Bookings are starting to recover steadily. According to AirDNA, vacation rentals bookings skyrocketed by 127% after reaching the lowest point in late April. Our own data also revealed that bookings have been jumping from 5% of pre-COVID19 forecast in April, to 27% in May and towards 40% in June so far.
While the recovery is on the way, it is hard to just use the same nightly rates you set for your vacation rentals before COVID19. How to price your vacation rentals at the right level and strike a balance between occupancy and revenue is more difficult than ever. In this article, we will discuss some key things to note and share our recommendations.
Why is it difficult to price your vacation rentals after the coronavirus pandemic?
Pricing a vacation rental is always a blend of science and art. If you price your vacation rentals too high, you will not be able to sell your room. If your rate is lower than average, you will miss out the profit or even suffer a loss.
The coronavirus pandemic has just added more complexity to it. We see a slide in bookings from March till April. Stepping into May, however, bookings start to recover. But how to set the right rate to take advantage of the recovery is still like an experiment for many vacation rental managers. After all, the uncertainty of whether there will be a second wave still exists. This makes it more difficult for property managers and hosts to set their pricing strategy.
What should be considered when setting the price?
1. Domestic travellers have different price acceptance level
Based on our data, there are 65.8% of bookings for travel within the same country, up from 25% in pre-COVID19 time. We expect the demand for international travel will continue to switch to domestic travel.
As such, property managers should take note that the acceptance of price levels for people from different countries are varied. For example, guests from the US tend to spend more than their Spanish counterparts . If you are running vacation homes in Spain, you may want to set a lower price this year to attract domestic holiday seekers.
2. Travellers are more prudent in spending
Due to job loss or a more uncertain economy, travellers are, in general, more prudent in spending even if they are eager to travel again. So you may price your short term rentals in a competitive way. It’s better to start at a lower price than last year.
That said, if you are not going to have a price cut in your pricing strategy, it’s good to highlight the free extras or amenities you provide.
3. Length of stay tends to be longer
According to our booking data, we see people booking for 4.6 nights on average before COVID and now 5.6 nights. With a longer length of stay, you could consider adjusting your daily rate or offer a discount to attract guests. If you are using a direct booking site from Your.Rentals, you can easily leverage our promo code feature to give a discount to the guests. More info on attracting longer term rentals is available here.
4. New COVID cleaning logistics are required
Travellers’ expectations of cleaning and disinfection are much higher. All the extra cleaning work should not be forgotten in your expenses. Price your holiday rentals in a way to reflect the cost or simply add it as a cleaning fee in your listing.
5. Check your competitors’ rates
One thing that holds true no matter whether there is Coronavirus or not is to do your research and check how much your competitors charge for rentals similar to yours. Keep yourself competitive. If you are using Your.Rentals property management system, you can get professional occupancy, cancellation policy and minimum stay data from AirDNA for free, and this data will help you to set your pricing strategy more accurately.
With many countries gradually opening their borders, the bookings should come back steadily. Having the right pricing strategy will enable you to stay ahead of your competitors. As the peak season is coming, if you’re interested to know more about pricing and seasonality, check out this article “How to set your seasonal pricing in 5 easy steps”. And if you manage more than 10 properties and would like to get more professional pricing advice from our team, just let us know!