Price Your Vacation Rentals to Occupy Them
In a time when everything is unknown, inconsistent, and unprecedented, one thing your vacation rental management company can stay confident in is a solid pricing strategy. Having a team of revenue managers, the appropriate tools implemented, and a strategy to follow is the key to optimizing your pricing according to your demand. In this article we will talk about just that, the strategy behind your pricing, who manages that, and the tools needed to execute.
Dynamic Pricing in Vacation Rentals
There are many pricing strategies out there, but dynamic pricing is the one that is taking the vacation rental industry market by storm. According to our friends at Rentals United, dynamic pricing is a response to dynamic demand. Using dynamic pricing software to adjust your rates can significantly boost your revenue. Leading dynamic pricing providers claim that their data-driven solutions can increase revenue by as much as 40%. This may sound foreign to you, what they are saying is pricing your units accordingly, you can get in front of the right person in the right place, at the right time, with the right price. We can take it a step further, let’s talk about different ways dynamic pricing strategies work.
Slowest Week Day
Analyzing your days one by one is important for your vacation rental revenue management. Look at your numbers and determine which week day has the average lowest occupancy rate. Once you have determined that, this is an opportunity to lower your price, verify industry averages on that same night, and compare your current pricing. This could be the golden ticket to filling a few more units or maybe even all of them!
Pricing for Extended Stays
If your properties are located in “snowbird” territory where extended stays are more often, or if your business strategy targets more extended stays you can promote this by pricing accordingly. Looking at 15+ stays, you can grow those while increasing your revenue by providing a 10-15% discount. This allows you to capture additional extended stays because the guest feels valued and compelled to take advantage of this offer. With the offer being smaller, one additional guest easily makes up and adds more revenue than you previously had.
Minimum Night Stays
A problem we would all love to have is 100% occupancy. If you are in that boat, there is still room to increase your revenue and setting minimum night stays might be the answer to that. You might be wondering what a minimum night stay means? A minimum night stay is the lowest amount of nights a reservation can be made for requiring a longer stay cycle for your guests. If you currently have a one night minimum stay, you are running the risk of doubling or tripling your cleans in a week than they need to be, costing your vacation rental management company time, money, and resources. You can avoid this by simply adding a 2 or more minimum night stay.
Now that you have seen that dynamic pricing and many factors play a part in increasing your revenue and pricing according to demand is important and involves a lot of data, but who manages all that? We will discuss this in the next section.
Vacation Rental Revenue Management Experts
Depending on the size of your operation, there is a chance you have an inhouse revenue management team. This could include an executive in the position with others who analyze industry trends, understand the market you are in, and price accordingly. Having an inhouse revenue management team allows you to market that value to gain new owners and help retain current owners by providing internal support and showing valuable experience in the industry. Another option is having a partner in the revenue management industry such as BeyondPricing, PerfectPrice, PriceLabs, or WheelHouse. These industry professionals are all integrated with TRACK Hospitality Software. If you would like to learn more about each of them, please read this article here.
Revenue Management Tools in Your Vacation Rental PMS
Now that you know your strategy and the team to help make this happen. Let’s discuss ways that your vacation rental property management software can provide you with tools to enhance your operations when it comes to pricing.
Giving you the flexibility to price your units on multiple levels due to different conditions will allow you to configure your rates quickly and accurately. The ability to price your units within minutes gives your revenue management team the ability to make decisions on the fly according to factors such as amenities, room counts, location, and more. Making sure your vacation rental revenue management team is well versed and skilled in your property management software will be critical for efficiency.
Breaking it down even further, you can look into daily rates vs seasonal rate. Daily rates are when your pricing strategy allows for you to change your pricing structure on a daily basis. Depending on your strategy, you also might utilize seasonal pricing. This is pricing that is utilized for 2 or more weeks at a time with no fluctuation involved during that time period. If you would like to learn the differences between daily and seasonal pricing, please read this article that TRACK has provided on the blog for you.