Rented and Turno Partnership

How to Set Prices On Airbnb

Rented — Fri, 21 Oct 2022 18:08:50 +0000

Define Your Business Goals

It’s a good idea to understand your overall goals for your property before you list it on Airbnb. Crunch some numbers and estimate an average amount of profit that would cover your overhead while increasing your revenue. You’ll set your prices with the goal of hitting that number or higher.

Then, figure out your occupancy goals. Remember that more bookings equal more revenue, so getting as many nights booked as possible is key to hitting your profit goals.

There will be times of the year when you won’t be able to accept bookings for a variety of reasons. Maybe you like to take a week between the busy season and slow season to perform maintenance on the property, or you have upcoming renovations and know you’ll need to set those dates aside. You may even like to use the rental for your own personal use.

Estimate how many days a month you’ll want to use the rental for yourself, add the maintenance days, and voila: an occupancy rate.

Estimate Your Expenses

While the overall goal of listing your vacation rental on Airbnb is to turn a profit, you have to remember that there are costs associated with inviting guests into your property. This is particularly true for short-term rentals as they see a lot more action than long-term rentals.

Pull out your calculator and make some rough estimates of how much overhead will cost. This should include funds to manage the wear and tear, cleaning funds, an emergency fund in case of major damage, and restocking costs for things like toilet paper, towels, and cleaning supplies.

“Don’t forget about cleaning fees. You can opt to build it into your rate or add it in as a standalone fee. Planning to do your own cleaning? Be sure to factor in a small amount to offset the time and materials that you will spend on this commitment.”

– Futurestay

Establish Your Market Value

Now that you have some goals in mind, it’s time to calculate the rough market value of your property. This will be the foundation from which you set rates, helping you decide what’s the absolute minimum nightly rate you can accept and what your average rate might look like.

This is where comp sets come in handy. You can use Airbnb to search for properties that are similar enough to your own — same bedroom/bathroom count, similar amenities, same location — and look at their rates. Then, based on your business goals, you can start estimating a base rate and a minimum rate.

Understand the Makeup of Your Price

Your Airbnb rate is made up of these main components:

Nightly pricing: Here, you can decide whether you want to charge per guest or up to the maximum number of guests.
Security deposit: Some Airbnb hosts charge a refundable damage deposit to cover any potential damage that might occur during a stay.
Cleaning fee: This covers the cost of turnover, whether you clean the property yourself or outsource to a professional cleaning service.
Additional charges: This may include pet fees, additional guest fees, late check-in or check-out fees, etc.

Fees are often considered a kind of protection for Airbnb hosts and property managers — in case something does happen, the cost comes out of a separate account and not the bottom line — and they may be legitimate depending on the market or the age and modernity of the home.

But remember: expensive fees are just as much of a turnoff as overly high rates. When you can, consider incorporating as many Airbnb fees as you can into the nightly rate.

Make Price Adjustments When Necessary

Whether you have one or one hundred Airbnb listings, you can still use key principles of dynamic pricing to entice more bookings and maximize your revenue.

For example, consider lowering your prices during times of the week or season when demand is the slowest, and even consider throwing in a discount or two to achieve more bookings during slower times. When demand is high, like during your peak season, a major event, or the holidays, raise your rates to match.

Most importantly, stay on top of your calendar. In the event of a major change, such as a horrid weather forecast or a spike in overall demand, you can adjust your prices to meet it.

Should You Use Your Channel Manager’s Free Pricing Tool?

As you grow your vacation rental business and take on more and more properties, the free pricing tools offered by OTAs like Airbnb and Vrbo may not cut it.

These tools can come with a bit of conflicting interest. An OTA is, of course, looking to get bookings for itself but not necessarily for the property managers who use it. So, take any recommendations from those tools with a grain of salt.

The post How to Set Prices On Airbnb appeared first on Turno.

Understanding Airbnb Fees and Discounts

Rented — Fri, 22 Jul 2022 02:29:08 +0000

Is a Vacation Rental Discount a Good Idea?

Some vacation rental industry experts argue that discounts aren’t very effective and may actually harm your reputation or your reviews.

This seems counterintuitive — people love discounts. But studies have shown that for some consumers, any kind of sale, especially on lodging, can spark suspicion that there might be something wrong with the rental. What’s more, if a consumer makes the purchase, the “discount” might make the guest overly critical.

