Limited Service Hotels

Limited service hotels (LSHs) don’t have to mean limited revenue. These budget-friendly hotels are a rapidly growing segment within the hospitality industry that appeal to price-sensitive commercial and leisure travelers.

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But what exactly is an LSH, and how can these hotels maximize guest comfort and hotel revenue? Keep reading to find out.

What is a Limited Service Hotel?

Limited service hotels, sometimes referred to as select service hotels, are budget-friendly accommodations that prioritize comfortable essentials over extensive amenities.

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They typically offer:

 
• Clean and functional guest rooms: Comfortable beds, private bathrooms and basic, limited amenities, such as business centers, conference rooms, pools, gyms and laundry facilities.
 
• Limited on-site food services: Continental breakfast, vending machines or grab-and-go options might be available, but full-service restaurants are uncommon.
 
• Convenient locations: Often situated near transportation hubs, strategic locations or popular tourist areas so guests can easily find nearby restaurants, bars and shopping centers.

Who Are Limited Service Hotels Designed For?

Limited service hotels cater to a broad range of travelers, including:

 
• Price-sensitive commercial travelers: Business travelers on expense accounts often prioritize affordability and convenience.
 
• Budget-conscious leisure travelers: Tourists and vacationers seeking comfortable accommodations without unnecessary frills benefit from lower room rates.
 
• Frequent travelers: Loyalty programs offered by limited-service hotel chains can be attractive to frequent travelers seeking rewards and benefits.

3 Challenges of Running a Limited Service Hotel

While offering significant advantages, operating an LSH also presents unique challenges:

 
1. Balancing cost and guest experience: Maintaining a lean staff and minimal amenities requires careful planning to ensure a positive guest experience.
 
2. Standing out in a competitive market: Hotel operators need to differentiate themselves through strategic branding, exceptional service and innovative guest experiences.
 
3. Adapting to evolving guest expectations: Limited service hotels must continuously adapt to changing guest preferences and integrate new technologies to stay competitive.

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3 Key Characteristics of Limited Service Hotels

Limited service properties tend to share similar characteristics. Here are three of the most common:

1. Low-Priced Rates

LSHs offer significant cost savings compared to full-service hotels, making them attractive to budget-conscious travelers. In fact, leisure travelers are more willing to splurge on travel experiences than hotel class, according to a 2024 Deloitte study. This presents a great opportunity for LSH properties to attract these travelers while upselling them on exclusive local experiences.

2. Limited Amenities

While lacking full-service restaurants, spas or concierge services, LSHs may offer essential amenities and services like fitness centers, guest laundry and free Wi-Fi.

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These properties may also have communal kitchens or barbecue areas so guests can buy and cook their own food. This is especially likely for an extended-stay hotel.

3. Self-Service Model

LSHs often operate with a lean staff, encouraging self-service through digital check-in options, mobile key access and user-friendly guest technology solutions.

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This allows these properties to keep the price point low without sacrificing convenience or comfort for guests.

7 Ways Limited Service Hotels Can Increase Revenue and Retention

Your limited service hotel growth strategy should focus on ways to improve the guest experience while increasing your revenue.

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Here’s how:  

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1. Focus on Essentials

When it comes to limited service hotels, nailing the basics is non-negotiable.

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Yes, value-conscious travelers prioritize comfortable accommodations over extensive amenities. But ensuring guests get the essentials will help boost your retention rates.

 
• Prioritize cleanliness: A sparkling clean environment is a must for a limited service property. Use high-quality cleaning products and conduct regular deep cleans. Guests notice and appreciate spotless rooms and common areas.
 
• Quality sleep: Comfort is king. Invest in premium mattresses, high-thread-count sheets and blackout curtains. Add soundproof windows to minimize outside noise for a restful night’s sleep.
 
• Efficient check-in/check-out: Streamline processes with digital kiosks and mobile apps. Reduce wait times and enhance convenience, allowing guests to check in and out in seconds.

2. Embrace Technology

Leveraging technology is crucial for staying competitive and enhancing guest satisfaction.

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Here’s how limited service hotels use guest-facing technology to make more money and encourage repeat visits:

 
• Mobile check-in/check-out: Allows guests to digitally check in and check out from their stay via their mobile devices.
 
• Guest messaging platforms: Guests can communicate about their stay using guest messaging via SMS and Whatsapp. Staff can provide real-time updates, personalized service and quick responses to any queries or issues.
 
