Setting Your Minimum Stay Period to Maximize Revenues

Get your minimum stay period wrong and you could lose potential business. Get it right and you could fill out your reservations. But how does an independent vacation rental owner decide?

First off, you need to take note of what your visitors want. If they are leaning toward short breaks or short stays, then you need to gear your minimum stay periods to that market. Unless you want a sparsely populated reservations calendar. We heard of one owner with a property on a group of islands where many visitors wanted to spend only part of the week on her island before moving to explore another. She had a 3-day minimum stay restriction to accommodate her short stay guests. Over time, she found it increasingly unprofitable owing to the fixed set-up and cleaning costs required for each new round of guests. Instead of cleaning and setting up the property once a week, this was necessary twice a week with no extra income to cover her increased costs. Even worse, sometimes, owing to short stay bookings, the property would remain empty for days, leading to further losses. For this reason, some owners rule out short stay bookings of less than 6 days.

Minimum stays mean increased costs for owners

If you’re a new owner setting your rates, consider this. Choose a low day rate combined with a short minimum stay and you will face high set up and cleaning costs which you will have to absorb. Unless you make an additional charge to short stay customers. One answer might be to set your day rate at a relatively high level to cover your increased costs. This will deter most short stay bookers and will also make your weekly and monthly rates look good. Especially if you present them as a discount on the weekly stay! When guests do make a short booking, at least they’ll be paying you a fair return.

Pick up extra revenue in slacker times

No one wants to turn away potential bookings, but it’s a good idea to limit short stays to annual periods of low and medium demand – never in the high season. That way you can pick up extra revenue with shorter minimum stay restrictions in the slacker periods and you will not lose out at peak times. If you don’t want to appear as an inflexible owner who will never allow short stay bookings, how about trying this? Apply a cleaning fee of, say, $100 for stays less than your posted minimum. Say your minimum stay was 6 days, this sends out the message to potential guests that you will consider short stays. Naturally, you would need to post any additional charges clearly at the time of booking, and preferably before. You may well lose those who were looking for 2 or 3 days, but you may pick up a proportion of those seeking 4 or 5 day stays.

Flexibility is key

So, if you can be flexible with your minimum stay periods, there are solutions that will mean not only do you have a fuller reservations calendar but also that you make a fair return on your rental. Your guests will still have opportunities for short stays at your property and many of them will understand that the increased rate is justifiable. This could (perhaps even ‘should’) be explained on your website. Setting different rates and minimum stay restrictions for different periods then adding in new rates to cover other scenarios can be a bit of a headache. Particularly if rates are updated and posted on more than one channel – i.e. if you are registered with more than one listings site or online travel agent (OTA).

Powerful online tools can help

We know this, here at Homes and Rooms, as our CEO has been through this same scenario with his own property. When he developed the online tools to help other independent vacation rental owners, he made sure they included a facility to simplify the implementation and updating of rental rates. Subscribers to Homes and Rooms will find adding and amending rates particularly easy using our Rates Wizard facility. This powerful tool enables them to introduce, delete or alter rates, specifying validity dates, minimum stay information, provisos and exceptions via their Homes and Rooms Rate Builder. These changes will be effective across the subscriber’s website and will be automatically updated across any other website that may be promoting the vacation rental property using the Homes and Rooms plugins for external websites.