July 21, 2021 | John DeRoulet
Effective pricing is one of the most important business aspects a vacation rental manager has available to them to impact their bottom line. Pricing is complicated and the marketplace is volatile. Meaning, having the “right price at the right time” determines whether our ADR is optimized as well as how your occupancy compares.
Further complicating this is the perception of value and sentimentality attached to the asset itself. How often have we heard “my property is worth X” when we know the market moves through X, Y, and Z rates throughout the year?
In the Vacation Rental/STR space this may mean having pricing specific to seasonality, day of week trends, and even actual sales in the market. Some of us do this better than others. (Learn about the Wheelhouse Engine to see who does it best!)
At its root, dynamic pricing means to “set the right price, at the right time, for the right customer” and to have that price reflect and react to changing market conditions to produce the highest revenue for your product. It does not mean the product is worth less but specifically that time and demand have a varying, direct impact on the value of the product throughout the year.
These principles shouldn’t be a surprise to us and many owners will recognize where dynamic pricing has become so ingrained that we may not even notice it.
As such, to truly maximize revenue one has to consider the market and one’s place in it at any given time and price accordingly.
Dynamic Pricing is now the norm across industries. It is fundamentally ingrained in other forms of hospitality and technology has allowed for widespread adoption within the Vacation Rental industry.
Setting a single rate is like a broken clock; it’s right twice a day but what about the rest of the time?
Utilizing Wheelhouse’s Dynamic Pricing platform allows you to rapidly respond to the changes in the marketplace. Drive more Revenue via Occupancy while also capturing higher rates through optimization.
Here’s a shortlist of important points you can leverage when talking to your owners about pricing:
Owner’s unfamiliar with dynamic pricing may have some hesitancy. Coupled with the sentimental value of their properties or seeing it through their perception of value can make owners uneasy. There are many ways to assuage these concerns, protecting both owners and providing the opportunity to take advantage of dynamic pricing.
Dynamic Pricing is undeniably the future of pricing in the STR space. Consumers are already acclimated to this reality but it is up to owners and operators to adopt it. As an industry, we have come a long way! Dynamic pricing used to mean many things. From being able to offer rates for each day of the week to scraping Airbnb and tracking your competition.
Tools like Wheelhouse have taken this even further by incorporating real market data and sophisticated (published!) data science into pricing to provide accurate, optimized rate recommendations unique to your listings. It’s time to take advantage of what the marketplace has to offer.
Reach out to us at email@example.com to have a conversation today!
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