How dynamic pricing for vacation rentals helps you earn more
At 10 Stars , we’ve perfected vacation rental pricing so our homeowners can make the most out of their investment. Our proprietary dynamic pricing technology—combined with the expertise of regionally focused revenue analysts—has enabled us to consistently deliver higher profits for vacation homeowners.
How dynamic pricing works
Demand isn’t always consistent, so why should pricing be? Big data and machine learning are allowing companies across industries to charge fluid prices that adjust based on market conditions. And here at 10 Stars property management LLC, we’re leading the vacation rental industry with this tech-enabled approach to pricing.
Powered by machine learning, our dynamic pricing system monitors rates throughout the day and makes changes in response to changes in demand. It knows when to command peak pricing—say, for a holiday weekend or a popular event—and when to adjust for softening demand in order to keep the bookings coming. This method of dynamic pricing relies on advanced algorithms that factor in millions of data points to set the right price at the right time.
As this technology becomes more widely adopted, fixed prices are becoming a thing of the past in many digital marketplaces.
But we don’t leave it all up to machine learning. We pair our industry-leading technology with regionally focused analysts, so you benefit from the best of both worlds. Your dedicated regional analyst monitors your home’s performance and fine-tunes the algorithm for optimal impact. This one-two punch of technology and human expertise helps us deliver vacation homeowners around the world the best return on investment—especially during more volatile times.
Optimal moments optimize revenue
We don’t just look at what’s happening in the moment to set rates—instead, we look at the big picture. We analyze the booking pace of your market, then compare that to the current and historic pace of your home and its competition, slowly adjusting rates to deliver the best return. Through this system, we can deliver you the optimal rate by booking your home at the optimal moment.
Sometimes, optimizing your revenue means shortening the booking window (how far in advance guests book). For example, you may be used to seeing your peak season calendar fill up months in advance. That’s convenient for property managers who have to manually book out their homes, but it can leave money on the table.
Imagine for a minute that your bookings are retail products. Early bookings for peak season are a bit like discounted retail products at a Black Friday sale. Your bookings may fly off the shelves, but your product is selling at a sub-par price point. By waiting for the availability of homes to shrink, and decreasing your booking window alongside it, we’re able to hold out for the optimum rate and drive more revenue for your home.
Pro tip:
Avoid setting minimum rates that limit dynamic pricing and block your ability to maximize booking activity.
Dynamic rates increase overall revenue
Homeowners who have never experienced dynamic pricing may be hesitant to embrace a pricing strategy that involves variable rates. We understand it’s a new approach for many. But our data shows that the best way to deliver more revenue is by dynamically adjusting rates.
Our system is all about specifics and can adjust one nightly rate to optimize your overall revenue. For example, if we see most people booking three-day weekends (checking in on Thursday and checking out on Sunday), we may drop the nightly rate on Wednesday so guests are encouraged to book four nights instead of three. While the average daily rate (ADR) is lower for the four-night trip, incentivizing the extra night ultimately results in more revenue for your home.
Though the difference seems small for one reservation, the more competitive ADR benefits revenue in the long run. We know through experience that having competitive pricing for a home in the off-season adds up and, in turn, increases conversion to put your home in a stronger position when peak season hits.
Long-term profitability
Our dynamic pricing technology is designed to help you win the long game, earning higher annual revenue. We might not advertise the highest rate every night—but we charge the smartest rate (remember the pricing feedback loop?) to get you the best return overall.
Though it may take lowering the rate on an individual night, the benefit of turning a three-night stay into a five-night stay, or raising occupancy by an extra 10 percent during the off-season, really adds up over time—especially as your review count increases.
If you’re not already one of our valued homeowners, let’s talk. We’re confident we can earn you more money with our dynamic pricing system, which you now know all about.
Rates FAQs
Our rates are based on a number of variables, including seasonal weather patterns, holidays, location-specific events, competitor pricing, demand elasticity for your home, occupancy rates, booking window trends, current sales and promotions, regional demand trends, proximity to local landmarks, seasonal demand curves, changes in demand, and much more.
Here are some of our top tips:
- Sleeping capacity is a major factor that drives revenue, so consider increasing your home’s bed count by adding a sleeper sofa.
- Popular amenities such as a hot tub will also set your home apart and allow for premium pricing. Some of our homeowners have increased their revenue by 15–20% by adding a hot tub—and 10 Stars can even help you install one!
- Allowing pets at your home can also increase revenue by 10–20%.
- Lastly, it’s smart to regularly review your reservation calendar. If you have dates blocked off for your personal stays, make sure you unblock days as needed if your plans change so your home is available for guests to book and enjoy.
Dynamic pricing is the best way to optimize your vacation rental’s profits and performance. It analyzes real-time market data like day of the week, competition, seasonality, current demand, and upcoming local events to adjust your rates accordingly. Your rental rates are updated daily to reflect all the fluctuations in data. The result: Get booked at the best price, for the right time.
Airbnb hosts can create their own prices or opt into Airbnb’s pricing tool, which features many dynamic pricing functions. Their tool, Smart Pricing, can be turned on or off whenever you’d like. It analyzes data like local demand, average number of people who view your property, average review scores, and quality of your amenities. Then, it automatically updates your listing price to match the demand, but only within a minimum and maximum price that you set.
There are several ways to determine your nightly rental rate. These include understanding your operation costs, looking at your competitors’ rates (not to duplicate, but to gauge the market), researching upcoming holidays and local events that could possibly boost demand, and preparing for inevitable vacancies. If you’re willing to invest in vacation rental pricing software, some options include RateIntelligence and MarketMaker.
At 10 Stars property management LLC, we use dynamic pricing (leveraging proprietary technology and regional experts and analysts) to set the optimal rate for each of our homes. Changes in demand can happen in real time. So, your rates are updated daily to reflect the current demand for your home.
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