Full Pattern Length of Stay: A New Old Leap in Revenue Management
By Don Wilson Senior Vice President, Maxim Revenue Management Solutions | October 28, 2012
Full pattern length of stay (FPLOS) controls for hotels can contribute 1.5% to 3.0% additional revenues over optimal rate management programs alone, without incurring additional costs for the hotel. Even Min-Max and CTA controls are inadequate to achieve the highest level of revenue management success and profitability for the hotel.
Several other industries have proven that there are a myriad of other factors that are crucial for revenue management success in addition to dynamic pricing.
FPLOS controls allow a hotel to accept a discount rate up to a peak period, say 1 and 2-night length of stay, not allowing stays at this discount rate for the peak, but then again open up this discount rate for longer lengths of stay, thus improving occupancy on the shoulder days and increasing overall revenues.
In addition, hotels incur incremental variable costs that cause a multiple-night reservation to generate more profits than single-night reservations at the same rate.
The results are a more accurate model of hotel operation and increased revenues and profits from the revenue management system using FPLOS.
But are length of stay controls really worth it? Optimal rate management should suffice, right?!
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