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Do Small Hotels Really Need a Revenue Management System? The Numbers Say Yes – Image Credit Unsplash
A look at how hotels can use dynamic length-of-stay restrictions and inventory management strategies to capture demand during major events while avoiding unsold rooms close to arrival.
When I worked as a market manager for a major OTA in Montreal, I knew the importance of Grand Prix weekend to hitting my goals and targets. Just four nights in summer could represent a significant portion of our revenue, if handled correctly. We all know rates are going to be sky high, but the real opportunity for standing out is in restriction management.
For those who haven’t lived and breathed a Grand Prix weekend in Montreal, let me fill you in. Thursday night is when the groups arrive because the practice sessions take place on Friday. On Saturday there are qualifying sessions and the race takes place on Sunday. Naturally, the spectator attendance is higher on the weekend than the Friday, and people tend to want or need to get home for Monday. That being said, the corporate groups are usually booking a 4 night stay including Thursday, Friday, Saturday and Sunday.
So picture this, all major hotels in Montreal have weekends closed out in June (or May since 2026) until the dates are made official. Once they are announced, the rates get put in place and a minimum 4 night stay restriction is placed on all 4 days. It’s fair, you want to protect your inventory for those die hard fans that are going to book immediately after the announcement is made, or for the corporate groups, or our loyal return guests.
Now, imagine we are 90 days from arrival and you still have 50% of your inventory to sell. Are you holding on to your minimum 4 night length of stay restriction? Are you removing it from Thursday and allowing anyone to book one night on Thursday? Are you opening up your Sundays to departures? And if you are, have you removed the restriction on your Sunday requiring more than a one night stay? Are your room types balanced so if someone does want to stay for 3 or 4 nights, do you have availability? Same questions at 30 days prior to arrival.
When I was at the OTA I would shop for different stay patterns on the website and see if there were any hotels available. If there weren’t, I would look at the inventory grids of hotels to see if there were rooms available but simply gate-kept by restrictions or unbalanced inventory, then I would notify my partners in case they wanted to make changes. You would be surprised to know how many hotels had a minimum 4 night stay restriction on their Friday night still active when I would call them on the Thursday before, and with a significant number of rooms left to sell.
Responsible restriction management is a crucial part of revenue optimization. This is one way that we see it come up in an urban market like Montreal with a few compression events per year. But in markets like Daytona Beach where they have 2 months of occupancy above 70% in March and July, restriction management can help optimize occupancy by ensuring there is availability for the search patterns people are looking for.
If you accept every reservation that comes in for 2 nights here and there, when people eventually call to reserve for 7 days, you may not have the rooms available. Rate Yield’s Smart Restrictions allow you to set minimum length of stay restrictions of 7 days and have them automatically removed when you reach the 90 day booking window, or have them reduced to 5 days, then 3 days, and so on and so forth. Rate Yield’s restrictions can help you reach your profitability goals by prioritizing longer lengths of stay, while opening up for shorter lengths of stay when your rates are higher.
Rate Yield is a revenue management software that was designed by revenue managers for revenue managers who enjoy revenue management! We empower you to make your own decisions and determine your own strategies and then let the system take care of implementing it for you. Reach out today for a demo of how we make this happen for clients!
Rikki Cavanagh is the Director of Business Development at Rate Yield. Connect with Rikki on LinkedIn.
About Rate Yield
Rate Yield was created in 2019 by seasoned Revenue Management consultants with over 30 years of experience within the field. Rate Yield RMS was designed to adapt to small hotels, inns, and resorts as well as large hotels in city centers. With settings and thresholds that can be modified against a hotel’s unique market trends, Rate Yield makes it more accessible than ever to implement AI in revenue management strategies. With real-time insights, agile strategy development, modules for budgets and forecasts, as well as a tool for displacement analyses, Rate Yield provides a complete software that will help your hotel to yield more revenue, period! To learn more, visit us at www.rateyield.com
