Despite decades of research and development, and millions spent on developing proprietary pricing algorithms, airlines and major hotel chains still practice Active Revenue Management. This entails having revenue managers and pricing analysts constantly watching what their software is suggesting, and making judgement calls on behalf of their business. It is critical that vacation rental property managers mirror these practices by investing time and resources in using objective data to make pricing decisions for their business.
Bringing on New Listings Poses a New Challenge
The lack of quality historical data during the months most affected by COVID-19 will make establishing initial rates for new properties much more challenging. To confront that directly, you’ll need to take advantage of using market demand to gauge how to best set prices, and edit and adapt those prices almost daily for a new listing as you monitor pacing. You can do so manually or by using an automated dynamic pricing tool. In either case, spending dedicated time daily, focused on pricing, will be critical in the recovery process.
Be Ready for a Flood of Short Lead Time Bookings
Once restrictions are lifted, your management company must be prepared for a noticeable increase in short lead time bookings. With reservations slowing down dramatically for stay dates within the next six (6) months, you’ll have more open calendars (even during high season) than you will have had in years prior.
As a result, you’ll need to react quickly to adjust your last minute discount strategy, override prices or minimum stay requirements, and reconsider new promotions or discounts you have in place. These nimble approaches will attract new guests during orphan nights (available nights positioned on the calendar between two other reservations) and uncertain times.
The speed of the recovery is unknown, and every property management company will have to follow it daily to make the best strategic revenue management decisions for their organization.
Dynamic Pricing is More Important Now Than Ever
Staying on top of changes in supply and demand in your market has always been important, but with travel trends changing daily now, dynamic pricing is an important tool for the entire vacation rental industry.
It will continue to be important to react quickly to changes in your market moving forward. Utilizing market-level data, alongside individual listing data points, dynamic pricing tools enable property managers to stay competitive in a quickly changing landscape.
Typically, market supply and demand does not shift very much day to day. This has changed recently though, as most markets around the world are changing daily as cancellations increase and booking pace decreases.
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