Dynamic Pricing and Minimum Length of Stay Controls as a Hotel Management Practice: Are There Customer Perception, Ethical, and Legal Questions?

Abstract

Length of stay controls and dynamic pricing are components of revenue management tools widely used in the lodging industry. Length of stay controls require guests to stay for a minimum number of nights, even if they might wish to stay for only one night. Dynamic pricing characterized by high room rates and length of stay controls are common when hotel demand is strong for a specific event, such as a college graduation, natural disasters and emergencies, New Year's Eve festivities, July 4 fireworks and concerts, or a major sporting event. While implemented to boost revenue, the combination of dynamic pricing and length of stay controls can raise ethical, legal, and fairness questions that can lead to adverse impacts on hotels. Dynamic pricing may be legal or illegal, depending on state law and the circumstances. Length of stay controls may also be legal or prohibited depending on the state. The authors suggest some alternatives that will allow hoteliers to comply with existing statutes and case law and navigate ethical, legal, and fairness questions.