The future is hybrid: Navigating the ‘length of stay’ challenge in STRs

The short-term rental (STR) and vacation rental industry thrives on flexibility—meeting the diverse needs of guests while optimizing revenue for property managers. Length of stay (LOS) pricing is a good example of this rule. Smartly applied, it can be one of the strongest tools in revenue managers’ kit to maximize revenue opportunities while also promoting operational optimization and customer satisfaction.

As a product manager with a focus on revenue strategies optimization, I see LOS not as a problem to solve but as an opportunity to innovate. The future lies in a hybrid LOS approach—one that leverages the strengths of property management software with advanced machine learning capabilities and data processing, in collaboration with booking channels, to enable property managers to optimize revenue without sacrificing marketing benefits or operational efficiency.

The challenge of LOS pricing

Simply put, LOS pricing is the practice of tailoring rates to the length of a guest’s stay. Property managers have various reasons to monitor and encourage specific LOS as they build towards the Holy Grail: a fully booked calendar. We all understand that longer stays are operationally and financially beneficial, but it takes experience and practice to calculate just how significant the financial impact can be. LOS impacts three critical areas:

1. Revenue optimization: Adjusting rates to maximize profitability across different LOS scenarios
2. Operational costs: Balancing shorter stays, which require frequent turnovers, with longer stays, which reduce calendar gaps but may lower nightly rate
3. Guest satisfaction: Offering flexible stay lengths while maintaining competitive pricing

The complexity arises in the technical implementation of LOS pricing, as property managers often face a trade-off between flexibility, system performance and marketing value. These trade-offs are shaped by the two primary methods of LOS pricing:

Option A: The ‘classic’ LOS-based pricing

This method defines a pricing table for every combination of LOS and booking dates. For example:

Two-night stay = $X

Five-night stay = $Y

The advantages of this method include: 

• Maximum flexibility: Property managers can implement specific pricing rules, such as charging the same rate for five nights as for seven nights.
• Support for complex use cases: Revenue managers can adjust rates for short stays to account for higher operational costs or set revenue parity across different LOS.

The disadvantages are equally significant:

• Performance challenges: Managing and pushing vast data sets to booking channels is a performance challenge for some property management solutions and online travel agencies (OTAs), which could lead to a higher probability for rate discrepancies and double bookings.
• Loss of marketing benefits: This method does not leverage channel-specific perks like strike-through pricing or higher rankings, unlike rate plans and promotions, which I’ll discuss next.

Option B: Rate plans and promotions

This method allows property managers to apply discounts to nightly rates based on LOS. For instance, a revenue manager could offer:

• A 10% discount for seven-night stays
• A 15% discount for 14-night stays

The advantages of this approach are significant:

• Marketing value: Booking channels highlight discounts with features like strike-through pricing and higher search rankings, increasing guest conversion rates.
• Ease of implementation: This method requires less data to push to channels, ensuring smoother system performance.

However, the disadvantages include:

• Limited flexibility: It cannot support nuanced rules like setting the same price for five nights as for seven nights or increasing rates for short stays.

The future is hybrid

The limitations of both methods reveal the need for a hybrid approach—one that combines the strengths of rate plans and promotions with the flexibility of direct LOS-based pricing. This vision is not only achievable but essential for the future of revenue optimization in the STR industry.

In a hybrid LOS model:

• Rate plans and promotions: Property managers use these to provide discounts for longer stays, leveraging the marketing value of higher rankings and strike-through pricing on booking channels.
• Custom LOS rules: Managers can set specific pricing rules in parallel to rate plans. For example:
  • Price a five-night stay the same as a weekly rate.
  • Increase the price by 50% for two-night stays to offset operational costs.

This dual approach ensures:

• Flexibility: Managers can tailor pricing to unique operational and revenue goals.
• Marketing value: Discounts and promotions still boost visibility and conversions.
• System efficiency: By balancing data requirements, the hybrid model avoids overloading systems while maintaining performance.

I believe the future of LOS lies in empowering property managers to set rules that reflect their unique business needs—not just through discounts but also through nuanced pricing strategies. This vision requires technology that is both sophisticated and user-friendly, enabling managers to strike the perfect balance between flexibility, performance, and profitability.

The role of technology and collaboration

While most property management software (PMS) can support this model for their direct booking independently, achieving this hybrid approach for all your booking sources requires collaboration between PMS providers and the OTAs. Both play a crucial role in enabling seamless integration and implementation of LOS strategies.

Advanced PMS should provide tools that allow:

• Dynamic rate management: Combining nightly rates, promotions and LOS rules in a unified interface
• Custom rule creation: Enabling managers to set nuanced LOS rules such as pricing parity for specific stay lengths or premium pricing for shorter stays
• Efficient data integration: Automating the push of both rate plans and LOS rules to channels without overloading systems

Booking channels like Airbnb and Booking.com should support:

• Hybrid pricing models: Allowing property managers to combine rate plans and promotions with custom LOS rule
• Marketing flexibility: Continuing to highlight discounts while respecting custom pricing rules

Final thoughts

Navigating the challenge of length of stay is about more than solving technical hurdles—it’s about reimagining the way we approach pricing in the STR industry. By embracing a hybrid model supported by both PMS and booking channels, property managers can unlock new levels of revenue optimization and guest satisfaction.

The future of LOS pricing is flexible, efficient and collaborative. It’s a future where property managers can set the rules—not just for discounts but for every stay length scenario—without compromise. To make this vision a reality, the industry must remain committed to providing the technology and transparency that equip our users with the tools and insights they need to thrive in an ever-evolving market.

The future is hybrid, and the opportunities are endless.

About the author...
Shay Many is the senior director of product management at Guesty.