When driving direct bookings, It's not about going 'head to head' with others to be the lowest. It's about knowing the value of the property and pricing it to get the highest return on the investment made.
It's hard for new short term rental hosts to know if they are pricing their property correctly. On one hand, they need to entice vacation planners to select their property over it's competitors, but on the other hand, they also need to be able to turn a profit as quickly as possible once the property has been setup.
What I've learned in my years as a process improvement consultant and vacation rental property owner, is that the best pricing techniques start with having a very clear idea of the expenses and the long term potential for profit.
In the example below, I've outlined the best way to determine if the nightly rates are priced correctly for a whole home listing.
The first step is to calculate the 'all up' expenses including business overhead costs. The mortgage payment, utilities, insurance, internet services, improvement loans, furnishings, repairs, cleaning, marketing, yard service, etc should be included to ensure the possibility to break-even considering the number of days in the booking seasons of the property.
Include everything + the kitchen sink.
Once that's been done I can calculate how much I need to earn nightly in order to make a profit above my expenses.
I've found having the right pricing tool can make all the difference!
I've recently developed a simple excel tool where I enter my expense information and profit requirements to automatically calculate my rates for peak, mid, and off season so that I can see at a glance what I should be charging and what kind of discounts I can offer.
A few simple entries into the tool, and it does all the necessary calculations to compute the rates automatically. It provides a summary report of what can be earned after length of stay discounts have been applied, the profit potential of the property over time.
Taking it to infinity and beyond!
Once the right price has been set the host can look to improving & upgrading the home into something that is unique and cannot be found elsewhere.
It will attract a different crowd of guests that are willing to pay even more for the space because it will be more of an 'experience' vs. just a place to stay for a few days.
For example, established in January 2020, Heartshire Retreat in Surprise, AZ has a current project underway to convert the basic backyard space into a gamers heaven that is sure to further delight it's ideal guest demographic for years to come.
Its about making the most of my investment
That's why I love Pintetrest so much for marketing to guests. Check out my a Heartshire INNspiration space! for a ton of fun ideas and environments.
#HeartshireRetreat #bookdirect #houfy #vacation #staycation
Are you a new airbnb/vrbo or houfy host? Looking for help with your vacation rental business? Reach out to me on facebook at Houfy Hospitality Hub and let's create a plan to get you on the road to growth & profitability. I can help you make your profitable vacation rental dreams a reality.
How I got into Airbnb
"I have big dreams of owning a hotel someday. But this won't just be any hotel. It will be a hotel for video gamers, cosplayers, ren faire goers, fantasy & sci fi lovers, comic book convention fans, families & dragons.
At the very root of my glorious life changing Dream, I am Stacey, the Heartshire Queen of Hearts. I draw people together in my medieval fantasy inspired castle and host weekend Dungeons & Dragons style game sessions for adventuring types. Guests spend a whole weekend immersed in the adventure as they traverse the lands of Heartshire Ranch and uncover what is at the very heart of Heartshire Kingdom. - Their patronage supports rehabilitation, meaningful work, and provides tiny little castles for veterans who were once homeless. TLC4HV2023"
Someday I will build it and they will come. :-D
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