How to Use Stay Controls in Hotel Revenue Management

For hotels, maximizing revenue starts with filling up their rooms. To achieve this, many hotels used to enforce minimum stays. For example, a country inn might require guests to book a three-night stay from Friday to Monday rather than allowing them to book individual weekend nights. But as customers demanded more flexibility and sought competitive rates online, these “stay controls” lost favor with hoteliers, who worried about turning potential customers away.

But their popularity is once again on the rise.

With the advent of modern software systems that can factor in many variables before making dynamic decisions about whether — and how — to impose specific arrival and departure times on guests, stay controls are making it easier for hotels to manage their revenue. This article provides a comprehensive guide to stay controls, including how they help hotels match their pricing and inventory to different customer segments, market dynamics and seasonal demand trends, as well as their benefits, limitations and best practices.

What Are Stay Controls?

Put simply, stay controls are restrictions on the time and length of a guest booking. By purposefully controlling these parameters, hoteliers can optimize the occupancy of their rooms while ensuring a steady revenue stream regardless of the highs and lows of customer demand. The most common stay controls are minimum length of stay (MinLOS), maximum length of stay (MaxLOS), closed to arrival (CTA) and closed to departure (CTD).

Stay controls have had a resurgence in the era of dynamic pricing, whereby hotels automatically adjust their room rates in real time to capitalize on peaks in demand and to minimize the impact of troughs. Dynamic pricing initially put more power in the hands of customers, leaving hotels scrambling to keep their rates competitive while maximizing occupancy throughout the year. Stay controls have shifted this balance of power back, providing hotels with the means to stay competitive while taking a more sustainable approach to inventory and revenue management.

Key Takeaways

• Stay controls allow hotels to set restrictions around when and for how long guests can book their rooms.
• The most common stay control involves setting a minimum length of stay.
• The benefits of stay controls include optimized room pricing and occupancy, as well as simplified forecasting and budgeting, all of which drives better revenue management.
• In the age of dynamic pricing, hotels increasingly turn to cloud-based financial management software to choose the most effective stay control strategies.

Stay Controls Explained

Stay controls may appear counterintuitive at first glance. Why would a hotel impose restrictions on its guests in today’s competitive hospitality market, especially when some of those guests are ready and willing to pay premium rates for their rooms? To answer this question, it is important to remember that, in the age of dynamic pricing, not all bookings are created equal. Economic conditions, seasonality and one-off events can create massive swings in the supply and demand for rooms, with highs presenting significant windfalls and lows exposing hotels to potential lulls. By using stay controls, hotels can adapt to these fluctuations as they come to achieve a continuous balance between pricing and occupancy.

Consider a four-star hotel that usually hosts families and charges $250 per night. Suddenly, a three-day technology conference is scheduled in its hometown, sending demand through the roof among business travelers who are willing to pay $500 per night for the same rooms. To maximize its revenue over those three days, the hotel will want as many of its rooms available to conference attendees as possible, which would require it to restrict stay times for its usual customers — or charge them the much higher rate and require them to book all three nights to achieve the same revenue.

How Do Stay Controls Work?

Hotels and managers use stay controls to manage when guests can check in and out of their rooms, how long they must stay and at what rate. In addition to positioning hoteliers to adapt their pricing and occupancy in line with shifting supply and demand, this approach also simplifies financial forecasts, which, in turn, improves revenue management.

For instance, a mountain resort might impose a minimum length of stay for weekend bookings made during peak skiing season to ensure its rooms stay occupied on “shoulder days,” like Thursday and Sunday. That same hotel might combine this minimum length of stay control with favorable rates during off seasons to promote longer bookings and drive continuous revenue throughout the year.

Benefits of Stay Controls

Hotels must develop plans that align with shifts in customer demand, but stay controls allow them to play a part in generating and managing demand. As a result, they will be able to realize the following nine benefits:

• Optimizing occupancy rates: A full hotel is not necessarily the most profitable hotel. The optimal occupancy rate for a hotel is one that delivers the highest total revenue for all of its rooms combined. This might mean charging higher rates during peak periods while accepting that only 80% of rooms might be occupied at the same time. Conversely, a hotel might require guests on a discounted rate to check out before the weekend or public holidays to free up its rooms for customers willing to pay premium prices.

