July 2, 2021
How to Talk to Homeowners About Pricing Strategy
Vacation rental homeowners come to vacation rental property managers like you for expertise in the industry. By outsourcing the management of property maintenance, listings, and revenue, homeowners can get the most out of their investment without all of the hassles.
But for most vacation rental homeowners, investing in a vacation property is just that: an investment. Which means they want to see a net positive return. However, when your homeowners don’t understand your vacation rental pricing strategy, their restrictions can get in the way. Here’s how to effectively communicate with your owners about your vacation rental revenue management strategy.
Establish Clear Goals |Both Long and Short Term
Vacation rental homeowners can easily become focused on the average daily rate (ADR) as the most important indicator of revenue for their property. But no matter how high or low a daily rate is, an unbooked day earns nothing.
Coach them on the importance of long-term, non-revenue performance goals, such as occupancy rates, and how that can inform your vacation rental pricing strategy and, with time, make more money than a high nightly rate.
Explain How Peak Days Work
Walk your homeowners through your vacation rental pricing strategy to reflect peak days in your specific area. It’s important to help your homeowners understand that not every day of the week is worth the same amount. Vacation rental properties are unique, and their value is dependent on multiple factors including location, amenities, and times of the year. A weekend in a downtown Seattle property may not make as much money as a weekend in a beach property in Galveston, and weekends with holidays in them are a whole other beast. Using dynamic pricing to accommodate for consumer demand and time of year can make all the difference in net positive revenue gain.
Have a Talk About Restrictive Practices
Vacation rental homeowners may assume that setting certain restrictions, like minimum stays or minimum rates, will keep the return on investment high. But in fact, these restrictive practices can seriously backfire.
Setting overly restrictive minimum stays can decrease demand for the rental, which makes it harder to charge a premium price. And while minimum rates by themselves aren’t bad, they aren’t always reasonable depending on the time of year. A rental priced too high during the off-season may find it difficult to bounce back during peak season. Having a flexible vacation rental pricing strategy and using minimum stay requirements carefully can make a huge difference.
Similarly, homeowners may feel pressure to set high fees in order to maintain their property. But high fees can be just as much of a turn-off as unreasonable rates or min stays. Guiding homeowners through an evaluation of their property and what it needs can help assuage their anxieties about covering the costs of potential damage or regular maintenance.
Come Prepared With Success Stories
The best way to sell an idea is to back it up with hard evidence and a success story, and the same goes for vacation rental property homeowners. Give potential homeowners examples of other owners you work with who have benefited from a successful dynamic pricing strategy.
Use a Revenue Tool to Help Inform Your Strategy
Leaning on a revenue management tool like Rented’s Automated Rate Tool (ART) can help inform your vacation rental pricing strategy with recommended nightly rates and informed adjustments across all your booking channels. And when you work with Rented’s team of revenue management experts, they can give you the background knowledge to help owners understand why prices are set a certain way.
With a little upfront communication, you can help your homeowners understand just how beneficial a dynamic vacation rental pricing strategy can be.
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