The beginning of the year should be the prime booking season for your vacation rental business, but booking pace in 2024 has been slow compared to past years. And now you might be one of many in the vacation rental industry fighting off a feeling of dread, wondering if you need to change your strategy. Vacation rental hosts and managers, does this situation sound familiar?
As market conditions change, vacation rental operators are in danger of missing out on profits due to outdated strategies for bookings and revenue.
At Beyond, we understand the challenges you face around getting your vacation rental booked at the right time at the right price – it’s literally what we do! And we know that hosts and property managers often find themselves at a crossroads, requiring a delicate balance between attracting guests and maximizing profits.
In this article, we will explore how small tweaks to your revenue management strategy can significantly boost bookings, allowing you to secure profits, avoid last-minute fire sales, and beat your competition.
What’s Happening In the Short-Term Rental Market In 2024
Beyond’s extensive database of short-term rental data reveals some concerning trends in the first few months of 2024:
- Bookings are down by 15% year-over-year.
- Urban markets are experiencing an 8% decline in bookings, while rural and summer markets are down by more than 20% in some regions.
- Furthermore, the time between booking and the actual stay date is decreasing, as guests are booking closer to the actual stay dates of their reservation.
Our data suggests a pressing situation: many properties remain unbooked during what is normally a time of high booking activity because nightly rates are high and booking windows are shortening.
We know that holding out for a higher rate now might seem like the right course of action. However, based on the data, it’s crucial to price appropriately now to capture the bookings being made during those shorter planning windows. A lack of action now will likely lead to little to no bookings, and a fire sale situation in the future as you attempt to recoup losses with dramatic last-minute discounts.
How To Adjust Your Strategy To Get More Profit
It’s clearly time for hosts and managers to rethink their pricing & revenue strategies before it’s too late. There is still time to make adjustments, and the solution lies in adopting a strategy that responds to market changes in real-time – and it’s less complicated than it sounds.
Implementing a modern revenue management system can help you quickly adapt to your changing market, giving you an edge over competitors who are slow to evolve. These systems provide data-driven insights into optimal pricing based on historical trends, market demand, and even your competitors’ rates. The best part: all of this data is automated right into your dynamic pricing, meaning your property is positioned to get booked at the right price at the right time.
The tactical tweaks outlined below, when integrated into your revenue management system, can significantly improve your strategy to get more bookings at a fair price in 2024.
1. Optimize Length of Stay Strategies
Understanding the average length of stay in your market is essential for setting realistic minimum and maximum stay requirements. Ensure that your property's length of stay options align with average guest preferences to attract bookings.
In Beyond’s Market Insights, you can see how many nights the average guest stays in your market as well as how far in advance they book:
Use that data to understand what an average stay looks like in your market, and align your own length of stay rules to see if that helps you secure more bookings. Try testing out lower (or even higher) minimum lengths of stay to see what works best for you.
2. Avoid Mispricing Events
Events and seasonal attractions can greatly influence demand, but pricing too high or too low during these periods leads to missed opportunities. Event demand shifts every single year no matter what, so pricing an event similar to previous years is not always the best course of action. A robust revenue management system will identify these crucial event booking windows and optimize your rates to match demand, ensuring you don't undersell or overprice your property.
Let’s take a look at the performance and market data available in Beyond. In this example, we looked at a host in a summer market around the 4th of July. We can see that:
- Bookings are pacing behind the last two years.
- Pricing for this listing is too high compared to similar-sized listings in this market.
To attract more bookings, we recommend that this host ensure that their Base Price and Minimum Prices accurately match the demand and seasonality in their market, preventing having to sell the unit at significantly reduced nightly rates during the peak summer season.
3. Experiment With Small Price Decreases
A small drop in your listing's price can sometimes yield significant results. While a revenue management system automates most of your pricing, you’re still in the driver’s seat, influencing your pricing with settings like Base Prices and Minimum Prices.
Test the waters with a 5-10% reduction in your Minimum Price and monitor the impact on your booking rate. This incremental approach can result in a substantial increase in bookings without significantly devaluing your property or services.
In Beyond, changing your Minimum Price is simple! You can even change your Minimum Price for multiple properties using Bulk Actions:
4. Leverage Market Data
Understanding your market is key to effectively capturing a large share of consumer demand in your area. Comprehensive data analysis can provide the insights you need to set competitive rates that attract guests. The right revenue management solution will offer detailed market trends, and adjust your prices according to the demand.
For example, within Beyond’s Market Insights solution, you can access core data about your market, making it easy to spot trends and take action.
In this example below, it is clear that this market is experiencing a decline in occupancy and average daily rate compared to last year:
In this example, we recommend optimizing their listing to be more attractive to guests, dropping any seasonal minimum stay settings, and dropping Minimum Prices by 10%. Then, monitor closely if this increases the bookings they’re receiving for the high season.
Take Action Before It's Too Late
With booking pace down 15%, the time to act is now – before you miss your ideal booking window. Implementing these nuanced changes to your revenue management strategy can drive immediate results and position your property as an attractive booking option.
As the market continues to shift, those who are agile in their strategies to attract guests & increase bookings will have a successful 2024. Let's make sure that you're one of them. Upgrade your revenue management strategy today and ride the wave of booking success. Get started with Beyond.