• Digital tipping: Enables hotels to reward hardworking staff, increase staff morale and boost service quality using cashless tipping.  
 
• Upsells: Increases revenue by driving guests to purchase personalized upgrades and services during their stay.  
 
• AI operations: Use AI tools to automate routine tasks, personalize guest interactions and gain insights to improve service delivery

3. Improve the Guest Experience

Creating memorable stays leads to repeat business and positive reviews.

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Here’s how to go above and beyond:

 
• Personalized service: Use CRM systems to track guest preferences and tailor customer service. Greet repeat guests by name and have their favorite amenities ready in the room.
 
• Loyalty programs: Design a simple yet enticing frequent travel program with perks like free nights, room upgrades and exclusive discounts. Use data to target frequent guests with personalized offers.
 
• Customer feedback: Implement easy-to-use feedback channels like QR codes in rooms linking to surveys. Act on feedback promptly to show guests you value their input and continuously improve.
 
• Modernize the guest experience: Use hotel management software like Canary Technologies to create modern guest experiences with mobile check-in, contactless payments and self-service kiosks.

4. Streamline Hotel Operations

Efficiency is key to maintaining profitability while delivering great service.

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Here’s how to streamline your operations:

 
• Efficient staffing: Use workforce management software to predict long-term busy periods and schedule staff accordingly. Cross-train employees to handle multiple roles during peak times.
 
• Inventory management: Implement a digital inventory system to track usage and reorder supplies automatically. Avoid overstocking or running out of essential items.
 
• Eco-friendly hotel features: Install energy-efficient lighting and HVAC systems. Use motion sensors and smart thermostats to reduce energy consumption when rooms are unoccupied.
 
• Go digital: Invest in mobile check-in and check-out, table registration and digital contracts to simplify staff tasks and allow them to focus on guest interaction and service.

5. Offer Creative F&B Options

Innovative food and beverage offerings can set your limited hotel apart and enhance guest satisfaction:

 
• Grab-and-go meals: Provide a variety of self-service pre-packaged meals and snacks. Partner with local chefs to offer gourmet options that cater to travelers.  
 
• F&B upsells: Offer F&B upsells that guests can add before or during their stay. Think local wine and beer, charcuterie plates and family pizza packages. Upsells increase your incremental revenue while adding value to the guest experience.  
 
• Partnerships with local eateries: Collaborate with popular local restaurants to offer delivery services directly to guest rooms. Feature these partnerships in your marketing to attract foodies.
 
• Healthy options: Offer a selection of gluten-free, vegan and low-calorie meals. Create a nutritious breakfast buffet or limited restaurant with fresh fruits, yogurt and whole-grain options. Lobby food services that allow guests to grab a pre-packaged meal can increase your incremental revenue.  

6. Focus on Group Stays

Attracting group bookings can significantly boost occupancy rates.

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Here’s how to tap into this market:

 
• Corporate partnerships: Develop relationships with nearby local businesses for corporate stays. Offer tailored packages with meeting room access, free Wi-Fi and shuttle services.
 
• Event packages: Create attractive packages based on group type, such as business travelers, families and event attendees. Include perks like complimentary rooms for organizers and discounted group rates.
 
• Meeting spaces: Equip meeting rooms with the latest technology, such as high-speed internet, video conferencing tools and comfortable seating. Promote these amenities to business travelers.

7. Be a Local Guide

Enhance guests’ stays with unique insights and recommendations:

 
• Curated experiences: Partner with local tour operators to offer exclusive experiences like guided city tours, adventure sports or culture tours. Create packages that include these experiences.
 
• Local expertise: Train staff to provide expert recommendations on the best local dining, attractions and hidden gems. Invest in AI messaging to automate this task. Equip your front desk with maps, brochures and insider tips.
 
• Community events: Promote local events, festivals and markets through your hotel’s social media channels and in-room information. Encourage guests to explore and engage with the local culture.

Limited Service Hotels vs. Full Service Hotels: What’s the Difference?

Limited service hotels are the perfect blend of convenience and affordability. But what’s the difference from a full service property?

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Here’s a quick overview:

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Ready to Elevate Your Limited Service Hotel?

Limited service hotels offer a compelling proposition for both budget-conscious travelers and hotel groups seeking to expand their reach.

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By focusing on core essentials, embracing technology and catering to the right demographics, you can establish your LSH as the ideal spot for a budget-friendly getaway or work trip. Start your journey to elevating guest experiences by scheduling a demo with Canary today.