open with our customers that used to be disregarded, we are now becoming more and more a force of the industry.

What worries do you have about the future?

However much sense our model makes for the hotel industry, I regret to say that we are still encountering a lot of resistance from the established hoteliers. They are not necessarily in lockstep with today's societal trends. They're not moving as quickly as they should in trying to incorporate new models. Resistance to change in any industry, at any level, any age, is always a clear and present danger for established models. And more so to an established model like hospitality, which has been selling hotel rooms for night stays in the same way for centuries. Hotels By Day coming in and turning the model on its head is facing resistance. There's a knee-jerk reaction to think that the day room is necessarily a romantic stay. But it's not. Not that we don’t have some of it -- I'll be the first one to say a portion of our bookings do have that component because we're selling hotel rooms, so whether it's night stay or day stay, romance happens. But our effort is about messaging a larger audience, business travelers, leisure travelers, that now they can take a daycation, they can stop for a few hours to refresh, work in privacy, get ready for the meeting, or unwind from the meeting.

Why is the hotel industry so resistant to change?

Consider that the model of hotel stays has been in place for, essentially, millennia. Lodging, an inn somewhere by the side of the road, has existed forever and ever. And the check-in and check-out process with their fixed time bands has been locked in for a long time. Beyond that, every hotelier that goes to hospitality school, gets professionally trained, and works at hotel chains which own 70% of the inventory in the United States, have very structured ways of doing business. We're coming in with a different way, and the industry hated it at first. Just to give you an example, at our press launch, a major hotel brand sent a circular to all their hoteliers stating: "We forbid you to sign with Hotels By Day. We think this is disruptive to our model and operations, and we think you should not sign with Hotels By Day.” Besides the fact that I shat in my pants that day when I heard about this letter, it just goes to show how calcified their thinking is. Additionally, by the way, they're ever more profitable. Hotels have been running on record profits for the last six years. Hence they are not pressured to close the loop on their revenue cycle to generate more revenue during daytime hours. But the old thinking is breaking in front of our eyes. Even the branded hoteliers said, “Never mind this circular, I don't care, I'm going to sign with Hotels By Day because I'm sitting on way too many empty rooms during the day and it sinks me.” And so those single hotels we signed in Philadelphia, those hotels that we signed in New York, those hotels that we signed in Chicago when we first launched, have now flourished to 700 hotels. Yet the mentality is still alive. It will take another few years for everybody to realize that it does make sense to generate revenue during the day. That day, we’ll all reap the benefits of that change of mentality: guests, hoteliers, our company, and our investors.

1	$5M+ in gross bookings revenue to date.
2	CEO has 20 years of experience in hospitality.
3	35% customers are repeat users.
4	700+ hotels in North America and London.
5	54K+ bookings.
6	Featured on Lodging Leaders podcast.
7	Featured in over 150 press articles, TV shows, and multiple podcasts

1	The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
2	A lack of funding to scale our business may be detrimental to progress. We are relying on investments to scale our company to greater profitability.
3	Antiquated hospitality technology makes it very difficult for us to integrate or persuade businesses to use our technology.
4	Competition with other larger travel companies could limit our expansion. Expedia is an example of a competitor.
5	A failure to maintain our current customer base or to attract new customers, would negatively affect our business.
6	Loss of team talent due to poor funding. We are reliant on a small management team and a loss to any of these key members along with a failure to attract new talent may be problematic for our business.
7	In an economic recession, people tend to spend less money on luxuries, including hotels. In the case of an economic recession, this could cause a downward trajectory to our revenues.
8	If a sex ring is caught using our app, the publicity could be damaging to our reputation and brand.
9	We could be subject to a breach of our technology which would result in a loss of privacy for our customers.
10	Tony Cheung and Eddy Kaljic are part-time officers, which may result in diminished time being committed to the company.

Officer	Title	Joined
Yannis Moati	CEO	2014
Eddy Kaljic	Director of Sales	2016
Tony Cheung	Principal Accounting Officer	2014

Date	Amount	Security
12/2018	$102,051	SAFE
08/2014	$550,000	Priced Round

$50,000	30% Technology improvements which will include improving the UI/UX of the app. 20% Building out the loyalty program. 30% Adapting our website and apps to scale internationally with translations and customizations. 15% Part time data scientist 5% Wefunder Intermediary fee
$107,000	25% Technology improvements which will include improving the UI/UX of the app. 10% Building out the loyalty program. 15% Allowing website and apps to scale internationally with translations and customizations. 18% Part time data scientist 27% Connectivity to hospitality ecosystems (demand & supply) 5% Wefunder Intermediary fee

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