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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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.