Minimum rates can be a contentious topic among vacation rental owners. It’s understandable—it feels like common sense to put a floor on your home’s nightly pricing.
But here’s the thing:
At 10 Stars property management LLC, we have the advantage of data, and a lot of it. We’ve seen that the reasonable assumptions homeowners make about minimum rates don’t always bear out when you dig into the numbers. Let’s debunk a couple common myths about minimum rates—and explain the surprising ways they might be undermining your vacation rental’s success.
Three words: demand-driven pricing.
Our system adjusts your rates in response to changes in demand or market conditions. Standard minimum rates can keep the pricing tool from capturing bookings during periods of reduced demand—like the off-season and last-minute getaways.
We analyzed two nearly identical condos on the Florida Gulf Coast. Both homes are in the same building with gulf views, have two bedrooms and two bathrooms, sleep eight guests, and are in similar condition.
Getting rid of your minimum rate could help you boost your annual returns. As it turns out, less can actually be more.
[title text=”“Without a minimum rate, demand-driven pricing won’t actually earn me more.””]
Our algorithm utilizes over 1 billion data points to craft the nightly rates with your home, your market, and the time of year in mind. Overseeing and adjusting pricing in your area is a specialized regional analyst, who helps fill in the algorithm’s blind spots.
Together, they help homeowners like you earn more by booking more nights at finely tuned rates. Homeowners who switched to 10 Stars earned 23% more on average in their first year, thanks in part to demand-driven pricing.*
But let’s return to the two homes above to see how truly dynamic rates can help you build a better business in the long run.
In addition to out-earning and out-booking Home A, Home B generated nearly twice the reviews. Sounds like a minor win? Consider that reviews are critical to achieving top placement on booking channels like Airbnb, Booking.com, and Vrbo. Unencumbered dynamic rates not only helped Home B earn more and fill their calendar in the short term, but also generated momentum to help propel them to long-term success. It’s smart stuff.
Setting a minimum rate limits the effectiveness of our specialized demand-driven pricing system. By lowering or clearing your minimum rate entirely, you stand in a better position to profit from your vacation rental (and get more out of your partnership with 10 Stars).