Stay restrictions in hotel revenue management: What they are and how they can boost your topline

At first, the idea of stay restrictions might sound counterintuitive – why limit your guest’s ability to book exactly the stay they want?

But depending on your property, guest demographics and demand patterns in the market, stay restrictions can be a great way to boost your business. 

Among other things, they can drive occupancy and revenue, generate bookings on shoulder days and reduce your operation team’s workload. Bring all these points together and you’re on the way to increasing your profitability.

Read on to learn more about how you can use stay controls to achieve these benefits at your hotel. 

 

What are stay restrictions for hotel revenue management?

Implementing stay restrictions allows you to control the types of bookings you accept for certain dates and/or rate codes.

This could mean opening some rate codes only for a limited time or during a specific season. Another option is to manage the length of stay guests can book during high- and low-demand periods. For the best results, use a combination of both approaches for different rate codes and times of the year. 

Depending on which systems you use, you can set restrictions in your PMS, RMS or both. To keep them organized, choose one platform and stick with it. That way you avoid mix-ups and you’ll have an easier time keeping track of your controls.

 

Why restriction management is important

Stay controls have an important role in revenue management because they can help you optimize your inventory and drive business in several ways. 

For one thing, they play a part in ensuring you fully sell out during high-demand times like fairs or other multi-day events. They also let you control exactly when you sell special offers to avoid leaving money on the table during peak periods. When used right, stay restrictions can even boost business on shoulder days, drive bookings during off season and increase your average length of stay. 

Now, let’s look at some of the most effective types of stay controls. 

 

Common types of stay restrictions

There are many different ways to manage arrivals and stay lengths. Which approach you use, how and when you implement it, depends heavily on your property type, guest preferences and demand patterns. 

As a rule of thumb for all properties, it’s best to keep things simple and straightforward. That makes it easier to keep an overview and manage your restrictions effectively. 

That being said, here are the most common types of controls and what they can do for your hotel. 

 

Minimum length of stay

If guests want to arrive on these dates, they have to book for at least a set minimum number of nights. This works especially well during high-demand dates for several reasons. 

  1. A minimum length of stay keeps rooms from going unsold over busy times, e.g. a multi-day fair. For example, if a guest only booked a stay for the first two nights of a high-demand four-day tradeshow, it would likely be hard to sell that room at your premium rate for the last two nights. But with a restriction in place, you can avoid this issue and maximize occupancy during peak period. 
  2. Requiring a minimum stay length is also a way to boost shoulder days that usually see lower demand. Here, you may offer an advantageous deal for guests who tack on a night or two to make the longer stay more attractive. 
  3. It increases your average length of stay which results in a lower turnover. This lightens your team’s burden since stayover rooms require less housekeeping. It also means less activity at the front desk. Both of these aspects can help reduce labor costs which is good for your profitability. 
  4. Finally, getting travelers to spend more time at your hotel creates new chances to build more guest loyalty. The longer they stay, the more chances you have to wow them with great service. On top of that, you have more ancillary revenue opportunities since guests who stay longer tend to spend money at your property, e.g. on F&B, the spa or laundry.

Minimum price

In order to achieve the best possible RevPAR during high peak times, it may be necessary to restrict certain lower rates, hotels can do this by implementing a minimum price restriction (also known as a hurdle rate).  The minimum price is the lowest acceptable room price for a given date and it practically means reservations are not allowed for this date if the booking rate is lower than the minimum price. The minimum price restriction helps informing which rooms should be sold to whom, when and at what price to achieve maximum profitability.

 

Maximum length of stay

In this case, guests can’t book a specific room or rate for more than a certain number of nights. Hotels primarily use this to protect themselves against dubious bookings from unreliable sources. While that’s a good idea, use this restriction with caution to avoid accidentally turning away legitimate requests for valuable long-stay business. 

Another way to leverage this control is to promote extended stays during a slow phase, say for remote workers, but without letting this promotion spill over into your busier periods. 

 

Closed to arrival

In this case, guests can’t book a stay starting on this date but they can book a stay through it. This restriction works best for packages and discounted rates, e.g. a two-night midweek getaway with arrival dates only from Monday through Wednesday. If the offer is enticing enough, it can drive business on historically low-demand days. At the same you ensure guests can’t book any lower-priced offers on your peak dates. 

Some holiday resorts also use this control to manage exactly when guests arrive and depart. For example, they may only allow arrivals and departures on weekends. In this case, they’re combining the closed to arrival restriction and the minimum length of stay control to manage their workflow and optimize how they use their inventory. 

 

How to maximize your results from using stay restrictions

If you’re ready to start using restrictions or you want to optimize your existing ones, here are five easy steps to follow:

  1. Get a solid understanding of your demand patterns: check your past performance and forward-looking demand data to know when your peaks and slow periods are. This will give you an idea when restrictions might make sense. 
  2. Identify shoulder dates: take a closer look at your high-demand times and determine where you have a chance to drive business before and after. Then brainstorm which types of restrictions could work for the audience you’re trying to attract at that time. 
  3. Look at your low-demand periods: again, examine your data to identify these phases. Then leverage forward-looking demand and search data to inspire ideas for controls that could help you sell more rooms. 
  4. Check your restrictions: once you’ve set your controls, make some test bookings to ensure they work as intended. They’ll reveal if all is in order or if you’re blocking reservations in an unintended way. 
  5. Analyze your results and tweak your set-up: collect performance data and test different types of restrictions. This will help you find the best solution for your property and get the most out of stay controls in the long run. 

Coming soon: The modern way to optimize stay restrictions

As the next innovative step Atomize will be able to pair rate recommendations with suggestions for setting or editing stay restrictions. This function will be available for hotels using the Mews PMS shortly and  will be rolled out for more PMSs throughout this year. 

That’s great news because let’s face it: there’s too much market and demand data to sift through every day to always know which restrictions are the best choice right now. The new automated restrictions recommendations fully take care of that. Based on mathematical demand models, Atomize evaluates if a restriction would increase the total revenue and if so, the system automatically suggests a restriction.

This not only saves you valuable time. It also ensures your restrictions are always optimally set up, so you can take revenue and occupancy maximization to a whole new level. 

Learn more about the restriction management functionality in Atomize here >

Want to learn more about these features? Get in touch with our team now!

 

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