• Enhancing revenue management: Revenue per available room (RevPAR) is one of the most important metrics for hotels, telling them how much revenue, on average, each room in their properties generate every day. Stay controls give hotel management more control and foresight into room occupancy and pricing, which helps them manage their revenues more accurately. In turn, optimized revenue management drives better hotel budgeting, resource allocation and spending that aligns with hotel management’s broader business strategy. For example, controls like MinLOS tend to increase the average duration of guest stays, leading to higher overall revenue and reducing operational costs thanks to less frequent turnover. Such improved financial performance would be reflected in key hotel financial statements, particularly the income statement and statement of cash flows.

• Balancing supply and demand: Optimizing the balance between supply and demand is a nonstop process that hotels must master to drive steady revenue and growth. When used as part of an integrated inventory and revenue management strategy, stay controls provide insight into customers by segment — down to their booking behavior — average length of stay and the revenue each segment generates. Together, these data points provide a solid foundation to help hotels continuously refine the supply and pricing of their rooms in line with both market demand and variable customer preferences.

• Reducing operational costs: The length of a guest’s stay has a direct impact on a hotel’s operating and labor costs. For example, a family that books a room for five nights will put less demand on a hotel’s housekeeping, room service and inventory costs than five different business travelers who book the same room for one night at a time. By enforcing longer bookings with stay controls, hotels can minimize the higher operating costs associated with short stays.

• Improving the guest experience: Hotels that prioritize their guests are more successful and profitable. Not only are happy guests more likely to leave a positive review and recommend the hotel to other potential customers, but they are also more likely to become loyal customers and return to the same property if the opportunity arises. While some guests will be turned off by having restrictions imposed on their stay, other loyal customers will actively seek out date-specific packages and favorable room prices, especially during off-peak periods. It’s also worth noting that the time and cost savings hotels gain by imposing stay controls can be reallocated to improving a property’s services and amenities, be it hiring additional staff or buying new equipment for the hotel fitness center.

• Maximizing event and peak season revenue: Stay controls are a powerful tool for hotels that want to maximize revenue during peak seasons and popular one-off events. For example, hotels will commonly free up rooms for high-paying corporate guests ahead of a major conference by limiting the duration of stays just before the conference starts. Stay controls also allow hotels to avoid lulls during off-peak periods by promoting special deals for customers willing to book longer stays during these periods to save on their nightly accommodation costs.

• Strategic inventory management: A hotel’s primary source of inventory is its rooms. Hotels must manage the availability and pricing of their rooms to entice guests, promote bookings and foster loyalty. Other forms of hotel inventory are the assets used to manage the property and serve guests, such as linens, toiletries, cleaning supplies and food for its restaurants. By implementing stay controls as part of a broader inventory management strategy, hotels can track demand for their rooms and inventory usage throughout the year and proactively adapt their strategies to satisfy customers and reduce inventory costs.

• Supporting long-term planning: Stay controls help bring structure to the way hotels manage room availability, pricing and revenue. Combined with an analytics strategy that breaks down this data, as well as data on customers’ preferred room types, length of stay, inventory usage and preferred booking channel by segment, hotels can develop more accurate forecasts to inform their long-term financial strategies and continuously improve their guest experience.

• Mitigating the impact of market fluctuations: All hotels experience peaks and troughs in demand; they often follow seasonal trends. For example, a country bed and breakfast known for its farm-to-table restaurant would attract fewer guests in the winter than in the summer, when it grows produce on-site. To mitigate the operational and financial pressures applied by these demand fluctuations, hotels can adapt their stay controls to maximize profit during busy periods. For instance, they could implement controls that favor long stays at a high rate. Then they could improve revenue during the off-peak season with flexible booking policies and pricing. Accurate forecasting is essential to this approach, as it allows hotels to predict and align their stay control strategies with projected demand ahead of time.

Limitations of Stay Controls

While stay controls give hotels more control over their pricing, inventory and revenue management, they also come with risks that could impact customer loyalty. The following list highlights the limitations of stay controls.

