|The MLOS Myth.|
By Jean Francois Mourier, CEO of REVPAR GURU
Wednesday, 9th January 2013
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 wasnıt 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 Yearıs Eve), MLOS and stay patterns arenıt the best revenue management strategies for day-to-day use in todayıs online, highly competitive market.
Still not convinced? Hereıs 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. Itıs an outdated system that for the most part doesnıt work with todayıs technology (the good technologies).
Youıre inconveniencing the customer. If Iım a consumer and I want to stay at your hotel for three nights and Iım 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)!
Youıre decreasing your online visibility. Weıre 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 propertyıs MLOS is four days, your property will not show up in their OTA search results. In short, youıre 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. Donıt 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 helps hotels to analyze complex data - including historical rates, the rates of competing properties in the same destination, pricing trends and environmental factors - to determine the right rate, at the right time, to secure the highest number of bookings. REVPAR GURU's system calculates room rates up to a year in advance, and continues to update the rates automatically multiple times every day as factors change, across all online channels including OTAs and direct channels.
In short, REVPAR GURU helps hotels to increase their occupancy and their revenues.
Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.