Length of Stay Heuristics

Abstract

Refinements of existing revenue-management systems attempt to account for guests' actual length of stay, although many early systems assumed one-night stays. Other inputs to revenue-management systems involve no-show rates and average room rates. Tests of added rules for revenue management were conducted at three hotels in an effort to exceed the accepted standard of a 2.9-percent improvement in revenue that typically results in systems that do not contemplate length of stay. One of the three hotels was primarily a business hotel, one was a business and convention property, and the third was patronized primarily by leisure travelers. At low daily occupancy levels (e.g., 70 percent) length-of-stay rules do not boost revenues substantially beyond the expected marginal revenue levels of revenue-management systems that do not account for length of stay. As occupancy increases, however, the performance of length-of-stay rules improves, especially as a means for boosting performance during shoulder nights.