In addition, some vacation hosts feel nervous about offering discounts for fear that guests will take advantage of them. For example, hosts worry that a guest who knows about discounts may demand a discount for a special event or because they were unhappy with their stay.

Discounts vs Dynamic Pricing

You may wonder what the difference is between a discount and the pricing adjustments that occur in your dynamic pricing strategy.

Dynamic pricing takes market factors into account to offer rates that are the most attractive to the right guests at the right time.

In most cases, your dynamic pricing tool (along with the help of a revenue manager, if you use one) will handle lowering prices when it makes the most sense, and do so based on market sensitivities and current events.

But that doesn’t mean that discounts don’t have a time and a place in the vacation rental industry.

When a Discount Actually Makes Sense

Using discounts for vacation rentals is like using salt in a dish: When used appropriately, it can add so much to the experience. Here are the instances when discounts may make the most sense for your short-term rental:

When a booking window is closing: A little extra discount on last-minute dates can be just what a potential guest needs to get them to book, topping off your occupancy and earning you a little extra income. Even if the price is much lower than you would typically go, a booked night is more profitable than an unbooked one.
To incentivize repeat guests: Discounts can be a great way to engage with past guests and encourage them to rebook. You can structure these discounts to be more “exclusive” or loyalty-based, particularly if you offer discounts through guest referrals or an actual loyalty program.
To encourage guests to extend their stay: Adding a free night to cap off a longer stay, like a fifth or seventh day free, can give potential guests a little extra incentive to book a longer vacation, particularly if the fifth or seventh night would have been the lower-priced night anyway.

What About Airbnb Fees?

Extra charges that go beyond your nightly base rate are called vacation rental fees. Most often, these fees are used to compensate the host for providing additional services or amenities. There are two types of vacation rental fees: standard and custom.

Standard vacation rental fees are the most common and can include extra guest fees, cleaning fees, and pet fees. Custom vacation rental fees are any charges that go beyond standard fees and could include pool heating as an example.

“When making adjustments to your pricing, consider what fees may be appropriate in your unique situation. Name these clearly in your listing so that there are no surprises. These instances might include early check-in fees, late check-in fees, or pets.”

– Futurestay

Do Airbnb Fees Prevent Bookings?

When you charge a fee on OTA booking websites, the fee is added to the total price at checkout, which makes it possible for travelers to know how much money they will be paying for in total.

The traveler’s point of view is important when considering fees for vacation rentals. Imagine the frustration of trying to calculate a stay, only to have the total significantly increase at checkout due to fees. When travelers experience this frustration, they might abandon the booking process and look elsewhere.

Still, fees alone don’t prevent bookings. In fact, a study by Vrbo found it’s not just the cost of staying at your property but also how much you are charging per night which can make all the difference in whether someone books or not.

What’s important is that you put a strategy in place when deciding on your fee structure.

How to Set an Effective Rental Fee Structure

Vacation rentals that charge a single fee have a 30% higher conversion rate than those with three or more fees. However, you may need to charge additional fees to cover the cost of extra services.

Below, find tips to help you be strategic about how you charge rental fees.

Keep Separate Fees to a Minimum

This will help keep people from being scared away by seeing a lot of fees.

Roll Standard Fees Into Your Base Rate

This will make it easier for people to see how much they will be paying in total, and it won’t be as expensive as if they were charged separately.

This strategy might be a little more tricky, however, as you’re going to have to include your cleaning or other expenses into the base rates for the property. In turn, potential guests browsing properties may be more drawn to similar listings that have a lower nightly rate — even though all the extra fees will be added at booking time.

Know When to Include a Discount or Fee

Discounts and additional fees may seem like a good opportunity, but they can sometimes have a significant amount of backlash. Knowing when the right time is to offer a discount or fee is the best way to go about this type of pricing strategy.

Before attempting a discount or additional fee, get a feel for the way your target market responds to such things. Do they automatically assume a property is of cheaper value if a discount is offered? Are they easily frustrated by additional fees to a property listing? The answers to these questions will inform your discount and fee structure.

The post Understanding Airbnb Fees and Discounts appeared first on Turno.

