3 Uses for Derivative Rates in Your Property Management Software

Empowering managers to provide customized rates and fees can help increase your vacation rental management companies income drastically. This plays a part by allowing to offset the cost of commissions by channels, decrease rates for longer periods of stay, and create discounts to increase occupancy rates during slower times such as mid week. In this article we will go over these three use cases and how they can help capture more income for your VRMC.

Distribution Channels


Is your VRMC potentially losing money on distribution channels by not covering all the hidden fees and commissions in your listed price? This is a common mistake many VRMCs and Owners do not realize is happening. Being able to set derived rates to become the real rate is a huge value to help cover costs on distribution channels such as VRBO, Booking.com, and Airbnb. 

It is normal that vrmc’s are losing revenue on distribution channels due to how the fields are set up and syncing from the channel to the PMS. Most commonly, distribution channels will set up unit rates by using the base rate of the property then on a second adjustment field will add the commission percentage. This is causing issues of missed revenue on the reservation feed due to utilizing two fields. What’s the solution you might ask? Creating a derivative rate in your PMS. This will create one field that includes your base rate plus distribution channel commissions and fees in one synced location.

Having a derived rate only associated with each channel is important as all channels do not run the same with fees and commissions. Another value point your PMS can provide is by only pushing specified rates to appropriate channels. If you go in and increase a rate to VRBO, you do not want that rate to also push to your website. 

What about Price Consistency? Your PMS and Distribution Channels should be in a 2 way sync to only increase to your set daily rates. This is how your VRMC will not operate unethically with derived rates. 


Extended Stay Rates


One way to get repeat guests is to make them feel special by providing them a discount. Perhaps that discount is an appreciation thank you for an extended length of stay (LOS). Many VRMC’s will apply the 6 and 1 rule, meaning if the guests is staying 7 nights it will be buy 6 nights and get one free. This is a great opportunity to push this offer on your website only as a book direct campaign. Derived rates will give you the option to eliminate posting the same discount to booking channels and OTA’s. 

Setting up 2 different derived rates is a prime example shown below. You can set up one rate for length of stay from 6+ to 27 nights with a 20% discount, then apply a second LOS discount for 28+ days at 25% discount. 

LOS satisfaction and expectations will need to be set in your Property Management System to correctly work with your reservations. 


Package Rates


To gain the most return on your investment, you want to increase your occupancy rate on your slower nights. A lot of these times are mid-week stays. The ultimate goal to fill these properties is to provide a special rate to entice the guests to come during off season, shoulders, or mid-week. A seamless way to do so is to set up a mid-week stay derivative rate. 

In the hospitality industry, Sunday nights are considered weeknights, you will want to close to arrival on Friday and Saturday, as well as close departures on Saturday and Sunday. This will allow your guests to check in and out on lower occupancy nights at a discounted rate. You will also want to make sure to set your minimum and maximum length of stay, as you are wanting to get your ROI by keeping the guest 3+ nights. 

Here is an image of how you will want to set up your Package Rates for Mid Week stay in TRACK PMS. 


If you are currently a TRACK client and want to learn more about this, please visit our feature release article here. If you are a non client and would like to learn more please reach out at learnmore@tnsinc.com.

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