December 27, 2022
5 Ways Revenue Management in the Vacation Rental Industry Will Change in 2023
Revenue management is now a key aspect of vacation rental management success. It is common industry knowledge that flexible, dynamic pricing based on data can greatly increase occupancy rates and, therefore, your overall revenue.
Here’s a look at a few ways revenue management tactics will evolve in 2023.
Data Matters—So Do Experts Who Understand It
The vacation rental industry is practically drowning in data. This is great news—we love data! But data is only as useful as the people who can analyze it, interpret it, and then offer actionable takeaways. In 2023, it’ll become more and more important to partner with experts who can take your data and turn it into solutions for your business.
This is the year to invest in your revenue management strategy and work with an expert, whether you partner with a firm, bring a revenue expert onto your staff, or grow one of your current employees into the role
Adjust Your Pricing Strategy for a Potential Recession
The “r” word has been floating around for over a year now as industries across the board feel the continued effects of COVID-19. And with the unprecedented success of the vacation rental industry in 2021 and 2022, it can be hard to adjust for a potential economic downturn.
However, 2023 will not be like 2021 or 2022. Demand is starting to level off, and revenue per available night (RevPan) is beginning to stagnate. Keeping a close watch on market data trends and adjusting prices quickly and nimbly will be the key to success. Property managers who refuse to adjust their prices to account for the slowing market or who wait too long to make adjustments might struggle to meet their occupancy goals.
More Rules, Less Revenue
Being a stickler for pricing “rules” or “conditions” can cause real problems in vacation rental revenue management. That will be more true than ever in 2023. Keeping prices too high, relying too heavily on a competitor’s prices, or adding on other conditions like minimum and maximum stays will cause more problems. Better to stay quick on your feet and rely on your tools and your experts to help keep your properties booked.
Look Forward and Back With Caution
It’s been a long-standing practice to use one’s historic pricing data to help inform a strategy moving forward. And, more recently, revenue management tools and experts have started using forward-looking data as well, in order to project success or failure based on current prices and market conditions. But these data sets are becoming increasingly complicated to use. COVID-19 and the industry’s incredible comeback have inflated the last two years of data. Using that as a foundation for a 2023 strategy could mean prices are just too high. Allow your algorithm and experts to do their job so you set the best prices for the current moment.
Over-communicate With Homeowners
Thanks to the successes of 2021 and 2022, vacation rental homeowners may expect a repeat performance in 2023. It’s crucial to set homeowners’ expectations and to get them onboard with your strategy as soon as possible. Make sure you introduce your new revenue management firm or consultant, review any new tools you’re using, and walk through this year’s strategy in as much detail as the owner needs.
Looking to kickstart your revenue management goals now?
Reach out to a revenue management expert at Rented learn how you can earn more revenue for you and your homeowners.