A property manager in Colorado recently got a new view into their market. Their 3 bedroom home was consistently booked and earned enough to cover its expenses – by most measures a success story! Yet when looking at the full picture, how successful? Like so many other property managers, they started to wonder “is my vacation rental listing underpriced?”
Let’s take a look.
The first glance: Is my vacation rental listing underpriced?
At first glance, the manager in question was doing everything right:
- They had dynamic pricing software to keep rates fresh and automate a complex portfolio full of unique homes.
- They had strong price variance between weekdays and weekends to maximize revenue around peak dates.
- They had high seasonal variance between peaks and off-peaks. In Colorado, the peaks are summer and winter for hiking and skiing, and the off-peaks are the rainy spring and fall.
- Finally, they capitalized on peak times like Spring Break and New Years Eve.
You can easily see it in their rate profile. High in July and August, low from October to the winter holidays. High through ski season, and dropping again for the summer.
The full picture: Is my vacation rental listing underpriced?
When we looked deep into the details, however, we found a different story. Here is the same view vs the market:
Despite achieving strong rates vs their compset over peak summer dates, we can see shoulder dates that are likely set too low.
Let’s take a closer look. Here is the Fall 2021 shoulder season. Notice how almost no other listing in the market receives a reservation below $150/night. There were times this listing dropped below $70/night.
Looking to the May 2022 shoulder season, we can see history about to repeat itself:
Now, we know from past performance that the listing can do well vs its compset, so there’s no reason to drop to the lowest rate in the market to attract a booking.
Let’s look at another listing nearby. This one also has a high seasonal variance, rate inflations for peak dates, and looks very similar to our first listing:
But when we look more closely at its rates vs the market, they never drop too far underneath their competition.
How much of a difference does this make? According to our projections, it could be as high as $25,000 over the course of a year.
How to fix your vacation rental pricing
This level of detail in the data is only available from Transparent. Reviewing averages and aggregation simply isn’t enough. Transparent’s down-to-the-listing granularity lets property managers know precisely how far to drop rates to ensure a booking without leaving money on the table. The full market breakdown for comp-sets referenced above is available in a Transparent dashboard.
So, with this visibility, what did I recommend to the first property manager to fix their shoulder season rates?
- Raise the ADR to $200 from April 1 to June 1. This is going to improve the perceived value of the room night to the Guest.
- Apply a 20% OTA-specific discount (e.g. Airbnb Opportunities). While still dropping rates to $160, strikethrough pricing preserves perceived value and boosts the listing in proactive direct advertising and OTA search rankings.
With these changes, the ADR for any reservation booked will be $160, almost double the current published rate. Plus, the increase in views from searches over the off-peak time have a positive impact on page rank for the listing today. If for some reason the listing doesn’t book as the booking window closes, the host can just drop an additional 5% to know for sure the reservation is the cheapest available.
If you are a property manager curious if you are leaving money on the table, search your listing at buoy.us.
(currently supporting searches for 4 bedroom homes and smaller in the US and Mexico)
There’s a Transparent data solution for everyone, from our free tool for individuals to our BI dashboard for high-growth property managers. Learn more about the right data solution to fuel your vacation rental revenue growth on our plans page, or by scheduling a demo: