The MLOS Myth
Remember back in the day when consumers used rack brochures and travel agents to book their hotel stays? Remember when Minimum Length Of Stay (MLOS) and stay patterns was the only way to deal with unconstrained demand to try to control our revenues and occupancy?
Times have definitely changed since the days when MLOS and stay patterns were the norm for revenue managers. Back in the day, it was impossible to use flexible pricing because revenue management technology wasn¹t sophisticated enough and the Internet was not yet in existence. But today, times have definitely changed. While MLOS can be useful for special events or big-ticket days (like New Year¹s Eve), MLOS and stay patterns aren¹t the best revenue management strategies for day-to-day use in today¹s online, highly competitive market.
Still not convinced? Here¹s some very important reasons for hoteliers to shift away from MLOS restrictions for their day-to-day revenue management, and instead, adopt flexible pricing using sophisticated revenue management technology.
The Internet, the Internet. MLOS was created before the invention of the online travel agencies (OTAs) and the resulting change in consumer booking habits. It¹s an outdated system that for the most part doesn¹t work with today¹s technology (the good technologies).
You¹re inconveniencing the customer. If I¹m a consumer and I want to stay at your hotel for three nights and I¹m told that the minimum stay is four days, you can be sure that I would take my business elsewhere. Since the OTAs give consumers the ability to see/experience hundreds of hotels in every destination, there is no shortage of competition so I may be willing to pay premium rates for my three-night stay but I will never book the four nights (because I can only stay for four nights)!
You¹re decreasing your online visibility. We¹re all familiar with the billboard effect. Contrary to popular belief, having a MLOS does not persuade a consumer to book the extra night to meet the requirement. If a consumer is looking for a hotel for a three-day stay, and your property¹s MLOS is four days, your property will not show up in their OTA search results. In short, you¹re blocking your own property from potential guests and killing your billboard effect.
MLOS Rules for 2013
If you are going to use MLOS for special events, use them sparingly. Don¹t just load a four-night MLOS for all dates, instead, try balancing the demand through pricing and if you really need to apply restrictions for any of the dates, make sure they are a reflection of the respective level of demand for that date. By focusing on longer stays, sometimes hoteliers miss out on single night bookings that could fill inventory gaps during shoulder dates. Not to mention the price hikes that may occur due to lower category rooms not being available for the full length of stay period. This can automatically bump your pricing way above the market.
Day-to-day, a sophisticated, algorithm-based revenue management system that collects and analyzes data, and provides rate recommendations in real-time as the factors in the market change is the best solution for consistent financial success. These systems allow you to control your rates and occupancy as needed, boost your revenues and free up valuable time to concentrate on the big picture (no more never-ending calculations)!
So what are you waiting for? Start the New Year out right with revenue management technology more suitable for the market in 2013!
About REVPAR GURU
REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment. REVPAR GURU"s solution offers dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU"s software solution has been used by hotels worldwide to increase occupancy and RevPAR. Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.
