How Much Buffer (Discount Margin) Should I Leave on My Rates for Last-Minute Bookings?

The fundamental reason for last-minute discounting is the concept of expiring inventory. Unlike a retail product that can sit on a shelf until it sells, a vacant Tuesday night in a beach house has a value of zero once Wednesday morning arrives. Revenue managers must act before that expiration occurs.

By offering a discount, you are effectively "buying" occupancy that would otherwise be lost. As the booking window closes, the pool of potential guests shifts from "planners" (who prioritize specific amenities) to "value-seekers" (who prioritize price and location). A well-timed discount speaks directly to this secondary audience.

While every market differs, industry leaders like Wheelhouse provide established benchmarks through their default settings. A common standard is a tiered approach: no discount until 14 days out, a 10–15% discount at the 7-day mark, and a 25–30% discount for bookings made within 48 to 72 hours of arrival.

These margins are not arbitrary. They are based on historical booking curves which show that demand for "transient" or spontaneous travel spikes in the final week. However, the discount should rarely exceed 35%. Beyond that point, you risk attracting guests who may not respect the property or who could trigger a "race to the bottom" with your competitors.

Many note that booking windows are compressing across the United States. In 2024 and 2025, there has been a noticeable shift where guests who previously booked 180 days out are now booking in the 30- to 90-day range. This means the "last minute" is actually getting longer.

Because more travelers are waiting to book, you may not need to be as aggressive with your discounts too early. If your market is seeing a surge in 14-day lead times, a 30% discount at 14 days is premature. You should monitor your "pacing" (how fast you are booking compared to the market) and only apply the heaviest buffers when your occupancy lags behind the local average.

A flat discount is a "step" function (e.g., 20% off if booked within 5 days). A gradual decay model slowly reduces the price by a small percentage every day as the check-in date nears.

The gradual model is often more effective because it avoids "price cliffs" that can lead to guest frustration or gaming of the system. It allows your property to remain competitive at every single point in time. If a guest sees a $200 rate on Monday and a $120 rate on Tuesday, they may feel they overpaid; a slow drift from $200 to $190 to $180 is less jarring and helps you capture the highest possible price the market is willing to pay at any given moment.

The biggest mistake a revenue manager can make is leaving automated discounts on during a major event. If the Super Bowl or a massive music festival is in town, you do not want your software to drop your rates by 30% just because you have one night left. Demand during these windows is inelastic; someone will pay full price (or a premium) even at the last minute.

You should "black out" these dates from your discounting rules. High-demand dates should actually carry a "Far Future Premium" and maintain that premium until the very end. If you have a vacancy for a major holiday 48 hours out, it is often better to lower your rate back to the "Standard" price rather than a discounted one.

Every property has a "floor"—the price below which it is no longer profitable to host a guest. This calculation must include variable costs: cleaning fees (if not fully covered by the guest), utility spikes, wear and tear, and your own management time.

If your "break-even" is $150 and your last-minute discount algorithm wants to push the rate to $120 to get the booking, you are essentially paying $30 for someone to stay in your house. In these cases, it is better to leave the property vacant. This "risk tolerance" varies by owner, but a clear price floor prevents your revenue management strategy from turning into a loss-making enterprise.

Price is only one lever; stay length is the other. Many revenue managers find that last-minute travelers are not looking for a week-long stay; they are looking for a Friday–Sunday "quick hit." If you have a 4-night minimum stay set, a 30% discount is useless to a guest only searching for 2 nights.

As you move into the 7-to-10-day window, you should consider "relaxing" your minimum stay requirements. Shortening your minimum to 1 or 2 nights—while keeping a slightly higher "cleaning fee" to protect your margin—is often more effective at filling a gap than a deep price discount alone.

"Orphan nights" are the small gaps between two existing bookings (e.g., a Tuesday and Wednesday that are unbooked while the preceding and following weekends are full). These are notoriously difficult to sell because they lack the "weekend" appeal.

Strategic revenue managers use targeted "Orphan Night" discounts that are even more aggressive than standard last-minute rules. You might offer a 40% discount specifically for a 2-night gap that occurs within the next 10 days. Since those nights are almost certain to go unbooked otherwise, any revenue captured—even at a deep discount—contributes directly to your bottom line with minimal additional overhead.