What are minimum stay policies and how do they work?
A minimum stay policy is a rule that requires guests to book a certain number of consecutive nights to secure a reservation.
For example, a hotel might enforce a 2-night minimum stay during a holiday weekend or a 3-night minimum during a local festival.
The primary goals of minimum stay policies are:
- ● To maximize revenue and ensure longer bookings during periods of high demand.
- ● To improve operational efficiency + reduce turnover costs by decreasing the number of check-ins and check-outs.
- ● To manage demand spikes by encouraging guests to book more strategically, filling gaps in the calendar.
This way, the minimum stay defines the least number of nights required for a guest to book accommodation. If a guest wishes to stay for a shorter period, they either cannot make the booking or must pay the full minimum stay. This policy, often abbreviated as MinStay or MinLOS (Minimum Length of Stay), allows hoteliers to optimize their occupancy and revenue.
It’s particularly useful for filling low-demand nights, such as the days before or after major holidays.
How minimum stay rules affect hotel revenue
Minimum stay rules can make a real difference to your hotel’s earnings when used wisely. Let’s see in what ways these policies can influence your revenue.
Boosting the Average Daily Rate (ADR)
People who book longer stays are usually okay with paying a bit more per night. This is especially true during busy times of holidays or major events. Keeping prices steady during these periods means you don't have to deal with constant guest turnover. It also helps keep your income more predictable.
Better Occupancy Rates
Frequent check-ins and check-outs create high operational demands, from housekeeping to front desk tasks, which can be resource-intensive. Reducing these turnovers with minimum stay policies kills two birds with one stone: streamlines operations and frees up your staff. This allows the focus to shift toward guest interactions or managing larger group bookings, ultimately leading to improved customer satisfaction and loyalty.
Lower Operating Costs
High-demand periods warrant greater control over bookings, and minimum stay requirements help achieve that by optimizing how rooms are reserved. During quieter times, these rules can encourage guests to book longer stays, effectively filling traditionally low-demand nights. Such an approach helps you to maintain a steadier revenue stream and reduces the pressure to fill rooms last minute, which can often lead to discounted rates.
Key scenarios when minimum stay policies make sense
1. High-demand periods
When your area is buzzing with activity, like during holidays, events, or busy tourist seasons, a minimum stay requirement can really pay off.
● Holidays
Think major holidays like Christmas, New Year's Eve, or long weekends. During these times, travelers are more likely to plan extended trips, making them more amenable to minimum stay requirements.
● Events
Large local events like music festivals, sports championships, or cultural fairs often draw crowds from near and far. These occasions bring in people who might not typically visit your area, increasing demand for accommodations.
● Seasonal peaks
Seasonal trends, like the height of summer for beach locations or the peak ski season in mountainous regions, naturally attract tourists looking for the perfect getaway.
Why it works:
✓ Longer stay requirements can help smooth out the booking curve, preventing your hotel from being fully booked one night only to sit with empty rooms the next.
✓ Reduces operational strain on your staff, who won't have to deal with the intensive turnover of nightly guests. This means cleaner rooms at a lower cost and staff that can give their full attention to current guests.
✓ Maximizes revenue during these lucrative periods by ensuring rooms are occupied over multiple nights at higher average rates.
2. Low-demand or shoulder periods
In quieter times, minimum stay policies can help sustain occupancy levels without resorting to low discounts.
● Shoulder seasons
These are transitional periods between high and low seasons. While not as busy as holidays, shoulder seasons still present an opportunity to attract budget-conscious travelers willing to stay longer for a deal.
● Off-peak nights
Weekdays or days after major events often see a lull in bookings. With fewer travelers, having a two-night requirement can help maintain occupancy levels.
Why it works:
✓ Longer stays under these policies are attractive to price-sensitive travelers seeking better value, potentially bringing in guests who wouldn’t otherwise stay.
✓ Minimum stay requirements also offer a sense of security in planning, allowing your hotel to manage resources more efficiently by filling rooms during those harder-to-sell nights.
✓ They enable you to add value through packages that can include breakfasts, parking, or even local experiences, improving guest satisfaction without cutting into room revenue.
3. Group bookings
Weddings, family reunions, or business conferences can benefit from thoughtfully applied minimum stay policies, balancing guest expectations with revenue goals.
● Weddings or private events
Events like these often involve large groups who will appreciate a block booking, but it's crucial to ensure attendees commit to at least a couple of nights.
● Corporate conferences
These are typically multi-day events. Encouraging participants to stay the duration can fill rooms that might otherwise see only partial occupancy.
● Tour groups
Groups traveling together often want special rates. By requiring a minimum stay, you balance offering discounts with ensuring you don't lose out on potential revenue from longer stays.
Why it works:
✓ A minimum night policy can secure a steady occupancy rate throughout the event, minimizing gaps in room bookings.
✓ Ensures that large event blocks aren’t left with random, hard-to-fill nights, creating a more predictable and optimized room utilization.
✓ Nurtures a community feel among attendees, as they stay in the same place for the duration of the event, potentially leading to repeat group business thanks to a positive experience.
Setting the right minimum stay policy for your hotel
Understand your market and guests
Setting the right minimum stay policy starts with knowing your market and guests. Aligning your policy with guest expectations and your hotel’s revenue goals is crucial for success.
Research local demand patterns by identifying peak seasons, major events, and holidays in your area. This will reveal how demand changes throughout the year.
In addition to that, take a closer look at your guests. Are they primarily business travelers who favor short stays, or leisure guests looking for longer vacations? Understanding these preferences is key.
Finally, don't forget to study what your nearby competitors are doing. Observing their minimum stay policies can offer great insights and help you judge what might work best in your market.
