In the hospitality industry, getting your pricing strategy right while avoiding being undercut by your competitors is a complex task that requires your constant attention. Furthermore, creating the right pricing strategy for your vacation rental management company can be quite difficult, given the wide range of internal and external factors that can affect any business that holds a seat in this industry.Since your company needs to stay proactive in order to maintain an optimal pricing model for the properties it manages, this article explains everything you need to know about getting your pricing strategy right, even under less-than-perfect market conditions.
Set a Base Rate for Each of Your Vacation Rentals
The first step in determining the right pricing strategy for your lodging management business is to set an optimum base price for every vacation rental you oversee. To determine the right base price, it’s important to consider all the factors related to each vacation rental, as follows:
- Operating costs – Calculating the operating cost per property is essential in order to avoid undercharging guests, which may result in lower profit margins. To find out the operating costs per property, you need to add up all the costs of running a vacation rental, including the owner commission, if any, cleaning and maintenance costs, insurance, utility bills, and any special supplies you provide, such as food, beverages and toiletries.
- Services and amenities – The more services and amenities a vacation rental provides, the higher its base price should be. As well, if a piece of property has been recently renovated, you should increase its base rate to reflect the extra cost.
- Location – If some of the properties you manage are located in a tourist destination where the vacation rental demand is higher, you can set a higher base rate.
- Reviews – Tourists are usually willing to pay more for a vacation rental that has multiple positive reviews. Thus, you can set a higher base price for those properties.
- Target audience – Your target audience is another essential consideration when adjusting your base rate. If you are trying to attract luxury guests, you can establish a higher base rate. On the other hand, if you’re trying to attract budget travelers, setting a modest rate would be a more realistic approach.
- Listing websites – A vacation rental that’s in the same price range as other comparable properties but offers more bang for the buck is more likely to be booked. To ensure that your nightly rates are competitive and attractive, you might need to tweak your base prices a little bit depending on the vacation rental listing sites you use.
- Market context – Considering the market context can help you determine the right base price for your properties without overpricing or underpricing them.
Choose a Vacation Rental Management System that Includes Seasonality Pricing and Dynamic Pricing Tools
A vacation rental management company needs to be dynamic in order to leverage its pricing strategy effectively. Luckily, our vacation rental management software solution offers advanced tools and integrations that can make your pricing strategy development process feel like a breeze.
One of the tools we provide is a built-in seasonality pricing tool, which can help you make sure that you won’t be leaving money on the table. Our seasonality pricing tool is a great addition to your tech stack especially if you manage vacation rentals that are located in any areas impacted by seasonality, in towns or cities that host different events that attract tourists during specific times, and/or in popular weekend getaway locations. This tool is included in our software, at no extra cost to you.
Our vacation rental management solution also provides third-party dynamic pricing functionality, which can adjust your rates daily or even several times during the day based on historical data, current competitors’ prices, new trends in the area, and real-time information. Unlike other tools available out there, which may focus solely on maximizing the value for the guest, the third-party dynamic pricing solutions you can access through our system focus on maximizing the value for your guests as well as your company’s profit. The pricing tools and features that we make available are key elements of our revenue management system.
When it comes to boosting your bookings and increasing your revenue and profit, the key to success is offering potential guests the right price at the right time. For this, your vacation rental management company will need to combine different pricing strategies based on a series of factors, which may range from revenue goals and target audience to competitor pricing and market trends, and then regularly review and adjust its strategies in order to achieve optimal results. Needless to say, all these tasks can only be executed efficiently with an advanced vacation rental management solution, like JANIIS. Do you want to learn more about our system? Let’s chat!