Overview
I love longer length-of-stay (LOS) bookings. They save a ton of time communicating with prospective guests, guarantee a higher occupancy, and decrease wear and tear in your rental. Combined with dynamic pricing, LOS discounts should be a significant part of your revenue strategy. They are a valuable tool in acquiring longer LOS bookings when a full-priced rate may deter many guests. I use a tiered discount system to provide a better discount for longer stays.
Using a tiered discount system
Length-of-stay discounts apply to the length you choose or longer. The most extended discount will be applied if you offer multiple length-of-stay discounts. For example, I use the following discount scale at our Costa Rica rental.
- 1-6 Days: Full base rate
- 7-13 Days: 10% discount
- 14-20 Days: 15% discount
- 21-27 Days: 20% discount
- 28+ Days: 25% discount
While this is my general discount tier for Costa Rica, I often reduce the discount amount during peak rental months when demand is strong.
At our rentals in Santa Barbara, we are set up for nightly rentals with a full-time cleaning staff, have strong same-day demand, and don’t offer any length-of-stay discounts. Every market is different and your hosting goals will determine what method is right for you.
More time, less wear
It might not seem logical, but guests who stay longer actually decrease wear and tear and cause fewer damages. They usually treat your place more like their home and less like a hotel room. I’ve also noticed a higher probability of converting them into future repeat guests if it’s a place that they visit often. That’s a win-win situation. From my experience with longer LOS bookings, the most frequent issue is guests locking themselves out by accident. I recommend a backup plan like using a Master Lock Key Box to help take the stress off accidental lockouts.
Revenue example
In a market without high same-day demand, I’d always take a month’s stay from one guest with a 25% discount over juggling five guests with downtime between them. Let’s break down the numbers below.
Your base rate: $250
50% occupancy (15 nights, with 3 x 5-night bookings) at 100% base rate: $3750
100% Occupancy (30 nights, with 1 booking) at 25% discount: $5625
This is just a simple example but highlights the potential benefits of a long-term booking. Experiment with different discounts and try different discount percentages to find the sweet spot.
Recap
Every listing is different, but generally, longer lengths of stay help drive revenue and reduce the stress of short-term rentals. I love using LOS discounts to entice guests to stay a few extra days… or weeks!