Use historical data to determine the optimal length
Your hotel’s historical booking data is a mine of information when figuring out the best minimum stay length. Look into this data, so that you can tailor your policies based on actual trends and revenue figures.
Focus on key metrics like the Average Daily Rate to see how room prices fluctuate. If the ADR spikes during peak periods, consider longer minimum stays to capitalize on high demand.
Track RevPAR to assess how efficiently rooms are filled at profitable rates. If RevPAR drops during slow times, a minimum stay rule could even out revenue by promoting longer bookings.
Another important thing is a booking lead time: how far ahead guests typically book. Longer lead times might mean you can enforce stricter policies during high-demand periods.
Adjust for different room types or packages
One-size-fits-all doesn’t cut it for minimum stay policies. Tailor your approach based on room types and guest packages to match different pricing, demand, and guest appeal.
Considerations vary: Higher-priced suites or premium rooms might need longer minimum stays, whereas budget-friendly rooms may not. With package deals like romance or wellness promotions, offering longer stays helps match the package’s full value.
When it comes to guest segmentation, business travelers often value flexibility, while vacationers might commit to longer stays, especially during quieter seasons.
Tools to help you implement and manage minimum stay policies
With these tools at your disposal, managing and optimizing your minimum stay policies becomes less of a headache and more of a strategic advantage. Each system plays its part in helping your hotel hit all the set goals.
Property Management System
An all-in-one Property Management System is essential for running a hotel smoothly, and it’s particularly crucial for setting and managing your minimum stay policies. With PMS, you can control room availability, handle bookings, and enforce policies all in one place.
Features to look for:
● Customizable minimum stay rules: Most modern PMS platforms allow you to set minimum stay requirements based on date range, room type, or booking channel.
● Integrated availability management: The PMS automatically adjusts room availability and booking restrictions, reducing the risk of overbooking and conflicting policies.
● Automatic policy enforcement: Minimum stay policies can be applied automatically to direct bookings and third-party reservations, minimizing manual work and errors.
● Guest communication tools: These built-in features ensure that guests are informed about your minimum stay requirements at the booking stage, preventing any confusion or unhappy surprises.
For example, a HotelFriend PMS can help you block single-night bookings during a busy weekend while allowing multi-night stays to be booked at regular rates, ensuring no rooms are left empty due to insufficient stay duration.
Booking Engine
A Booking Engine is a crucial component in the toolkit for managing minimum stay policies effectively. This tool serves as the hotel's direct booking platform, enabling seamless communication between the property and prospective guests.
Why a booking engine is essential:
● Direct policy execution: It allows you to set minimum stay restrictions on your website, ensuring that customers booking directly through your site see the same policies as those on third-party platforms.
● Customizable restrictions: Within the booking engine settings, you can configure specific restrictions tailored to different segments of your inventory, such as room types, promotional offers, or seasonality trends.
Channel Manager
A Channel Manager helps hotels manage room rates and availability across multiple online travel agents and booking platforms. It keeps your minimum stay policies consistent everywhere.
Why you need a Channel Manager:
● Consistency across platforms: It ensures that policies are uniform on all platforms, like Booking.com, Expedia, and Airbnb, so guests see the same rules irrespective of where they book. This avoids situations where guests might book on one platform without realizing the policy that exists on another.
● Rate and availability synchronization: Keeps everything aligned with your policies, avoiding booking conflicts and ensuring smooth operations.
When your hotel sets a minimum stay for an upcoming event, the channel manager automatically updates all OTAs to reflect this requirement. Any guest attempting to book only one night will be informed of the policy and prevented from completing the booking.
Revenue Management System
Revenue Management Systems use advanced analytics to fine-tune pricing and policies based on demand and market conditions. An RMS can be your secret sauce for getting the best out of your minimum stay policies.
Key benefits for minimum stay management:
● Data-driven decision making: The RMS analyzes booking data and market trends to recommend the ideal minimum stay length for specific dates and room types, ensuring you capitalize on high-demand periods.
● Dynamic policy adjustments: During periods of high demand, the RMS can automatically extend the minimum stay policy or adjust rates, maximizing both occupancy and revenue. Conversely, during slower periods, it can relax the policy to encourage bookings.
Your RMS might suggest increasing the minimum stay to 3 nights for a festival or holiday weekend based on predicted higher demand, helping your hotel capture the full revenue potential of those peak periods.
Dynamic pricing software
Dynamic pricing software takes things up a notch by using real-time data and predictive analytics to adjust your rates and stay requirements automatically. With tools like SmartPricing, which you can connect to your PMS, your approach becomes much more sophisticated and responsive.
How it helps with minimum stay policies:
● Real-time pricing and policy adjustments: Based on current booking trends and market data, it tweaks stay requirements to match demand—raising them in busy times and lowering them when it's quiet.
● Revenue optimization: Analyzes factors like competitor rates and local events to suggest the ideal minimum stay length for maximizing occupancy and revenue.
For instance, during a high-demand event, SmartPricing might suggest a 4-night minimum stay for peak nights while reducing it to a 2-night minimum during the surrounding slower nights, ensuring both higher occupancy and higher rates during the most profitable period.
Final thoughts
Implementing minimum stay policies can be a game changer for hotel revenue, but they need to be handled carefully. When used wisely, these policies can help you manage demand and optimize occupancy. However, you need to regularly assess their effectiveness to avoid turning away potential guests or losing revenue.
The most effective approach to minimum stay policies involves constant experimentation and data analysis. Don’t be afraid to test different lengths of stays for different periods, room types, or guest segments. Experimenting will help you get a better sense of how your guests respond to these policies and what impact they have on your hotel’s bottom line.