• Guest dissatisfaction: Customer loyalty is a key metric for hotels, which is why most hoteliers are as committed to fostering long-term loyalty as they are to maximizing daily revenue. Hotels must always ask themselves whether the business and operational benefits of stay controls outweigh the risk of alienating guests who want the flexibility to book specific days. For hotels that choose to implement stay controls, it is important to develop strategies that mitigate the risk of upsetting guests, whether by offering them perks during their stay or special pricing to compensate for the restrictive booking conditions.

• Operational complexity: Unless they have a centralized technology platform from which to manage inventory and revenue for stay controls, hoteliers must track and manage their room pricing, availability and booking conditions manually. With all of this data collection and analysis on their plates, on top of other responsibilities, hotel accounting teams may struggle to keep up with market trends or adapt their stay controls in line with changing demand, which means missing out on potential revenue.

• Risk of lost revenue: As in a growing number of industries, most hotels rely on dynamic pricing to maximize their daily revenue. But this approach works only if they can track and match their room prices to market demand in near real time. This is difficult to achieve at scale, especially when done manually. Stay controls complicate the issue further by making hotels less nimble in their day-to-day pricing. For example, a business that requires guests to book for a minimum of three nights commits itself to a single rate for the duration of that stay, even if it would have been more profitable to offer the room to three different guests during that period based on a dynamic pricing algorithm.

• Market sensitivity: Market fluctuations are impossible to predict. From global inflation that drives up a hotel’s operational and inventory costs, to labor shortages, to sudden changes in customer booking habits, hotels must be as flexible as possible to keep up with shifting economic and socio-demographic realities. By placing restrictions on the timing, duration and price of bookings they accept, stay controls do the opposite, leaving hotels to the mercy of market shifts rather than giving them the flexibility to pivot at a moment’s notice.

• Impact on revenue management strategy: Stay controls can help hotels to optimize revenue management strategies, but they also bring added complexity to the process. Between one-off events, seasonal trends and unpredictable swings in demand, optimizing revenue is no small task. Added to that is the billing complexity that accompanies offering dynamic rates and different packages to each guest.

• Adverse effects during low-demand periods: Stay controls, such as MinLOS, encourage longer booking times among guests. The risk for hotels that implement these controls is that the restrictive booking conditions could turn off potential guests who prefer more flexibility or don’t have time for a longer stay. In addition, determining the right balance between short-term revenue gains and long-term guest satisfaction requires continuous monitoring.

Types of Stay Controls

Stay controls generally fall into one of two categories: length-of-stay restrictions and arrival-and-departure-time restrictions. Hotels can mix and match the different stay controls to achieve their key goals, whether to optimize occupancy rate, raise revenue or manage spikes or dips in demand.

• Length of Stay (LOS) Restrictions:

  LOS restrictions require hotel guests to book their stay for a set period of time. Longer stays generally drive higher revenue because customers commit to paying for more nights. Longer stays also incur lower labor costs for the hotel, as staff don’t need to turn rooms over every night. To effectively implement LOS controls, hotels must carefully analyze demand patterns, make dynamic adjustments based on current booking data and market conditions, and strike a balance between maximizing occupancy and maintaining guest flexibility.

• Minimum Length of Stay (MinLOS):

  MinLOS controls require guests to book a minimum number of nights for their stay. For example, many hotels experience higher demand for Friday and Saturday nights, which is why they typically charge higher rates on those nights — but many guests may not book both. A MinLOS control that requires two nights for anyone booking either Friday or Saturday is a simple way to maximize occupancy and the associated revenue. MinLOS is also effective during holidays or special events.

  On the flip side, hotels may struggle to fill rooms from Monday to Thursday, which is not optimal from a revenue, inventory or labor management standpoint. By requiring guests to book a minimum length of stay, often at a discount, hotels can increase RevPAR by ensuring longer stays, especially during peak times. It also prevents the problem of unsold rooms on shoulder nights and balances occupancy across both high- and low-demand days. In addition, longer stays result in fewer guest check-ins and checkouts, reducing the workload for front-desk staff and housekeeping, which can lead to significant savings in labor costs and improved operational efficiency.

