Does the revenue management strategy for your vacation rental need a revamp? This is exactly the guide you need. Just follow our fundamental guidelines and find out what KPIs to track, how to make distribution and revenue management work together, how to talk to homeowners about revenue management and much more.
The most successful property management companies in the world are the ones that understand the delicate balance of setting prices, manipulating restrictions and making distribution and revenue management work together.
So where should you start?
- The most relevant revenue management KPIs.
- How distribution impacts revenue management.
- Do you need an in-house revenue manager?
- How to talk to homeowners about revenue.
- How to transform your strategy in 2022.
Without further ado, let’s explore some strategies
What is vacation rental revenue management?
The primary aim of a vacation rental revenue management strategy is:
- Selling the right product,
- to the right customer,
- at the right time,
- for the right price,
- on the right channel.
But don’t just take our word for it. John deRoulet is a revenue management expert and Director of Enterprise Sales at Wheelhouse. He says that revenue management is:
“Trying to balance your risk and reward by capturing the highest ADR (Average Daily Rate) while optimizing your occupancy to get to the best possible RevPAR (Revenue Per Available Rental)”
We will take a closer look at these metrics in a minute.
First, let’s clear up one thing: revenue management is not synonymous with dynamic pricing.
While most people who are just getting into revenue management will start with adjusting their prices and their minimum length-of-stay restrictions, a revenue manager is responsible for all aspects of the revenue side of the business. And that means you also have to take into account:
- Distribution. Revenue management and distribution should always go hand in hand. You can have the right price at the right time, but if your listings on sales channels aren’t effective, your properties won’t get booked.
- Operations. Revenue managers also need to be in tune with the operational side of the business. For example, you need to communicate with homeowners to understand their priorities, and inform them of revenue opportunities.
We’ll talk more about both of these later in this article.
What are the most important vacation rental revenue management metrics?
Revenue managers commonly track the following KPIs:
- ADR (Average Daily Rate): The average amount paid by a guest per night, during their stay. ADR is calculated by dividing the total revenue earned by the number of nights sold. Easy!
- Occupancy Rate: The percentage of nights occupied in a given period. It’s calculated by dividing the number of nights sold by the total number of nights in a given period.
- RevPAR (Revenue Per Available Rental): A compound metric that includes both revenue and occupancy. RevPAR is calculated by multiplying the ADR by the Occupancy Rate, or by dividing the total revenue earned by the number of nights in a given period.
The most important metric for evaluating a property’s performance is RevPAR.
It provides a clear picture of how well a property is doing and makes it easy to compare against other properties, regardless of size.
We can easily see that RevPAR can be broken down into its two components: ADR and occupancy. These three metrics are closely linked—changing one often affects the others. In many cases, there’s an inverse relationship between ADR and occupancy.
Focusing on ADR means pushing for the highest possible rates, especially during peak demand periods. While this can increase revenue per booking, it may lead to unsold rooms on less busy days, potentially lowering overall RevPAR. On the other hand, optimizing for occupancy ensures steady income by filling rooms consistently, but you might be underpricing some stays and missing out on additional revenue.
A strong strategy is to balance all three metrics – by optimizing for RevPAR.
Top-performing properties often do this by using a wide range of rates: low during off-peak times to boost occupancy and high during peak periods to maximise ADR. A flexible pricing strategy tailored to demand ensures that RevPAR is not only optimized, but remains sustainable across shifting market conditions.
Why distribution and revenue management are important for profitability in STR businesses
To maximize profitability in short-term rental operations, effective distribution and revenue management must go hand in hand.
Distribution is absolutely integral to revenue management. In fact, in smaller organizations, there’s often no distinction between a revenue manager and a distribution specialist—they are the same person.
That’s how significant the overlap is between the roles and the skill set required to fulfill them.
Distribution strategies and revenue optimization play a crucial role in maximizing profits by ensuring properties are effectively marketed and made available across various platforms.
The most obvious way in which distribution affects revenue management is the health of the property listings. We talk about this extensively in our ebook Reinventing Revenue Management, so let’s sum up the basics here.
A healthy listing is one that’s:
- Live and bookable on your sales channels.
- Displaying correctly (i.e. the front end matches the backend).
- Has the correct hero image, photos, description, amenities, etc.
- Has the correct pricing and availability.
- Has recent 5-star reviews.
If you can fulfill these key criteria, you will have a healthy listing, and have a much higher likelihood of a guest booking your property.
Recent, positive reviews are absolutely essential. We all know even a really well-reviewed property can be affected in the short-term, if you get hit with a couple of bad reviews at the wrong time.
