Pricing Your Vacation Rental Perfectly
Pricing your vacation rental property in Orlando is more of a gamble than formulating rocket science-based strategies. You have to adjust your prices according to the season or demand at that moment.
Setting the right rate for your vacation home should go beyond initial profits. It should focus, primarily, on finding the sweet spot for a particular competitive landscape that will ensure higher in-stays and repeat renters For instance, you cannot maintain your high prices when the bookings are low. Every vacation rental management or property management company will tell you that. Serious price adjustments have to be made despite the value that you place on your property. Before you say, “But my property is in a luxury neighborhood” hear me out.
What Is Your Worth
You might be thinking that you should raise your prices because you are in a posh neighborhood. But, how many other vacation rental homes are there? That is what is referred to as competitive landscape in business. You basically need to identify all your online and offline competitors. People offering the same services as you are. Take the time to learn from your property management or vacation rental management company on the houses they manage and how similar they are to yours. In a town like Orlando for instance, there are numerous vacation rental homes due to the fact that it is a premier summer vacation destination and a preferred location for retirees. Such a competitive landscape determines the prices of the vacation homes in Orlando. The pieces may drop if they are rather similar but may shoot up for a few properties that offer a unique experience.
When Prices Rise and Fall Price fluctuations are based on demand and your ability to meet the demand. To survive in the vacation property market, you should live by the following principles.
• Increase the price of your property when the demand is high. High demand is created by your social status. If your vacation home has a constant 5-star rating, then more people will want to rent it. You will probably also be recommended by vacation house listing websites, property management, and vacation rental management companies as a high-end vacation property. In that case, you actually have bragging rights and can set your own price above the market value according to the value you place on your property.
During the summer season, you can significantly increase the price of your house and have no negative impact on your market sales.
• Lower the price of your property when the demand is low. Just like pricing seasonal items, your vacation house needs to be newly priced for the offseason. There is less traffic from guests and low interest in your property then. This makes most vacation homes drop below the target value. In the coastal area of Orlando, properties get more traffic during summer than other seasons. That is why vacation homes are budget friendly in fall or winter. In some way, the seasonal price fluctuations have a boomerang effect on the market sales. Lowering prices when demand is low can make more guests to visit your vacation home. On the other hand, increasing prices when there is high demand in some cases may make customers shy away from your property. Alternatively, you could adopt the following pricing structures regardless of the rating of your property.
Higher for Short Term
Your guests visit your vacation home for different reasons. Some may be on short business, honeymoon, retirement or random travelers. You can take advantage of their short stay and hike the price of your property. In Orlando, visitors get to vacation homes only for a weekend to enjoy the pleasures of Disney World, Magic Kingdom, or an Epcot Experience. In such a case, vacation homeowners in Orlando may raise the prices for only that period that these Orlando’s to-go places Disney world are booming with guests. More often than not, you do not have to worry about having fewer bookings in your competitive landscape. Despite the fact that you are highly priced, your vacation home may have a feature that travelers find more important than others. Like having a swimming pool for example.
Lower for Long-Term You can't depend on high prices on a long-term basis. You will end up with fewer overall bookings – obviously not for a vacation rental business. That would also mean that all your competitors will be ahead of you in terms of customer base and gross rental income. If your guests are staying for more than three consecutive weeks, consider charging less per night. That way, you get more repeat customers and business all season. Do not feel like you need to charge extra because you have a unique amenity like a Jacuzzi tub. It is common for vacation homeowners to say, “I would pay $30 extra a night for that! This is Orlando what do you expect?” To be fair, you cannot judge the value of your property without looking at what others are offering. I would suggest that you use price filters on your listing website to know what your competitors are averaging at. Or better yet, consult your local property management or vacation rental management company in your area to get a breakdown of the top ten houses in the area.
Things To Consider When Doing Your Vacation Home Pricing?
Before you set-off on the intricacies of pricing your vacation home, use these questions to guide you on the perfect pricing strategy.
1. What is your competition? How are their price tags? 2. What are your selling points? Is your kitchen, bathroom, bedroom upholstery different? 3. What’s your booking potential? 4. What are your rental goals? What rate will bring in more guests, hence generate more revenue? 5. What your previous rental history and trend? 6. What’s your worth? Do you command a solid social proof evident in ratings/reviews? 7. Finally, consider using a dynamic pricing model – charge more when travelers are willing to pay more?
Pricing your vacation home is not easy especially in a competitive area like Orlando. However, you can work on striking the perfect price-point balance. Price your vacation home as high as you possibly can but low enough for travelers to pick you over your competition.