• Maximum Length of Stay (MaxLOS):

  There are times when a hotel expects to sell out its rooms at a premium rate, such as during a major conference that brings thousands of business travelers into town. When this opportunity arises, hotels can impose a MaxLOS on guests to prevent long-term bookings before the event that would block room availability during the high-demand period. Limiting the number of nights a guest can stay frees up rooms for new guests willing to pay higher rates, ensuring the hotel can maximize its revenue potential and capitalize on these make-or-break opportunities.

• Stay-Through:

  Stay-through restrictions require guests to include a specific night as part of their reservations. Unlike MinLOS requirements, stay-through controls focus on ensuring guests stay through a particular high-demand date, rather than setting an overall minimum duration for the stay. For example, a hotel might implement a “stay through Saturday” restriction during peak weekends, requiring guests to include Saturday night in their reservations. As such, a guest could book Friday and Saturday nights, or Saturday and Sunday nights, but they couldn’t book Friday night only or Sunday night only. As this example demonstrates, hotels use stay-through restrictions to protect occupancy on their most in-demand nights, typically weekends or specific event dates. This helps prevent situations where guests book the shoulder nights only around a high-demand night, ensuring the hotel maximizes revenue on its busiest nights.

• Arrival/Departure Pattern Restrictions:

  While LOS restrictions control the length of bookings as a means to optimize revenue and room occupancy, arrival and departure restrictions control when guests can check in and out of their rooms. In most cases, these controls aim to help hoteliers manage their operations at specific moments in time, especially during high occupancy periods.

• Closed to Arrival (CTA):

  With CTA stay controls, a hotel will restrict check-ins on specific dates, typically during high-demand periods when time and resources are dedicated to serving guests staying for multiple nights. CTA is particularly useful when resources are limited and accommodating new check-ins would strain operations. Hotels might also use CTA on days when they have reduced staff, such as on Sundays.

  However, CTA controls present challenges. While they can alleviate pressure on a given day, they risk alienating potential guests who then choose to book elsewhere. Additionally, demand may simply shift to the following day, potentially creating a new bottleneck. Effective use of CTA requires careful consideration of demand patterns, operational capacity and potential revenue impacts. Hotels must balance the operational benefits of CTA with the need to maximize occupancy and guest satisfaction over longer periods.

• Closed to Departure (CTD):

  Hotels implement CTD stay controls to stop guests from checking out on specific dates. As with CTA controls, this approach helps hotels reduce the pressure on their staff and avoid disappointing guests during busy periods or days when fewer people are working, like on public holidays. Limiting checkouts on specific days allows hotels to better allocate resources, reducing strain on front-desk staff and housekeeping.

Best Practices for Implementing Stay Controls

With a best-practice approach to stay controls, hoteliers can match their room availability to customer demand in a way that optimizes their revenues over time while reducing their operating and labor costs. Whether they opt for LOS controls, arrival/departure restrictions or both, the following practices can help them develop and implement a successful strategy.

1. Make Data-Driven Decisions

   By tracking their past performance and future demand data, hoteliers can gain a better understanding of how customer demand and market conditions change over time. This detailed insight into demand peaks and troughs and their effects on guest behavior allows hotels to determine the best times to implement stay controls and choose the best type of restriction to suit their specific needs.

   For example, a city center hotel might analyze its historical booking data and find that during a major annual convention, there’s a surge in demand for three-night stays from Tuesday to Thursday, while Monday and Friday nights have lower occupancy. By implementing a CTA control for Tuesday and a CTD control for Thursday, the hotel can encourage guests to book longer stays that include the shoulder nights, increasing overall occupancy, maximizing revenue and improving operational efficiency by reducing check-ins and checkouts on peak days.

2. Segment and Customize Stay Controls

   Every guest or group of guests has different expectations for their visit. For instance, business travelers, whose stays are paid for by their employers, are generally less money-conscious than families. Conversely, parents with children are more likely to book longer stays to justify the cost of their trip. By segmenting their guests into groups by characteristics such as their reason for travel, booking behavior, length of stay and price-sensitivity, hotels can tailor their pricing and stay control strategies to each segment. This improves their chances of securing bookings from all kinds of customers.

