What is Average Length of Stay?
Defining Average Length of Stay
Average length of stay refers to the typical number of nights that each guest stays at a specific property. Average length of stay is an important metric for hoteliers when determining length of stay controls and protocols as well as when factoring differences in daily rate.
Average Length of Stay = Number of Days Spent in hotel / Number of Stay Occasions
Understanding Length of Stay Controls
For example, if a hotelier has one room left and a person today is willing to rent for 2 days at $100 per night, should the hotelier rent the room? What if there is a strong possibility that another guest comes tomorrow willing to stay 4 days at a rate of $150 per night? In order to make these difficult decisions, managers need to have an in-depth understanding of demand by rate category as well as the average length of stay.
Minimum Length of Stay
An example of a length of stay control could be a minimum length of stay. This is commonly seen in vacation rentals and Airbnb's that do not have fast enough housekeeping teams to support daily turnover. Minimum length of stay can be used by hotels when there is a period of high demand followed by a period of low demand. This could be a seasonal holiday, national conference or local festival. The risk of minimum length of stay is turning away customers that are only looking for one night. However, it could greatly increase revenue if used correctly.
Maximum Length of Stay
Another example of length of stay controls is maximum length of stay. Maximum length of stay is often used when hotels are offering heavily discounted promotions that precede higher demand dates. The discount is meant to bring in guests during the low demand nights, however the hotelier does not want these guests to stay during high demand nights at the same rate. To prevent this, the hotel can institute a maximum length of stay, unless the guest agrees to a change in rate.
Creating a Stay-Length Forecast
Managers use the average length of stay to create Stay-Length Forecasts that help make important demand side decisions. A Stay-Length Forecast takes into account days of the week, occupancy rates, number of arrivals, as well as the average length of stay for those arrivals. Using historical data to inform these projections allows for managers to better set rates and control demand. See the table below to set up your very own stay-lenth forecast.
