Short-term rental trends are shaping up for 2023, and there is no doubt that property managers will find opportunities next year for growth. However, there will be a few challenges for property managers to face, such as the possibility of a recession, continuing inflation, and more competition – AirDNA predicts that the supply of available listings will grow to almost 1.4 million in 2023, an 8.6% increase from 2022. To prepare for this increase in competition, vacation rental managers should take a look at how to stay ahead and stay efficient through the use of technology.
The best and most effective way short-term rental managers can grow their business is to lean on an effective revenue management platform, and the key component of that platform should be dynamic pricing.
1. Dynamic Pricing Grows Your Portfolio by 24% YoY
We’ve all seen the big players in the vacation rental industry acquire properties at rapid speed to grow their portfolios exponentially over the last few years. However, this success is not only for the biggest players. Smaller-scale and independent property managers can also grow their inventory quickly and efficiently, and they can rely on technology to do so profitably. Enter dynamic pricing.
A recent analysis of vacation rental managers that utilize dynamic pricing grew their listings by an average of 24% in one year. Among all the great benefits of dynamic pricing (i.e. increased revenue, higher occupancy, etc.), the best way a great dynamic pricing platform helps with acquisition is the extensive market data available in the tool. You can keep an eye on each listing’s performance in your market, easily seeing how neighboring units are performing. Once you spot a property making less than what the market demands, all you have to do is approach that owner and let your results speak for themselves.
2. Dynamic Pricing Makes Your Business More Competitive
Capitalizing on demand is essential to maximizing revenue and staying competitive. Demand for your properties varies daily, and a static, flat pricing strategy misses out on those changes. By keeping your pricing dynamic, you can capitalize on these fluctuations and leverage pricing based on supply and demand:
- Prices rise during peak periods and micro-periods to drive higher average daily rates.
- Prices fall when demand is low and during shoulder periods (or days of the week) to drive higher occupancy.
Dynamic pricing reacts in real-time to find pockets of revenue in areas other tools can’t, ensuring that you are maximizing revenue and occupancy, your vacancies remain low, and that you don’t leave money on the table.
3. Dynamic Pricing Saves You Time so You Can Improve
Manually pricing (or trying to manage a less sophisticated pricing tool) is tedious and time-consuming. However, once you set up dynamic pricing for your properties, you’ve basically unleashed a smart, advanced tool that does about 95% of the heavy lifting for you. Trusting a dynamic pricing tool will allow you to have more time to do other important things, so you can use that time to focus on improving other areas of your business, like traveler experience. Creating unique experiences among your properties can help them stand out in a crowded market, but it’s hard to think creatively when you’re just trying to keep the lights on.
4. Dynamic Pricing Increases Owner Retention
Having a proactive revenue management strategy in place that is centered around dynamic pricing will not only save you time and increase your revenue, but it’s also a sure-fire way to keep your owners happy.
We recently talked to a few property managers about how dynamic pricing improves their business, and we noticed one main theme: dynamic pricing also helped improve relationships with their owners - and it actually led to new owner acquisitions. These successful property managers share data and educate their owners about how dynamic pricing responds to market changes and adjusts rates automatically. Most importantly, they make sure to communicate to their owners the impact that those rates have on their bottom line.
Ready to see how dynamic pricing can work for you? We’d be happy to show you. Contact us for a demo!