3. Communicate Clearly

   Unclear and unfulfilled expectations are the enemy of hotel guest satisfaction. They can leave a sour taste in customers’ mouths and, in some cases, cause them to post a negative review. Stay restrictions must therefore be explained clearly for every guest to ensure that they understand and accept the conditions of their stay before booking.

4. Maintain Flexibility and Adaptation

   All hotels experience periods of high and low demand. Some are busier in the summer than winter; others see spikes in demand between March and June, which are popular months for business conferences. But to succeed in the long term, hotels must generate revenue throughout the entire year. So the most successful hotels nimbly adapt to changing market conditions and customer demands. This requires a flexible approach to revenue management that supports quick adjustments to pricing, inventory and stay controls based on real-time data and insights.

   For example, a beach resort will typically see high demand during summer months, with many guests booked well in advance. However, an unseasonably rainy summer could lead to a sudden drop in bookings. By closely monitoring occupancy rates and booking trends, the resort can swiftly implement new stay-control strategies, such as relaxing MinLOS requirements or offering discounts for longer stays, to boost bookings and mitigate revenue losses. The key is to have systems and processes in place that allow for rapid data analysis, scenario-planning and decision-making. Hotels that can achieve this level of adaptability will be best positioned to optimize revenue and navigate the ups and downs of the market over the long term.

5. Integrate With Pricing Strategies

   To maximize their revenues throughout the year, hotels rely on dynamic pricing that adapts in real time to seasonal trends, occupancy data and current market conditions. The challenge of stay controls is that they restrict how flexible hotels can be in adapting their pricing, especially when rates fluctuate significantly from day to day. The smart approach is to integrate stay control policies with pricing strategies, which ensures that supply, demand and stay times all factor into pricing decisions and yield the highest possible revenue.

6. Leverage Technology

   From data collection, to performance analyses, to the continuous setting and adjustment of restrictions, hotels have traditionally allocated hours of work each week to manually managing stay controls. Not only is it impossible to scale this approach as a hotel business grows, but it is also prone to human error and simply can’t keep up with today’s fast-shifting market conditions. All of this means the manual approach to stay controls undoubtedly leaves potential revenue on the table.

   That’s why hoteliers increasingly rely on hotel revenue management software to automate these processes. It allows them to analyze booking data, anticipate market shifts, track bookings in real time and adjust their stay control policies to optimize their approach.

7. Adopt a Guest-Centric Approach

   An approach to stay controls that puts guests first will always deliver the best results. Happy guests are more loyal and more likely to spread the word and grow awareness for a hotel among their personal networks. But before discussing the details of guest-centric approaches, it’s important to acknowledge the inherent tension between stay controls and a truly guest-centric approach. At their core, stay controls are designed to optimize hotel revenue — sometimes at the expense of guest flexibility and satisfaction. Ideally, guests would have complete freedom to book their stays without restrictions.

   However, given the realities of hotel operations and the need to manage revenue effectively, eliminating stay controls is not always feasible. The challenge, then, is to find ways to mitigate the potential negative impact of stay controls on guest experience. And key to adopting guest-centric stay controls is to accurately segment customers and tailor restrictions to their specific needs, behavior and life circumstances.

   For example, parents with three young children looking for an affordable base for their family trip might appreciate a five-night stay at a discounted rate from Sunday through Thursday. Conversely, hotels catering to business travelers could offer special corporate rates with no MinLOS requirements, even during peak periods, to build loyalty among this valuable segment.

   While these targeted approaches can’t eliminate the constraints of stay controls entirely, they demonstrate a commitment to guest satisfaction within the limits of revenue optimization. By striving to balance these competing priorities, hotels can foster loyalty and drive long-term success.

8. Benchmark and Learn From Best Practices

   Optimization is an iterative process. By testing different types of stay controls, analyzing their impact on revenue, inventory and guest satisfaction, and learning from their results, hoteliers can incrementally optimize their approaches to drive growth over time. To do this, they can also set or compare themselves to hotel industry performance benchmarks, which provide a useful baseline to gauge their improvements. For example, the Uniform System of Accounts for the Lodging Industry (USALI) provides a useful set of benchmarks that helps hotels compare their performance against industry standards and see where they stand compared to the competition.