How to Price Your Rental Property: 5 Top Considerations

Rented — Wed, 20 Jul 2022 19:18:10 +0000

1. Research Your Competition

“It’s important to set a solid pricing strategy. First, we recommend that you check out the market prices. Impersonate someone looking to go on vacation in the town your rental property is located in. What do the options look like? If you ranked those from worst to best, where does your property fall? Be honest with yourself and price out a stay at your property from there.”

– Futurestay

Take a look at a few vacation rental listings that are as similar to yours as possible — the same number of bedrooms and bathrooms and a similar location is the bare minimum.

Take a look at their calendars and ask yourself:

How often are they booked?
When are they the busiest, and what do their prices look like during those times?
What are their prices like during slower seasons? Mid-week?

Are competitors’ rates especially high during an annual festival? How do they change over the course of a week? What about during the winter holidays, or over spring break? Jot down some numbers and calculate an average to establish a basis for comparison.

2. Don’t Go Overboard With Fees

One of the hardest parts of pricing a vacation rental is the fees. Just like overly high prices, overly high fees can turn guests off to booking.

You may find yourself with questions like: Should cleaning fees be an add-on or included in the nightly rate? What about pet fees or late check-in fees?

Two common ways to handle fees are bundling (combining all of your fees into a single fee) or splitting the cost of fees between you and your guests.

3. Establish Pricing for Times of High Demand

Pricing your rentals for times of high demand is both exciting and delicate. You have to strike a good balance between staying competitive and not overcharging while still taking advantage of the surge of demand.

What Does High Demand Look Like?

Every market has its own ebbs and flows of demand, called market sensitivities. Some of the most common ones include:

Seasonality: The various seasons of the year will impact demand in different ways. For example, September through November may be considered shoulder season in Hawaii, where the rains tend to increase. But in Vermont, property managers will be experiencing a peak thanks to popular events like leaf-peeping.
Days of the week: Some properties do better on certain days of the week. Urban markets may experience a high mid-week due to business travel, whereas a ski cabin in the mountains may be more likely to sell out on the weekends.
Major events: Marathons, film festivals, and other popular events are always a good time to increase bookings.
Holidays: While the holidays are generally busy for all rental markets, hosts who offer larger properties may see an uptick in interest as families travel to be together.

The type of rental and the amenities provided can also impact high demand. For example, homes with pools will be more popular when a heatwave is in the forecast, while condos with private hot tubs may sell better around Valentine’s Day.

Increase Your Rates Based On Data

To increase your vacation rental rates strategically during times of high demand, it helps to lean into some data, both authoritative data from your own project management system (PMS) as well as local market data.

Average Daily Rate: This data point can act as a base expectation for past busy seasons, and you can make adjustments to optimize your return on those specific days based on past performance.
Comp Sets: Comparing your properties to others in the market can help you see what your competition is up to and make adjustments accordingly.

4. Adjust Pricing During Slower Seasons

Like everything else in the travel industry, vacation rental pricing is largely dependent on when people try to book and why. Your beachfront properties will have different rates than townhomes in Aspen, which will have different rates than condos in Vegas or New York.

Changing your rates to match slower seasons means that you’re always getting your money’s worth and reducing vacancies. Don’t forget: You’ll make more by booking your property at a lower rate than if you don’t book at all.

5. Analyze Data to Make Evidence-Based Decisions

“To successfully run an Airbnb business, you’ll want to keep track of a couple of key data points.

First, you’ll want to know when guests are booking and when they’re staying on your property. This can offer you insight into what times of year are most lucrative for your business, as well as which times might be a little leaner. Additionally, knowing how far in advance guests are booking may help you to understand times to target ad campaigns or other marketing devices to make sure your rooms are never empty.

You’ll also want to know where your money is going. What are you earning from your properties? Where are there opportunities to earn additional income? Best of all, when is that money showing up in your bank account? Again, this data will provide opportunities to hone your strategy to increase your profits over time.”

– Futurestay

Price Your Vacation Rental Right

You have invested a lot of time and money into starting your own vacation rental business. The last thing you want to do is price your vacation rental too low and miss out on revenue. Creating a pricing strategy that best suits you and your property is the best way to maximize potential profits.

Strategically pricing your vacation rental can be done by considering your competitive market, how the seasons affect demand within the Airbnb industry, and how recurring fees affect your overall business.

The post How to Price Your Rental Property: 5 Top Considerations appeared first on Turno.