Vacation Rental Pricing
One of the most challenging tasks of listing a vacation rental is pricing it. It is important to ensure the right balance between offering guests a decent value, having competitive prices and optimizing revenue.
▶ How to adjust your vacation rental pricing?
There are important external factors to consider when pricing your vacation rental property: competition, seasons, events.
Competition
Vacation rentals require market research. When determining the best price for your vacation rental property, it is important to research properties with similar amenities and in a similar location.
- Location is key for a number of visitors. For example, listings in a certain neighbourhood or close to specific landmarks often alter a visitor’s choice. By comparing the prices of listings within a certain zip code, you will be able to get a grasp on how much your daily rate should be.
- The number of bedrooms should also be taken into account. Additionally, it is also important to look into the overall capacity of a property, not just the number of bedrooms, in order to compare prices by the number of guests the vacation rental can host.
Seasonal demand
Understanding the seasonality of your market is incredibly important as the demand of visitors varies throughout the year. Some seasonal factors that affect vacation rental pricing are:
- Weather often plays a key role in a visitor’s choice of location when they travel.
- Type of travel. Different markets also have different trends throughout the week. For example, many leisure locations have an increase in demand on weekends. Whereas, in urban locations, where the target audience is often business travelers, weekdays throughout some months of the year are popular.
- Vacation periods in source markets. Sometimes demand is affected by the vacation periods of the countries your travelers come from. Although it’s complicated to follow every market’s vacation period, this increased demand would usually reflect a surge in prices.
Events
Throughout the year, month and, even, week, there will be a fluctuating demand for your property. During large events, the demand for vacation rentals will increase, giving you the opportunity to maximize your revenue.
Your prices should be adjusted accordingly. It is necessary to forecast possible demand and take advantage of increased prices of vacation rental listings on a local scale.
There are two main steps. Firstly, identify key dates in the calendar year and then, ensure that you take into account the dates leading up to and following the event 'see the AB Apartment Barcelona revenue management strategy'.
▶ Why is it important to have a vacation rental pricing strategy?
According to the 2018 European Vacation Rental Survey, 20% of Property Managers update their prices only once a year, 11% only once every quarter and 17% only once a month. This means that nearly half of the Property Managers in a given market are pricing their listings incorrectly.
When Property Managers set their listings’ prices too far in advance, they are likely to price their listings way too high in comparison with the average market rate or too low and consecutively miss market opportunities for higher pricing.
The best Property Managers update their listings pricing weekly (32% of all PMs interviewed) or even daily (20% of PMs interviewed). By keeping a constant eye on the prices of their competitors and the immediate market they are competing with, these PMs are able to detect opportunities for higher pricing when demand is high and supply is low (like around big events) or lower their prices and still get a sale when demand is low and supply is high.
How can Transparent help you??
Constantly checking all your competitors becomes tiresome and time-consuming. If you don’t do this, you risk leaving money on the table. Transparent’s Dashboards allow you to monitor your competition to ensure that you are optimizing your rates and staying up to date with market trends. It gives you all the data you need in one place, so that you can focus on what really matters.
