You know that your vacation rental pricing strategy must be dynamic to capture bookings and earn maximum profit on your rentals.
However, it’s no longer enough to set your prices on historical data. As we’ve seen in recent years, the world, and the travel industry, can be turned upside down overnight.
It’s time to upgrade your pricing strategy, and make sure you’re doing everything you can to charge the optimum price for every night you sell.
To help you out, we’ve spoken to four property managers – Evolve, Veeve, Pass the Keys and Sweet Inn, three of whom represent companies ranked among the world’s top 50 property managers.
They’ve given us their best tips on what makes a great pricing strategy, including:
- Syncing up revenue management and distribution.
- Using real-time data and local market expertise to set prices.
- Investing in an advanced dynamic pricing tool that integrates with your channel manager.
Rentals United is not just a channel manager, but a partner to help you achieve your goals. See how we can help you improve your short-term rental business with a combination of market data, booking performance metrics and a diverse mix of sales channels.
Book a demo now
.
5 ways to instantly upgrade your vacation rental pricing strategy according to top property managers
1. Create harmony between revenue management and distribution
With an effective vacation rental distribution strategy, guests can find and book your rental on a diverse selection of channels. Instead of relying on a handful of large OTAs, you advertise your properties on niche and alternative booking sites, and get bookings from your website as well.
Vacation rental revenue management is how you balance risk and reward to capture the highest ADR, optimise for occupancy and earn the maximum revenue possible for every available room. It encompasses your pricing strategy and restrictions like minimum stays.
With revenue management and distribution working in harmony, you’re able to hit the sweet spot of high occupancy and maximum profit.
Benjamin Fedida, Head of Pricing Analysis at Sweet Inn says the company expanded their distribution to include more channels, and started a more aggressive campaign of promotion on sales channels with Rentals United.
“ We increased our promotion and increased our prices,” he said.
With RU you can manage listings across a huge variety of sites from large to small, including your direct booking site. You’ll have access to a wealth of data through our Data Studio tool to manage revenue, study your metrics and make sure you set the correct prices and restrictions throughout the year.
2. Understand local market trends and demand
By combining high-quality data with your own experience, you can become an expert in your local market. You’ll spot trends and changes in the market that will impact booking volume and prices, and be able to implement an accurate dynamic pricing strategy.
With intimate knowledge of your location, you’ll know what’s coming and can plan ahead to prepare for both local and worldwide events impacting your properties.
Cameron Felton, Director of Revenue Management at Evolve recommends hiring market experts to help you.
“ Hiring a team of market-specific revenue experts that fully understand the dynamics of both market and demand behaviour. Having this, plus data insights and a dynamic pricing solution that allows that team to both build pricing strategy and then quickly react as markets change, have allowed us to ensure all listings are yielding the most revenue available in the market at any given time!” he said.
It’s important to remember that you can no longer rely just on historical data. Instead, you need a dynamic pricing tool that gives real-time data insights, taking into account current events to predict upcoming trends.
As Germaine Mason, Head of Business Operations at Pass the Keys pointed out:
“ Market data platforms have evolved substantially over the last few years, and specifically since the pandemic, understanding local market trends for upcoming booking data as opposed to historic data has become more relevant and appropriate when strategising and implementing pricing policies.”
She goes on to explain that at Pass the Keys, the team shares predicted market trends with all their hosts, to help manage revenue expectations. With a higher level of transparency, they can build more trusting professional relationships.
To make accurate predictions you need an advanced dynamic pricing tool. According to Emma Seigel, Distributions Manager at Veeve, their team uses Wheelhouse.
“The implementation of Wheelhouse software allows for dynamic pricing on a nightly basis and brings in multiple data points to help maximise rates and revenue,” she said.
3. Be reactive with your pricing
Setting your prices is not a one-time task. For a successful vacation rental pricing strategy, you must constantly evaluate to ensure your pricing is right.
