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What is Length of Stay Pricing?

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Dennis Pitcock
Written by Dennis Pitcock

Length of stay (LOS) pricing sounds simple, but it is actually quite complicated. Typically, it is offering a better discount for stays that are longer in duration. This is not to be confused with a LOS rate, which is only one rate offering the same discount no matter how long the search window is as long as it meets the initial requirements. For example, let’s say a LOS promotion offered a 15 % discount for people booking 3 or more days. That “or more” is what doesn’t make this a length of stay pricing.

A LOS pricing strategy consists of multiple LOS promotion rates to offer more enticing deals to potential guests looking to make longer reservations. The larger the search window, the larger the discount given. This can be super effective in your overall revenue management strategy, because, as we all know, the longer the reservation, the less overhead it costs for us, the higher chance of them spending more on extras and even the better chance for a good review. So for many hostel operators, they are ideal. And not just hostel operators. Many large hostel chains use sophisticated central reservation systems that do just this. Hyatt comes to mind first, but surely there are many.

You don’t need all the bells and whistles to pull it off. You can take advantage of a child rate functionality many property management systems (PMS)channel managers, and even some booking site extranets offer. Yes the set up will be tedious, but the advantages could be well worth it. So you have a Parent or Master Rate. This is the rate all the LOS rates will be linked. It is crucial; they all must be linked to the same rate. For simplicity terms, let’s just link them all to the best available rate, or BAR. Here is how you would set something like this up:

lengthofstay

First, you can label your rates anything you want, but it is best to name your rates something you will recognize the second you see them. See above, you can’t really go wrong with how they are labeled. Each of these rates have their own restrictions, which is a minimum stay through. Depending on how you set them up, you can disable them on certain days either by date or days of the week, although if you disable them on the weekends, you might not need to make one any longer than 5 days. Now you can see how this will really help you capture guests looking for longer stays.

Consider you really need to boost your average LOS. Say you are in a stop-over city, or near a train station or airport and mostly get 1 night reservations, 2 nights at best. You most definitely want to boost your average LOS. Right now we’re linked to the BAR rate, these rates are siblings to other promotions. Rates cannot be combined with their siblings. So if you add an advance purchase (AP) rate where you give them a 5% discount for the rate being non-refundable (NR), the booking site will list them as two completely different rates. That will make the LOS price, especially for lesser amount of days, less appealing to the user. And, you really need those longer stays. For this LOS pricing strategy to work, you need to make copies of them again and link them to each promotional rate, making them children to the promotion, and set their restrictions accordingly.  Here we set up duplicate rates, and link them to the advance purchase rates:

lengthofstay2

So there it is, 5 rates almost identical to the ones above them. However, they are not the same. The restrictions are different. These rates have the same minimum stay through discounts but are nonrefundable (remember, you might have to manually reset the restrictions on some extranets). They are child rates of the AP rate, not the BAR, so the price they start with is the already discounted AP rate.

Now you should consider doing this with the other promotional rates you set up because you really need longer stays, so you should leave those looking out of the other promotions you are offering. Now you can see how easy it is to have so many rates and how complex the rate section can be, but it is common. It’s part of what revenue managers do at hotels. Soon enough it’ll be as easy as using your channel manager. And it is not too much for the booking channel either for they have effective Rate Mixing algorithms that make sure the best deals are offered to each visitor.

Yes, you will have a lot of rates, and you will become the master of your own rates. It’s what hotels do, but their sophisticated software makes it easier for them. Some PMSs and channel managers that are available for hostels have the ability for you to control these rates through them, but you still would need to set them up on each booking channel and link them together. Even if you don’t use a fancy channel manager, you can still set the rates in the booking channels themselves. You might not have all or any of the fancy software, but you’ve got nothing but time, and that is all you need, so you can set these up too. (and soon I’ll be showing you how).

 

About the author

Dennis Pitcock

Dennis Pitcock

Dennis jumped into the hostel industry after a summer backpacking Europe in 2008. He went from being a guest to a manager within weeks, and currently does consulting for large and small hostels alike in 3 continents. Prior, he worked in eCommerce, so he has passion for the tech side of the industry and is now deeply entrenched in the hostel and activities industry.

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