Industry insights
Vacation rental revenue management
11 Aug 2022
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By Sophie Eminson
Revenue management is a technique which can help business owners maximise income without sacrificing the quality of service. The goal of revenue management is to boost profit by providing customers with the best possible price for their purchase. It can be used across a variety of industries including travel and hospitality, as well as having benefits for holiday rental owners. Revenue management in the short-term rental industry is the practice of adjusting prices in response to market conditions, demand, and competition to ensure you have full occupancy.
Do you want to increase your vacation rental income?
Revenue management is an essential part of the vacation rental business. This is also often known as yield management or yield analysis, and is heavily influenced by the pricing of your holiday rental. There are many factors which need to be considered when making pricing decisions, for example: demand in the area, seasonality and perceived value. These three factors can help guide how much your customers should pay for a holiday home at any given time or place. Striking the perfect balance of value, quality and flexibility is sure to leave you with little remaining availability. Knowing how to any market left-over availability is also important. You may find it useful to read our blog which details how to prepare for last minute stays, and how it can be used to the hosts advantage.
We also recommend using data to predict future demand and occupancy rates in order to set prices accordingly. Monitoring your competitor data is key to understanding the market, as well as being able to identify where you fit in. If you’re looking for inspiration, AirDNA is a useful provider of short-term rental data analytics. Additionally, it is essential to have a better understanding of guests behaviour. Ask yourself these questions when setting pricing: how does the price of your rental affect different types of guests? How much should you charge on high-demand dates? Are there any other factors that motivate guests to book multiple nights at once rather than just one night at a time? When taking in to account these behaviours, here are some factors to consider when setting your pricing and marketing a holiday let:
Seasonality: events and demand in locations at certain times of the year.
Minimum night stay: consider making this as low as possible.
Additional costs: such as cleaning fees.
There are two main benefits of implementing an effective revenue management strategy. You’ll increase your revenues, and you’ll reduce the likelihood of having any empty occupancy. Using a channel manager or similar can help with vacation rental revenue management. The Travelnest vacation rental marketing software and smart pricing feature can help you select the best pricing, as well as our expert team who can offer insider insights which will benefit you as a host.