During the pandemic, we all saw how the world can change overnight. Property managers have to quickly react to local events, world events and market fluctuations to ensure they’re always charging the right price.
Dynamic pricing tools can help you do this easily without having to be constantly studying the market and prices.
Before they implemented Wheelhouse’s dynamic pricing software, Emma Seigel says that Veeve made the mistake of “Not being able to be fully reactive with pricing, especially following Covid, with the market conditions changing so much in such as short space of time.”
Other property managers echo this sentiment.
“Efficient pricing strategy and implementation are key to success,” says Germaine Mason of Pass the Keys, and she acknowledges this can be time-consuming and difficult without a dynamic pricing tool.
Fortunately, dynamic pricing tools like Wheelhouse, PriceLabs and Beyond all integrate with Rentals United, ensuring that the prices you set are automatically and instantly updated across all channels. This way, you’ll always be selling your properties at the right price, no matter what market conditions your find yourself in.
Use Dynamic Pricing Tools for optimal rates.
3 major vacation rental pricing strategy mistakes to avoid
Pricing strategy can be tricky, but it gets easier when you avoid certain mistakes.
So what are the major “don’ts” when it comes to pricing? Our experts weigh in with the biggest mistakes to avoid.
1. Don’t forget to plan in advance
We’ve all done it – you’re so wrapped up in the day-to-day of your business, you neglect to plan ahead.
This is especially true when things are going great, but Germaine Mason stresses the importance of planning ahead for a rainy day and completing reviews on a regular basis.
“The biggest mistake would be to underestimate the requirement to plan in advance (including local events and seasonal trends) and complete reactive reviews consistently, we know our industry does not sit still, markets and climate are ever-changing,” she said.
“Ensure there is planned time for these processes and don’t become complacent, even when it seems to be going just right!” she added.
2. Don’t just “set it and forget it”
There’s no such thing as fixed prices in vacation rentals. You can’t run a profitable business if you charge the same rates all year round, or even if you have set prices for different months, seasons or days of the week.
Things change so rapidly, and your price needs to be constantly evolving to adapt to tiny fluctuations in the market.
Cameron Felton says Evolve rental biggest mistake was building a fixed “set it and forget it” pricing structure.
“As the vacation rental industry continues to grow and quickly advances in its approach, dynamic pricing is becoming more and more critical to ensuring a profitable business,” he explained.
3. Don’t forget to set a minimum price
Minimum prices are your safeguard against losing money on a rental. As a property manager, you know the minimum nightly rate you need to charge in order to make a profit on your rental after man-hours and costs are factored in.
Benjamin Fedida of Sweet Inn advises: “Don’t forget to put a minimum price to ensure rates don’t drop too low in case someone makes a mistake when they update prices.”
It’s also essential to have a minimum rate set up for each property to make sure your pricing tool doesn’t drop prices below what’s profitable.
Adjust prices with Revenue Management.
Increase your profits with a dynamic vacation rental pricing strategy
Incorporate Short Term Rental Pricing Hacks.
Pricing makes a huge difference in the profitability of your business. Successful vacation rental property managers know that setting the right price, balancing demand and profit is the key to making as much money as possible from each unit.
It’s a balancing act that requires constant fine-tuning – not a one-and-done job.
Pricing might not be easy, but it’s much easier and less stressful when you have a dynamic pricing tool to automate the process for you and use all available market data to make sure your prices adapt to changes throughout the year.
Sync pricing with Airbnb’s Pricing Strategy.
With Rentals United, you can integrate a dynamic pricing strategy across all your channels. Not only that – with our Data Studio you can access deep insights into your property performance that can help guide your pricing strategy and measure the impact of any changes you make.
Rentals United is not just a channel manager, but a partner to help you achieve your goals. See how we can help you improve your short-term rental business with a combination of market data, booking performance metrics and a diverse mix of sales channels.
Book a demo now
.
