1. Segment your Guests
Guest Segmentation is the pillar to vacation rental revenue management. Identify your guests through these questions:
- Who are they?
- How do they book?
- When do they book and when do they stay?
- What’s the reason they travel (business /holiday/other)?
- How long do they stay?
Try geographical and demographic segmentation. The responses to these questions will help you group your clients before deciding on your rates, minimum stays and seasons. Furthermore, you will better understand your guests’ needs and expectations, and potentially tailor unique offerings to stand out from your competition.
2. Gather & Analyze Data
Anticipating future demand and forecasting trends is another essential. You should gather data from your market, and a good place to start is looking at publicly available info and statistics from local and international tourism boards. Moreover advanced tools can come to your aid. Innovative data intelligence companies like AirDNA and Transparent provide market insights, historical data and benchmarking tools, so you can forecast low and high demand and apply pricing accordingly. Don’t forget to regularly check industry news and research papers! It’s also essential to store your own data to analyze and anticipate future booking behavior.
3. Diversity Distribution
Advertise your vacation rentals on a varied selection of listing sites. Depending on your Guest Segmentation, you can get listed on OTAs, niche sites that bring bookings to your region or global metasearches and wholesalers. Determine costs, profit margins and commissions for each site. Don’t forget to fully optimize content to rank high and appear in filtered results, but most importantly using a Channel Manager is crucial to automate and broaden your market reach.
4. Boost Direct Bookings
Direct Bookings have higher profit margins. You can take various actions to boost them: from creating special offers on your website, to investing in online paid ads or social media competitions. How about creating loyalty programs for returning guests or discounts for referrals?
5. Dynamic Pricing Software
Dynamic Pricing providers use AI technology to analyze your market in real-time and give the best price recommendation to stay competitive! Such advanced software companies specializing in vacation rental revenue management include PriceLabs, Outswitch and Beyond Pricing. Vacation rental sites too, like Homeaway and Airbnb, offer pricing recommendation when you get listed so you are aware of your market average nightly rate.
6. Try Advanced Rates
Set year-round pricing, specify seasons, including important local events that can potentially increase demand. Additionally try applying advanced pricing, like Length of Stay: rate type that allows discounts for longer stays while you receive your sought revenue. You can alternate discounts with non-refundable rates, offer refundable rates for specific seasons or apply specific pricing only for the Weekend. Another option is using Changeover Days that permit checkins and/or checkouts only on specific days of the week.
7. Keep up with the Competition
It’s very common for vacation rental rates to fluctuate. More often then you think, making a search days apart will show different pricing for the same properties. To keep your vacation rental pricing competitive, it’s important to monitor how your competition is behaving, especially during seasons with low demand.