Introduction
In order to optimise your results in the short-term rental market, you have to get your pricing right. It goes without saying that if your rate is too high, your occupancy will suffer and if you price it too low, you’re wastefully leaving money on the table.
Getting your rates right is not a ‘set and forget’ effort either. It takes constant reviewing and tweaking to ensure you remain competitive in the market.
Speaking of the market – this is a great place to start when it comes to determining your rates.
Step 1: Market Research
The best thing to do is to start by searching for similar accommodation in your locale on Airbnb (and similar dominating platforms), and see what other properties like yours are renting for. Browse through at least 15 to 20 listings. Have a look at the photos and read the reviews of the highest rated properties. Assess how your property compares in value before you think about setting your price.
Remember to search different dates (ie. school holidays, Easter, Christmas, New Year, etc.) so that you get an idea of the price range that similar properties are currently renting for across the different seasons.
Step 2: Keep Your Emotions Out Of It
Now what’s really important to note is that most homeowners are emotionally attached to their homes and have a strong bias as to why their property might be better than another property.
When determining your rates, you need to keep emotion out of it, and here is why:
Step 3: Focus On Adding Value
If you’re just starting out, your property will have no social proof just yet (i.e. no reviews). What this means is that guests will be more hesitant to book your property over another similar property with lots of reviews.
So, it’s essential when starting out to focus on value before price to drive bookings and generate a few initial outstanding reviews. This will build the credibility of your property and catapult it to the top of the search results.
Step 4: Gain Glowing Reviews
We recommend coming in 20%-25% below the market for the first 3 months to give people a really good reason to take a chance on your listing, versus someone else’s.
Remember that your price per night also sets an expectation in your guests mind before they arrive. By initially pricing your property lower than other similar properties, it gives you a greater opportunity to exceed your guests’ expectations and have them write a raving review of your property. It also allows you to iron out any process issues and get feedback from your guests on how to improve the experience. When people feel like they’ve received great value, they will often overlook minor issues and may still provide you with a glowing 5-star review while providing you with private feedback on how to improve the overall experience.
Step 5: Consider Dynamic Pricing To Optimise Your Overall Income
Only once you’ve received at least five 5-star reviews, can you then look to start increasing your rates to be more in line with similar listings. Once you’re at this point, it may be a good idea to consider dynamic pricing in order to ensure that your rates are adjusting down automatically for periods of low demand or adjusting up for busier periods where there is low availability.
Remember that when using dynamic pricing software, for the first few months, you will still need to monitor and possibly adjust minimum and base rates on a weekly basis until you’re confident that the algorithm is working effectively.
Step 6: Maximise Exposure
If you really want to maximise exposure of your property and increase your occupancy rates, you’ll want to ensure that your property is listed on multiple platforms and syncs to a single property management system. This will allow you to centralise your pricing and availability so that you can avoid having to update multiple platforms and most importantly, avoid double bookings.
You won’t need to go and list your property on every single channel that you come across. Focus on the major platforms like Airbnb, Booking.com (and maybe Expedia & VRBO), and look to have a couple of independent agents market your property for you too.
If you’re currently doing short-term rentals in your property, or considering doing short-term rentals and would simply prefer to have it fully managed, have a look at the Euphoric Leisure Short-Term Rental Management solution by clicking on this link.
Euphoric Leisure is consistently achieving above the norm occupancy rates across its diverse portfolio. With a proactive and relentless property management focus, your home will remain well-maintained and in good hands.