Are you frustrated with your vacation rental property management revenue management strategy? Are you interested in increasing the maximum revenue potential from each of the properties in your portfolio? If so, then read on to learn more about dynamic pricing strategies that vacation rental property managers can use to increase revenue. We’ll explore strategies for increasing your vacation rental prices and finding the perfect balance of occupancy and profitability!
What is Dynamic Pricing Anyway?
Dynamic Pricing is a mathematical algorithm that takes real-time inventory data to raise and lower the rental rates of your vacation rental. Dynamic pricing aims to solve issues like under/overbooking, by adjusting prices based on supply and demand in order to transfer you get more bookings for when there are low numbers available. It also helps protect against spikes in demand during peak seasons, so if people want it bad enough they will pay what’s needed (supply and demand!).
The first step is setting the right price. You want to find a balance between maximizing occupancy and minimizing vacancy rates. This means charging too much will result in fewer bookings while not charging enough could lead to poor performance and low occupancy rates.
Then, by adjusting rental rates often, you can take full advantage of the benefits that short-term rentals offer. For example, if demand decreases and vacationers are scarce in your area during a certain time period; lowering prices will help keep those properties occupied while waiting for another surge of tourism to come through. You may also want to lower prices when there is a special event or holiday.
Using data to understand the supply and demand in your market is critical to make a transition from static to dynamic rates. This can be incredibly difficult to accurately measure without the aid of pricing tools and would be too time-consuming to self-manage.
What is the key to Revenue Management Success?
The key to a great revenue management strategy is applying the concepts of yield management. It ensures that all your properties are maximizing occupancy both in and out of peak season. Yield management is a strategy that maximizes profit by understanding, anticipating, and influencing your customer’s behavior. The process of yield management involves controlling inventory to sell the right product at the right time for the right price which can result in different prices based on similar properties.
Combining yield management with dynamic pricing is the leading strategy that vacation rental managers implement that leads to a successful and holistic revenue management strategy.
How to Get Started with Dynamic Pricing for Vacation Rental Management
Many property managers set weekly or monthly rental rates well in advance but it’s important not to overlook one major benefit: being able to adjust these dynamic pricing options according to what works best for the property at any given point and time. And when you have real-time market data to inform these decisions, you will produce results that your homeowners will appreciate, increasing your lifetime customer value.
The vacation rental market is a competitive one. It’s important to leverage all the tools available in order to stay ahead of your competition and generate more revenue from each property you manage. Dynamic pricing can be done with Art, Rented’s dynamic pricing tool, which allows managers to set rates for their rentals based on factors such as seasonality, occupancy levels and, demand trends across different geo-locations. You don’t have to take our word for it though; sign up for a demo where we’ll show you how this works!