Presented at the 2017 VRM Intel Live conference in Portland, we describe how to price your vacation rental on Airbnb, VRBO, or any site. We look at trends in occupancy and pricing.
2. About Me
Beyond Pricing
• Est. 2013
• Over 100k listings using us
• Over 700 markets worldwide
• Connected to most PMS systems
• $3.5m venture capital raised
Ian McHenry
• Est. 1983
• 12 years in travel
• Previously helped major global
airlines (and a bit of hotels) with
pricing & loyalty at Oliver Wyman
• Princeton University undergrad
3. Vacation Rentals Are Following Hotels…
• Increased consolidation (Vacasa, Wyndham, Vacation Rental Pros, etc)
• Emergence of franchises (Choice, iTrip, Teeming, Grand Welcome, etc)
• Online booking, OTA dominance
• Sophisticated pricing and revenue management (4 seasonal rates now
turning into 20+ rates for most managers in most markets)
4. But They Are Also Innovating Ahead of Hotels
• Personalized guest experiences and connection to local activities
• Smart locks and automatic check-in
• Welcome guides and apps
• Optimizing prices on an individual unit level
5. Major Challenges for Independent Managers
• Need to compete with multi-market large managers and franchises, whose
combined resources aid in paid marketing & SEO, revenue management, and
brand recognition
• Emergence of “light-weight” managers like Evolve, Pillow, etc. handling
bookings, guest communication, and coordinating cleaners
6. The Importance of Revenue Management
• With all of the new competition and multi-market managers offering
revenue guarantees to owners, it’s more important than ever to invest in
revenue management to help owners (and managers) make more money
• Managers who don’t focus on revenue management risk losing owners to
more sophisticated companies who can show greater returns
7. What is Dynamic Pricing?
Changing your price based on
changes in supply and demand
19. Two General Goals When Setting Prices
•Setting initial static prices
•Changing prices as demand changes
20. What Kind of Data Can You Use to Help Price?
•Comparable properties
•Occupancy of your own listings
•Market occupancy
21. Comparable Properties
•Managers often use “comps” in a similar way to how real
estate agents do: to find a similar property and copy its
pricing
•When trying to get a ballpark idea of a new listing’s value,
this is the go-to method
23. Finding the “right” comps
• 3 bedrooms, 1,000 sq ft
• Older bungalow
• 6 blocks from beach
24. Finding the “right” comps
• 36 nearby 3 bedrooms
• $249-$700 avg price
• Which do I pick?
25. Finding the “right” comps
• Nearest comp
• Avg price: $467
• My avg price: $247
• My occupancy: much higher in low
season
26. Finding the “right” comps
•While comps can get you in the ballpark, every property is
unique
•At the end of the day, the market sets your average price, not
comps
27. Copying off of “D” students
•Using comps to set your different seasonal and event
prices can help
•But make sure to copy off of “A” students who know
what they are doing
28. Copying off of “D” students
• $450 weekday, $550 weekend in high
season;
• $450 weekday, $485 weekend in low
season
32. Where to get the data?
•Listing sites
•Competitor websites
•VI Reports, Beyond Pricing
33. Your Own Occupancy Data
•Hotels have traditionally used data on how their rooms are
“pacing” to determine if demand for a single day is higher or
lower than expected and adjust pricing accordingly
•Vacation rental manages can do this as well
34. Your Own Occupancy Data
• Hotels use their inventory of, say, 200 rooms to see how quickly they are filling
up vs. last year
• This works for hotels because they are trying to optimize prices across the
whole PORTFOLIO of rooms
• So if they don’t realize until half of the rooms are booked that there is more
demand than expected, they make it up on the second half
• If you do this with vacation rentals, half of your owners will get booked at too
low of a rate
• However, it’s better than all of your owners getting booked at too low of a rate
35. What to look for
• Year over year occupancy trends
• Are certain days/weeks booking up slower or faster than last year?
• Aberrations in forward-looking occupancy
• Are certain days/weeks booking up slower or faster than the other
days/weeks around them?
• Segment data as much as possible (by bedrooms, by location, etc.)
36. Pitfalls of Using You Own Inventory to See Demand Changes
• Hotel style occupancy matrices require you to
decide when and by how much to change price
• In our Tahoe example, the PM might have sold out
80% of their inventory before they raised prices
• Better than not raising prices, but better to use
market demand trends to see increased demand
before your places get booked
37. Where to get the data?
• Your own PMS
• Ask your PMS if they have occupancy reports
• If not, do an export of reservations and track occupancy by week (or day if
possible)
• Third-party software layers
• Some third-parties can help you create a better dashboard of your data by
connecting to your PMS
38. Market Occupancy Data
• Market occupancy data (historical and forward-looking) can help you identify
supply and demand trends
41. Where to get the data?
• Listing sites (see following example)
• Competitor websites
• VI Reports, Destimetrics (historical), Beyond Pricing
42. Using Listings Sites to Track Market Occupancy Changes
• In our Tahoe example, you can
track the number of units available
for a date range by simply querying
HomeAway