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Staying competitive in an ever-changing vacation rental market means constant research and plenty of hard work to develop a highly effective pricing strategy that attracts guests and maximizes revenue. Cabins for YOU — a prominent vacation rental management company with generations of experience — spends countless hours week after week analyzing property performance to ensure the rates for your vacation rentals encourage guests to book and yield maximum profit for YOU. How? Take a peek at our vacation rental pricing strategy that consists of 3 main parts: property comparisons, business intelligence, and dynamic pricing.
Step 1 — Comparing Properties to Find a Baseline
When pricing properties that are new to the CFY vacation rental management program, we first take a look at comparable properties that have been with us for a while to determine a baseline. Looking at the historical performance of similar properties helps us find the best starting point for rates based on property size, amenities provided, overall quality, and location. And it’s always good to get the price as close to right as possible from the get-go!
Once we collect this information, we also look at the rates of similar properties marketed by our competitors, using business intelligence (discussed below). In doing this, we can not only see how our vacation rentals stack up against the competition to price more aggressively across the board but also make rate adjustments for newer properties based on the market as a whole.
Comparing properties in house and with others on the market may seem like a simplistic way to begin, but it’s also the smartest way. After all, if we can use our in-house data and collected competitor information to help find the sweet pricing spot in the vacation rental market for a new property on our program, we should!
Step 2 — Utilizing Business Intelligence to Better Strategize
While pricing vacation rentals successfully starts with comparing properties internally and externally, the process continues with understanding the consumer. Individual properties have unique qualities that offer guests different experiences, which can affect guests’ booking habits. If we can identify contributing factors that influence when guests book and how much they’re willing to spend on a particular property, we can lock on to the best rates that draw in the most income.
For instance, someone looking for a large rental for 20 with a mountain view and a private pool for Christmas is going to have differing booking habits compared to another person who wants a secluded 1-bedroom retreat with a fireplace and a pool table for a weekend in spring. They are most likely going to book at different times, and while one person may be more concerned with getting the best cabin for their dates no matter the cost, the other may be preoccupied with getting the best deal.
In order to make better pricing decisions for all our properties, CFY utilizes business intelligence (BI) software — designed to take raw business data and transform it into actionable information. It can even show us how our properties are performing in line with our competitors. This valuable insight allows us to see how well each property is booking, thus making it easier to adapt prices according to guest demand. In a nutshell, BI gives us a leg up in the vacation rental market by helping our marketing team analyze moving data for individual properties swiftly to help better strategize rates and reel in the most profit for our owners.
With BI on our side, we can not only customize a profitable pricing strategy for each vacation rental on our program but also monitor the success of those strategies. In other words, after we set new rates for a property, we can keep an eye on its performance to check if the new rates are working as they should. We want to make sure we’re hovering between overpricing and underpricing to ensure guests book your properties at the most lucrative price for YOU.
Step 3 — Maximizing Revenue with Dynamic Pricing
After we’ve come up with starting rates and analyzed important intel to better understand a property’s standard consumers, it’s time to implement dynamic pricing. What is dynamic pricing? It’s just what it sounds like — a constantly evolving pricing system that helps keep occupancy rates and rental revenue at their peaks. Basically, if we know when demand will rise or fall for a property, we can adjust pricing accordingly to appeal to guests and maximize revenue.
With dynamic pricing in place, Cabins for YOU is able to increase or decrease rates daily based on fluctuating demand. By adjusting rates according to booking windows (the time period between the booking date and the check-in date), property categories, peak seasons, and other factors (with the help of BI) as well as studying occupancy rate pacing (how many bookings we have now vs. how many bookings we had at the same point last year), we can use demand to our advantage.
- If we see guests are booking for a certain time period more aggressively than usual, it makes sense that they would probably be willing to pay a higher price, and we can increase rates for those dates to earn more revenue.
- If we know our competitors are losing bookings due to their rates being far too high, we can adjust our pricing appropriately and fill demand needs for guests ready to book, putting heads in beds and cash in our pockets.
- If we detect more and more guests are showing greater interest in a property, we can move rates accordingly to bring the most profit home.
Dynamic pricing is a game changer! By remaining flexible and optimizing rates to go with the flow, CFY enables your properties to stand out in the highly competitive vacation rental market, generating max occupancy and revenue year-round.
Cabins for YOU Pricing Tiers
Unlike many of our competitors that only have a few pricing tiers, Cabins for YOU has 9 base pricing tiers to truly take advantage of market conditions. And when you add dynamic pricing, this gives your vacation rental property an even greater opportunity for maximum income.
What About Static Pricing?
Goodness, isn’t it just easier to use static pricing for vacation properties? Oh yeah, it is much easier...and much less profitable. What about the sudden weather changes that have pushed people to book elsewhere? What about the viral video that’s influencing a wave of people to book in your area? Static rates don’t account for moving demand, and that can cost owners.
Imagine if we kept properties at set rates according to general demand for the year. We would miss out potential revenue for booking spikes that may happen when a hot new attraction opens, a celebrity visits the area, or a popular conference is held because our rates would be too low. And we would lose reservations when an annual event is cancelled, a new wave of rentals pop on the market, or a national crisis occurs because our rates would be too high.
Cabins for YOU aims to get you the most out of your investment by staying on top of demand and keeping your vacation rental competitive. We don’t just want your rental to pay for itself. You deserve to see a substantial profit year after year! And the best way to see that this is the case is maximizing your revenue with data-driven dynamic pricing for vacation rentals.
The center of all CFY pricing decisions is demand. When there is less demand, we decrease rates, and when demand rises, we increase rates — all to match price with demand. Is taking the time to do proper research and analytics daily really worth it? Absolutely! And we’re happy to do it for YOU as your diligent partner.