Pricing your property correctly is one of the most important tasks to get right. Here are our recommendations based on our experience of working with thousands of vacation rental owners.
Do lower your price on a temporary basis
If your listing is new or perhaps not receiving as many bookings as you would like, it's a good idea to temporarily lower your price to encourage guests to book with you. It's hard to compete with established properties that already have social proof like reviews and good property scores to back them up.
Do your research
To encourage bookings, you can offer a lower price and an excellent experience to your guests. Start by researching similar properties in your area and see how much competitors charge. A simple bit of online listings research will help you check out the competition, and how much they’re charging. Just make sure you are benchmarking like for like in terms of property size, amenities, number of beds and so on.
Once you have a baseline price, set your price below market average to generate interest. Once you start to generate more bookings and social proof (reviews) you can slowly increase your price to attract better paying guests.
Do reduce your minimum nights stay
We also recommend offering 1-2 night minimum stays. Although these aren't as lucrative as multiple night stays, they will help to attract more guests as your property will be visible in many more searches - including weekends. We are also aware from our partnerships with Airbnb and Booking.com that 1 night stays will attract more views and potential stays at your property.
Do consider how much it costs you to run your vacation rental
In addition to mortgage repayments, you’ll also have other fixed costs, such as taxes and insurance to factor in. Then, there are additional costs that may fluctuate, such as phone/internet, ad hoc repairs and general upkeep, water rates, electricity and gas. Draw up a list of all of your expenses to ensure that the pricing you opt for comfortably covers these costs.
Do keep your pricing up to date for the year ahead
This one is a no-brainer. Having your pricing in place for the next 18 months - 2 years is absolutely vital. Lots of people book holidays and short breaks well in advance.
On average, we have found that owners who don’t update their pricing for the year ahead could miss out on around 15% of potential bookings.
Don't let this be you!
TravelNest Tip: Don’t end your calendar on the 31st of December. Christmas and New Year bookings are always in high demand, so show future pricing right up until the end of the summer season, two years from now. Also bear in mind that January is the most popular month of the year for bookings, so don’t leave it too late to get your pricing sorted.
Do increase your pricing at specific times of the year
As well as reviewing your pricing annually, we also recommend identifying key periods where you can increase pricing and boost your revenue. For example, if you have priced your property seasonally, and have lower pricing toward the end of the year, we recommend adding in a specific period of higher pricing to cover the festive period.
Other periods where you could consider boosting your pricing include:
School holidays (outside summer) half-term breaks e.g. February, October, Easter, etc
Bank holiday weekends
Local events e.g. sporting events, concerts/festivals
When considering your pricing for these periods, consider the impact on your business, particularly whether there will be any increased costs associated with running the property over the festive period e.g turnaround/cleaning costs, as well as the impact on your own celebrations
Do be as flexible as you can
Having stipulations such as a five-night minimum stay or Saturday-to-Saturday rentals can be quite restrictive for guests. So that your property shows up in more potential searches on channels, we recommend being as flexible as you can with minimum nights stay and check-in days. This has a direct and noticeable impact on booking volume. For example, could you open your property up to a larger audience looking for more flexibility, such as mid-week bookings for example?
TravelNest Tip: You may want to look at your minimum nights stay over festive periods and think about the impact on your time. For some owners, it is often better to extend the minimum nights stay to reduce the turnaround time, guest check-ins, cleaning, etc.
Don't upset potential customers by being anything but transparent
Don’t forget to factor in additional costs for services such as cleaning, parking and laundry. These can start to add up, so think about how they will affect your overall pricing. It’s likely that the majority of guests will want their payment to include these fees. People don’t appreciate being faced with additional charges, especially if they feel ‘hidden’. Roll them up into a total rate if you can. You don’t want to put off potential customers with lots of hidden extra costs.
TravelNest Tip: As booking channels handle additional costs slightly differently, it is a good idea to have an understanding of how each channel handles and displays your additional fees to guests, and specifically where in the booking process these are shown. Additionally, most channels apply booking fees, so ensure you are aware of these so you can adjust prices accordingly.
Don't overcomplicate things
Split your pricing into easy-to-follow blocks, such as high and low season, and notable holiday breaks such as Christmas, New Year and Easter. Offering short break packages, from one, two or three nights, at certain times of the year is another nice way to market to your audience, and can really help you get more bookings during those tricky off-season weeks. Just make sure you show the total cost to avoid confusion.