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.
There are important external factors to consider when pricing your vacation rental property: competition, seasons, events.
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.
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:
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 Eloi’s, AB Apartment Barcelona, revenue management 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.
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.