We are at the time of the year when many of us come up with a list of personal goals and changes that we want to make over the next 12 months. I’m a firm believer that we should also evaluate our businesses and examine the changes that we need to make at this time as well. To get you started, here are some ideas around pricing and yield management to consider for the upcoming year.
Vacation Rental Revenue Goals: How to Grow Your Business This New Year
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1. Adjust Your Overall Prices
It’s not uncommon for many businesses to increase their prices each year. A 5%-7% “cost of living” adjustment is pretty standard.
It is thus worth comparing your rates to your competition - not just other vacation rentals, but hotels and B&Bs in your area as well. Take note if your rates are lower, the same, or much higher. How might the rate discrepancies be impacting your bookings?
Having higher pricing is not necessarily a bad thing. Particularly if you own or manage a luxury property, have unique amenities or features, or are located in a prime spot for events and activities.
2. Consider Different Rent Options
Many vacation rentals have a standard minimum night stay (typically 3-5 nights) and offer a nightly and weekly rate. Here are some other variations to consider for your rental property rates:
- Charge a higher nightly rate on the weekends. Particularly for 2-3 bedroom units, which are more likely to be booked as last minute weekend getaways.
- Charge a higher nightly rate for holidays and special events. I’ve been surprised at the number of owners that don’t this, as it’s a simple adjustment that could help grow revenue significantly.
- Offer a shorter minimum stay at a higher rate. For example, if your standard rate is $250 a night for a five night minimum, offer a 2-3 night stay at $350 a night.
3. Offer a Deal Travelers Can’t Resist
Offer your guests that are checking-out of your property a deal for a future booking. You can offer a discount on rates or reduce your minimum night stay. Make the deal nonrefundable, particularly if you are offering a significant discount. This will help discourage guests from booking your place as a fall back in case they don’t find a better deal somewhere else.
4. Reward Referrers
Start a referral program where a guest can save 10%-15% off their next stay, free nights, or discounts/freebies at local businesses if they refer a friend who books your rental. Social media is a great way to promote this offering. Make sure to collect e-mail addresses for future marketing as well. These are like gold!
Vacation Rental Business Goals
Did you meet your business goals this year? What kept you from meeting them? Where are your biggest opportunities? If you didn’t have goals, I encourage you to come up with 2-3 specific goals that you will focus on this coming year. Make sure they are specific and actionable. For example, instead of having “be the best in our market” as a goal, have something like “increase our customer satisfaction rating to an average of 4.5 stars”.)
Small, actionable changes produce lasting results over time. Happy holidays!
This article was written by James C. Sells, the Founder & Principal Consultant at VR Biz Consulting, a company that works with vacation rental businesses to maximize revenue and take their software from a cost center to a profit center.