That’s why it’s crucial to be aware of the health of your listing before you hit the booking window for your most in-demand dates. If you’re proactive about it, you can make sure that by the time guests start shopping for dates in your high season, your listing is being presented in the best possible light and guests are willing to pay the highest price for it.
On the other hand, if you’re not proactive about it, by the time you realize that something is wrong, it could already be too late and you could have lost months of revenue.
Staying on top of your listing health could be as simple as setting up a quarterly meeting to health-check all your properties. You could even do it once a year, for example, three months before high season.
Another option is to use a data analysis tool like Rentals United’s Elevate to streamline the health-checking process and stay in tune with your listing health all year round.
Discover Rentals United vacation rental data analytics tool: Elevate
We created Elevate to help you leverage rental data to get more bookings and boost your revenue.
This tool is all you need to pinpoint simple adjustments you can make to your listings to increase conversions.
What you can gain with Elevate:
- Leverage your own data to spot revenue growth opportunities.
- Stay ahead of the curve with our exclusive market trend insights.
- Improve your listings with personalized AI recommendations.
How important is an in-house revenue manager for vacation rental companies?
As we’ve seen, the roles of revenue manager and distribution specialist often overlap—especially in smaller teams where these responsibilities fall to the Founder or CEO. While this can work in the early stages, sustainable growth requires a more structured approach.
If hiring a full-time revenue manager isn’t feasible, it’s still possible to build a strong foundation using the right tools and insights.
How to build a Revenue Strategy for your vacation rental business
Start by tracking how your properties perform across seasons, pinpointing peak dates, and documenting your pricing logic. This makes future handovers easier and ensures your strategies are scalable.
This can work at first, but it’s important to plan for future growth. Be sure to document key revenue strategies and assumptions along the way, so that when the time comes to hire a dedicated revenue manager, they’ll have all the information and tools they need.
A good starting point is to create a clear picture of how the property performs throughout the year. This includes identifying peak months, high-demand dates, and noting trends observed in the market from both revenue and distribution perspectives.
These basic guidelines can go a long way. They allow future team members to understand the logic behind pricing decisions and begin connecting performance data back to your original strategy.
Alternatively, if you don’t have the resources for a dedicated person, there are revenue management systems you can use to take most of the work off your shoulders. These systems offer solutions tailored to your needs, allowing you to optimize your pricing strategies effectively, including options such as Fully Flexible and Non-Refundable rates to attract more bookings on platforms like Booking.com, or Expedia special discounts and promotions.
How to explain revenue management to homeowners (without sounding too technical)
AI automation is here. This relatively new technology is growing rapidly, and is really starting to find its voice. Modern tools now automate 70–80% of a revenue manager’s day-to-day tasks—freeing up time to focus on high-impact strategy, creative pricing, and long-term growth.
Look to AI for automation: Discover how to use new tools to your advantage—not as a replacement for human insight, but as an enabler of smarter, faster decision-making.
Of course, no matter how advanced these machines become, they’ll most likely never completely replace humans. Just look at the most developed revenue management industries, like airlines and hotels: they still use revenue managers.
When speaking with homeowners, the key is to explain the value, not the mechanics. It’s about showing that their income is being optimized, even when they’re not thinking about it. You can use these automated systems to “set it and forget it”, and they’ll do a good enough job. This means that the role of a revenue manager is subtly shifting towards a more optimization-oriented position, where the ability to implement new ideas effectively becomes important.
Of course, no matter how advanced these machines become, they’ll most likely never completely replace humans. Just look at the most developed revenue management industries, like airlines and hotels: they still use revenue managers.
How to approach vacation rental revenue management in 2025
In 2025, effective vacation rental revenue management hinges on leveraging a few key tools:
Automation: Streamlining tasks like pricing updates, calendar synchronization, and guest communications reduces manual workload and minimizes errors.
Dynamic pricing: Implementing dynamic pricing strategies allows for real-time rate adjustments based on market demand, local events, and booking patterns.
Utilize tools like Elevate: Rentals United’s Elevate platform provides actionable insights by analyzing historical booking data and market trends. This facilitates smarter pricing strategies and targeted marketing efforts.
In addition to these tools, it pays to plan ahead. Review what you think is going to happen for the upcoming seasons, at least on a quarterly basis, and build a contingency plan, allowing you to remain agile in responding to unexpected changes, maintaining steady occupancy and revenue streams.
Stay ahead of the curve: Let Rental United’s smart tools drive your revenue.