9. Plan for Various Scenarios

   Even the most in-depth forecasts can become irrelevant in the face of unexpected events, such as political unrest, a major hurricane or a global health crisis. Effective hotel revenue management requires planning for a range of potential future scenarios, not just relying on a single forecast. By considering multiple possible outcomes and developing contingency plans, hotels can be better prepared to adapt to unexpected events and market shifts.

   Scenario planning involves identifying key drivers of change, such as economic conditions, weather patterns or emerging travel trends, and then projecting how different combinations of these factors could impact hotel demand and revenue. For example, a hotel might develop separate forecasts and strategies for scenarios like an economic recession, a major sporting event coming to town or a shift in consumer preferences toward eco-friendly travel. Once these scenarios are defined, hotels can create action plans for how they would adjust stay control policies, pricing strategies and operational procedures in response to each one. This proactive approach allows hotels to be nimble and responsive in the face of changing circumstances.

   Take the five-star Edgewood Hotel and Resort in Nevada, which uses scenario planning through NetSuite’s enterprise resource planning (ERP) system. By running multiple “what-if” scenarios, Edgewood can assess the potential impact of different market conditions and strategic decisions on its occupancy rates and staffing requirements for every season. Edgewood’s system can easily account for changing weather patterns and other variables in its forecasting and integrate these insights into its room counts and labor models. This allows Edgewood to develop robust contingency plans and adapt quickly when unexpected events occur, ensuring optimal revenue management and guest satisfaction in any situation.

10. Monitor and Adapt Based on Guest Feedback

    While in-house data analytics provide insight into how different stay control strategies affect revenue, inventory, labor and other costs, they cannot reveal how these different controls are viewed by guests. There is no substitute for candid customer feedback, be it through direct conversations, online reviews or surveys, especially for hotels that understand the importance of positive guest experiences in driving long-term loyalty.

Manage Your Hotel Revenue With NetSuite

Hotels are under increasing pressure to increase customer billing and revenue. The rise of dynamic pricing requires their accounting and finance teams to vary prices, sometimes in real time, due to factors such as seasonality, occupancy and various one-off events that create overnight peaks or troughs in demand. That complexity is further compounded for hotel groups that manage multiple properties in different cities or countries. NetSuite’s cloud-based ERP centralizes crucial hotel accounting functions, such as billing, revenue management and inventory management, automating many of these processes to make them more efficient, more streamlined — and more accurate.

NetSuite’s approach to hotel financial management software also fosters data-driven forecasting, helping hotels to better plan for peaks and troughs in demand throughout the year. With more insight into their performance and more time to experiment, hotels can test and refine their market strategies, including their use of stay controls, to better manage their occupancy rates and optimize revenue for every room throughout the year.

At a time when hotels face stiff competition, unpredictable economic conditions and increasingly cost-conscious customers, stay controls offer them a way to better manage how, when and for how long their rooms are booked. As important, stay controls bring more clarity and simplicity to inventory and revenue management, which positions hotels to optimize their financial strategies over time. Stay controls are not without their risks, but by mitigating these with best practices and a robust financial management platform, hotels can make the most of stay control strategies to build customer loyalty and drive long-term revenue growth.

Stay Control FAQs

What are stay restrictions?

Stay restrictions are controls that limit when a customer can check in or out of their hotel room, how long they can stay or both. The most common forms of stay restrictions, also known as stay controls, are minimum length of stay, maximum length of stay, closed to arrival and closed to departure.

Why do hotels have minimum stays?

Hotels enforce minimum stays for several reasons. First, longer stays drive more revenue. Second, longer stays put less time and cost pressure on their inventory and staff. And finally, imposing a minimum length of stay helps hotels to optimize their room occupancy and revenue over time, rather than having it concentrated in high-demand days.

What is duration control in a hotel?

Hotels use duration controls to impose a minimum or maximum length of stay on their guests. Requiring guests to stay for a minimum number of nights helps hotels ensure steady occupancy and revenue for their rooms. Meanwhile, enforcing a maximum length of stay allows hotels to stay nimble around high-demand events, like trade shows and conferences, when they want to free up as many rooms as possible for guests willing to pay premium rates to attend those events.