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The Pros & Cons of the Commonly Used Booking Restrictions

Every hotelier has used a restriction in their pricing strategy at one time or another. Whether a minimum length of stay (MinLOS) requirement over a particularly busy period, or a restriction on a particular day preventing new arrivals (Closed to Arrival – CTA), these restrictions are a common business practice. But are they the best way to manage pricing and occupancy for a hotel on a day-to-day basis?

In this article, I will cover the most commonly used restrictions and explain which one is the most important restriction that hoteliers should be using in today’s highly competitive online marketing.

Minimum Length of Stay Restrictions (MinLOS)

MinLOS restrictions were highly useful in the days prior to development and rise in popularity of the online booking channel, but today, where a large percentage of bookings are made online, they are not useful for day-to-day usage. However, MinLOS restrictions can be useful for special events or big-ticket days (like New Year’s Eve). Here’s why this restriction is not useful day-to-day….

First and foremost, it restricts your potential guests’ ability to book their stay according to their needs, not corporate policy. It is an inconvenience that will most likely send the potential guest running to the competition.

You’re also decreasing your online visibility. By having a MinLOS restriction in place, any searches that customers make on the OTAs will filter out your property if the guests’ stay isn’t compatible. This decreases the billboard effect and can cost you valuable direct bookings in the long run.

Closed to Arrival/Departure Restrictions

If a hotelier decides to make a particular day “closed to arrival” or “closed to departure”, it means that guests are restricted from either arriving or departing on that particular day. If a guest is already staying with the property on that date, they can continue their stay uninterrupted but no arrivals/departures will be allowed on that date.

These restrictions are most commonly used to control the flow of arrivals and departures, during special events when a certain stay pattern is desired, such as stays on the four days leading up to Super Bowl. However, I have seen an overuse of these restrictions to address short staffing and to facilitate the check-in and check-out process.

Once again, why would you make it more difficult for a guest to book with your property? If a guest wants to arrive or check-out on a given date, let them do so. If resources are an issue, consider alternatives like offering check-out via iPads in the lobby and getting a sophisticated PMS to make your reservation and check-in procedures less complicated.

Maximum Stay Restrictions

This restriction does not allow guests to make bookings that extend beyond a certain number of days, and is often used when offering promotional discounts to drive occupancy such as “Stay Three Nights, Get the Fourth Night Free“. I have seen cases where the hoteliers set a Maximum Stay restriction to avoid giving away two free nights if a guest wants to stay eight consecutive nights.

It seems pretty obvious to me but wouldn’t this restriction be counter-intuitive? A hotel’s end goal is to increase bookings, which is why they offer a discount in the first place, but then, they tell their guest that they can’t stay beyond a certain period of time. Promotional discounts seek to increase the volume of bookings. If you are penalizing your guests or not letting them book longer stays, you are closing the door and minimizing the amount that can be earned on incidentals during their stay, which is often how hoteliers increase their RevPAR on discounted promotional stays.

Price Restrictions

Finally, the holy grail of restrictions: Price. Out of all of the restrictions that I outlined today, price is the only one that I would suggest that hoteliers use on a continuous basis.

Other than price, overusing all of these restrictions is not beneficial because they all diminish the amount of revenue that a property can earn. That’s where price is different.

Price is the only one that I would suggest that hoteliers use on a continuous basis

Hoteliers should be aiming to sell the most rooms at the best rate, and competing on price makes that possible. The law of supply and demand tells us that to constrain demand, we can increase price (not exorbitantly unless you really want to limit sales). Similarly, to stimulate demand we can decrease price (incrementally –no rash discounting).

Do you still use these ineffective restrictions at your property? If so, try implementing price as your only restrictions and watch your revenue grow!

do you want to sell more rooms

 

10 thoughts on “The Pros & Cons of the Commonly Used Booking Restrictions

  1. This was helpful. May I have a copy?
    Kindest regards,
    Lisa

     
  2. I don’t really agree with the statement that revenue made in incidentals is how hotels boost up adr…
    Secondly yes you are correct in saying most traditional restrictions are not as effective as they used to be … However sometimes it is important to use restrictions on promotional rates to limit unnecessary discounting.
    Weekend stays promotional rate may not be extended on weekday. You may certainly book but the price may vary.
    I don’t think many hotels use no arrival or departure restrictions .. Not anymore at least. If you are aware of any please let me know.

     
    1. It is true that revenue from incidentals does not boost ADR since it does not fall under “room revenue” for tracking purposes. However, as an additional revenue stream, it can help hotels increase operating profits.

       
  3. We use MLOS every Saturday night coupled with increased pricing. Our market has very strong demand for Saturday nights and lower demand for Friday and Sunday nights. We use MLOS to avoid having Saturday become fully booked and leave the other less desired dates unfulfilled. We achieve high REVPAR over the 3 days compared to our competitors whom mostly use pricing yet are not able to achieve sufficient rate increase on the Saturday to offset the lower occupancy of the Friday and Sundays which are usually heavily (mostly unwarranted) discounted.

    We achieve 94+% occupancy per year for each of the last 3 years. REVPAR has increased 28% over this period.

     
  4. Excellent idea to focus on price and profitable price value business relation for lasting long.

     
  5. I strongly agree with the below strategy explained well. As a customer, they expect free flow reservations, if when they try to make a booking online and it drives them through steps and finally it shows a restriction then they get irate. As said above the ‘price’ is the best strategy to use depending on the demand and supply..

     
  6. profitable suggestion to tryout.Thank you

     
  7. The use of promotional added value items, such as free hot breakfast, spa use, etc., is very effective and can be used according to demand.

     
  8. I agree in terms of online sales channels – We use the tools once a year on New Year’s Eve: 31.12. closed to arrival and a minimum stay of 3 nights. In leisure hotels it is not possible that guests arrive at 31.12. and departure at 01.01., because we could not serve the guests who want to spend a week’s holiday.

    But in the field of stationary sales, a control of arrival and departure days is useful as well as in the group segment.

     
  9. In some regions, or particular situations, a minimum stay is imperative.
    We are in a typical tourist area, and sell far more rooms in the weekend than during the week. For our cheaper budget rooms, we do use a minimum stay on Friday and Saturday when booking far in advance, because otherwise all our rooms would be booked on the weekend months ahead, and we would be fairly empty during the week. We want to keep a number of affordable rooms available for guests who want to book a longer holiday rather than 1 night. We offer our superior/deluxe rooms for 1 night on weekends: if you want to stay 1 night, great, but you will have to pay a little bit more for it. Of course, it is essential to keep track of bookings, so you can lift restrictions in time if you see certain patterns in your room occupancy.
    Another example is the coming weekend, which is a 4 day 3 night long weekend in most parts of Europe (Thu-Sun). Most people want to make the most of it, and go away for 3 nights. What you absolutely don’t want, is sell a sole Friday, because you know you will never sell the Thursday anymore. That is why, longer beforehand, you want to impose a minimum 2 night stay. Of course, this week the minimum stay was lifted, so that people wanting to stay 1 night can lap up the left over 4 rooms. It requires a bit of thinking and fiddling with the system, but we reach full occupancy on weekends like this every time. If we would just let the online bookings go, we would only be full on one of the nights.

     
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