Coronavirus & You: How to go beyond pricing when global travel trends change
On February 11th, we shared a blog detailing the noticeable changes in market demand for the first vacation rental markets affected by the recent Coronavirus outbreak. Since then, the outbreak has spread to many other areas of the world and has had a significant impact on the global travel industry. Various large corporations have banned global business travel, airlines are waiving cancellation fees, and more countries are introducing travel restrictions for visitors. With never ending talk of the COVID-19 virus, we wanted to share some of our top tips for vacation rental managers to stay on top of their strategy as it pertains to these changes in high-level travel trends. While lowering prices to stay competitive during times of low demand can be effective, there are also techniques that help support your overall strategy and may prevent the need to lower your pricing strategy dramatically.
Use dynamic pricing (if you aren’t already!)
This one is a bit of a given, but if you are not using dynamic pricing (pricing that changes alongside changes in market supply and demand), then you will have to manually read changes in market demand and update your prices accordingly. With Coronavirus causing occupancy levels and overall demand to fall in markets around the world, pricing algorithms are picking up on that information and changing prices for properties automatically.
If you’re not already using dynamic pricing, how are you reacting to changes in market supply and demand? If you have access to market data reports and update your pricing manually, how often are you making changes in an efficient manner? A dynamic pricing solution helps with this.
Forecast the impact on your business
Understanding where your guests typically travel from and your top feeder markets is a great place to start to gauge how the spread of Coronavirus may impact your current and future business (forecasting potential impact by aligning this with travel restrictions).
Begin tracking changes in how people will travel to your market. Is your market reliant on air travel? If so, airline restrictions and cancellations may impact the ability for people to even get to a certain area. Drive-to markets are likely to be impacted less due to this, but may still see a decrease as travel fears worsen.
Review your cancellation policies and prepare for the inevitable (forecasting cancellations)
With reservation cancellations on the rise, it is important to understand and have a plan in place for handling cancellation requests from guests. Be sure to review updated OTA cancellation policies as they pertain to your market (Airbnb’s updates can be found here).
Many airlines have allowed flexible cancellation policies in the wake of Coronavirus, and it makes sense for vacation rental managers to follow suit as appropriate. Allowing guests to defer and rebook reservations for later in the year can help manage customer satisfaction and shift revenue to a later date instead of losing it altogether.
Short term pricing & distribution techniques
While there are many factors to consider when updating your overall revenue management strategy, pricing strategy in the short term can have an immediate impact on your business, coupled with changes in distribution, cancellation policies, and more.
Using last minute discounts can automatically target available occupancy with lower rates on your behalf to drive occupancy during a period of low demand. Increasing both the booking window and discount percentage will help in attracting last-minute guests who may not have otherwise booked based on price alone.
Here's some techniques other than pricing that can help rental providers boost short-term occupancy:
Creating targeted promotions on multiple channels can help direct bookings to specific date ranges, especially over the next few weeks as Coronavirus continues to remain in the mainstream media.
Emailing your subscribers to let know how your destination is doing right now. Invite them to book if it’s appropriate. If you have properties that offer increased privacy, like secluded cabins or private beach homes, these may be of higher interest right now and can be featured in your email campaign.
Using social media to highlight featured rentals, calling out any lower than usual pricing as a rare chance to snag a great deal and a budget-friendly vacation.
Generating demand from your local market with staycations. Targeting potential guests within a two-hour driving radius with a special offer can be very effective, especially if their broader spring travel plans are not an option anymore.
Long term pricing & distribution techniques
No one knows exactly how the recent Coronavirus outbreak will impact the global travel industry in the long term, but it’s important to understand how potential long term effects will impact your business specifically.
Always explore the option of selling your inventory on more channels than you currently do, as reaching more potential guests on digital channels can help drive bookings across the board.
Depending on your market, you may wish to reexamine your pricing strategy to focus on getting bookings versus driving for high ADRs (which might not be achievable this year if the lull in travel continues). With an overall decrease in travel there will be less demand in the market, thus making a shift to a pricing strategy that focuses on occupancy more realistic.
If you are already a Beyond Pricing user, here are some tips and tricks you can use in the tool to help you maximize the performance of your listing.
- Using Last Minute Discounts can automatically target available occupancy with lower rates on your behalf to drive occupancy during a period of low demand.
- Lowering the Base Price lowers the pricing for the whole year, but so far this virus is only a short term issue. However, given the recent fall in the stock market there could be a prolonged low period, making lower base prices a more viable option for the rest of the year.
- As you lower the Base Price there is a chance our suggested pricing will hit your Minimum Price. We recommend you reexamine your Minimum Price and lower it in order to drive for occupancy.
- Where necessary you can add Seasonal Maximums to cap pricing and hopefully drive occupancy short term. If you need this option enabled for your account please reach out to us at firstname.lastname@example.org.
- Manual Price Overrides can also be used to customize day-level pricing, but be careful when implementing these as they will not change with updated market demand data.
With more news developing every day about Coronavirus, it’s important to stay on top of how it will realistically impact your business. Be sure to utilize every tool in your revenue management toolbox (not just pricing) to maximize your strategy during possible periods of low demand in your market. Our team will continue to update this post with additional tips and tricks as more news develops.