How Longer Minimum Stays at Lower Prices Can Drive Results

by Cohostmarket

One often-overlooked strategy to increase occupancy and revenue. Lower Prices Can Drive Results could be hiding in your minimum stays. Here’s how you can leverage minimum stays to increase occupancy and revenue, and even have a surprise effect you probably never expected!


With the turmoil in travel, many hosts are rethinking strategies. Some areas have regulated minimum stays to 30 days or more, which reduces your ability to be flexible. However, if you are not restricted by regulations – or those regulations are expiring as your region opens up, here are some ideas.

The status quo might be hurting you

What minimum stay lengths are you requiring today? Many hosts we work with start with a 2-night minimum year-round. Some hosts in certain markets might have just a week-long, 7-night minimum, all the time. Do customers want something different? Could this be hurting you? 


There are several ways a short minimum can hurt you. Short stays can prevent longer stays, reducing your occupancy. For example, this company had four bookings in July after Coronavirus – each for only 2 nights, blocking every weekend in July. With every Friday and Saturday booked, they can no longer get a full week booking. Their listings won’t even show up in an Airbnb search that includes a Friday night. 


Short stays can also create extra work and costly inefficiencies for staff. For example, if everyone stays Friday and Saturday night, your cleaning staff will have a lot of work on Friday morning and Sunday. But if you require a 3-night stay, you might have checkouts on Monday, or arrivals Thursday, spreading out the work. This can reduce stress and turnover in staff.


Long stays can be just as bad. In markets where most hosts require a 7-night stay, many guests might pay a premium to stay just 5 nights – especially at the last minute. By offering a shorter stay as a product that appeals to different travelers, you can potentially drive higher revenues.  


Long stays also create what are called “gap nights” (also known as “orphan nights”), or nights between bookings that cannot be booked because they are shorter than the minimum. For example, if you have two 7-night stays with 5 nights in between and a 7-night minimum, that 5 nights will not be bookable. It will not appear in Airbnb or VRBO, or even on your own website. By allowing a shorter minimum during the gap, you can increase occupancy. Otherwise, it’s unbookable lost revenue.


Winning strategies for Lower Prices Can Drive Results

Simply setting a short or long requirement will miss out on revenue and bookings. The key is to have a dynamic strategy. The winning strategy will depend on your market characteristics, so we’ll break down a few different possibilities. 


Urban markets

Urban markets tend to have different travelers on weekends vs. weekdays. Weekday travelers are frequently traveling for business, so book later and expect shorter minimums. However, the vacationers that might book a week or two would be shut out if you have, say, a Tuesday booked.  To take the best advantage of your market, consider a strategy that:

  • Requires longer lengths of stay far in the future (say, over 3 or 4 months in advance)
  • Requires a shorter length of stay on Sunday, Monday, Tuesday and Wednesday nights
  • 3 nights on Thursday (to capture the weekend)
  • Dynamically reduces to 1 or 2 nights with less than 1-2 weeks to check-in (if you are comfortable with the safety of this) 
  • Has a specific holiday strategy; this will depend on your market – for example, some cities empty out on holidays, while others see record visitors. 


Drive-to holiday markets

Drive-to Holiday markets tend to cater exclusively to vacationers with very specific demand patterns that, which at least until recently, tended not to change much. Now, with Airbnb and VRBO marketing heavily, bringing new people into the market, and coronavirus changing travel patterns, anything may go. 


To take advantage of unique market demand, consider a strategy that:

  • Requires long stays far in advance, especially for larger properties
  • Requires the same length of stay every day; in these markets, weekdays are not very different than weekends for demand. 
  • Requires at least 3 nights on a Thursday to capture the weekend
  • Dynamically reduces at the last minute – which may be months in the future, unlike an urban market, because people are still planning vacations in advance
  • Requires longer stays at holiday periods, as much as a week
  • Carefully fills gaps so that you can offer short stays in between longer ones to maximize occupancy.


Every drive-to market is a bit different – for example, beaches in Florida may experience consistently high weekly demand all summer long, as customers drive from far away, while beaches in Texas may only rent for weekends because the investment in the long drive simply isn’t necessary. Drive-to ski markets experience last-minute demand but only if it snows! 


The surprising benefit of dynamic minimum stays

Not only does managing minimum stays dynamically increase your performance in occupancy and revenue – it can increase your ranking in search on Airbnb and VRBO, leading to more visibility, and even higher revenue and occupancy. This is because search algorithms favor properties with more availability. 


How do I implement this?

Implementing dynamic minimum stays can be a lot of work! You can, of course, do all of this by hand, though you have to be vigilant. For example, if a gap is created 9 months in advance, and you don’t see it for 2 months, you may be out of your booking window and not have anyone still looking to stay in your market. 

Because vigilance is important, Perfect Price has built a simple and efficient way to automate dynamic minimum stays. You can easily set up very sophisticated policies–in just a few minutes–and then sleep well knowing that the AI is constantly checking and updating them.


By Alex Shartsis, co-founder & CEO of Perfect Price
Lower Prices Can Drive Results , Perfect Price is the leading provider of
AI-powered Dynamic Pricing for Vacation Rentals. Seamlessly integrated with Guesty, Perfect Price gives property managers enterprise-grade intelligence, transparency, and control over their pricing.

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