Are you wondering why vacation rental stays unoccupied while your competition is always booked full? It could have something to do with your high vacation rental rate. If your rate is too high, your guests will have high expectations and you will be unable to deliver on and hence, you will lose repeat business. Also, high vacation rate could work as a deterrent to prospective guests. On the other hand, a low rate means you will not attract the right kind of guests and also you will not be able to generate a profit. So, it is imperative you fix the right rate every season.
|1. Calculate Costs Associated with Your Rental|
|2. Get to Know Your Competition|
|3. Be Ready for High and Low Seasons|
|4. Take a Second Look at Your Vacation Rental|
|5. Do Away with Extra Fees|
|6. Don’t Shy Away from Discounts|
Remember, your vacation rental will not be occupied every single day of the year. There will be times when the rental will be vacant. So, it is imperative you calculate all costs associated with managing and maintaining your rental and then take a conservative guess of the number of weeks it will be occupied in a calendar year. This will give you a fair idea what you should be charging your guests during the weeks it is occupied.
The costs you should be looking at include:
Once you have the amount, take a closer look at your competition.
Your competition is vacation rentals that are similar to yours. Compare apples to apples and not to oranges. This will give you an idea what vacation rentals that are similar to yours are charging. If you find out that your rate is still too high, you need to take a second look at what you are charging your guests. If your rate is in line with the prevailing rate in the area, you have nothing to worry about. And, if the rate is too low, push it up so that it is as per the market.
Each area has its own high and low season and the rates that vacation rental owners charge varies based on the season. You too should follow the trend prevailing in the market. Make sure you have one rate for the high season and another for the low season. The rate should be calculated taking into account how you can cover the costs associated with your rental and still make a profit. Basically, in the first couple of years you shouldn’t be looking to make a profit. Your focus should be in establishing yourself and creating a loyal customer following.
You can overcome the difficulties of low season by setting up a minimum stay period. However, do check the local laws before you make any plans. Some areas stipulate the minimum number of days for short-term rentals. You can also offer guests a discount for longer stays. This will help you reduce your turnover costs and also the wear and tear your property undergoes. Usually, if guests book for 7 days or more, you should be looking to offer them a 10% discount on the daily rate.
If you find your high and low seasons’ rate is higher than what your competition is charging, you need to take a look at the amenities you provide your guests. Are the amenities really that outstanding to justify the higher rate? Or, if your rate is too low, you could not be estimating the real value of your property. Maybe your amenities cannot match up to your competition. Then it is time to see how you can offer the same amenities to charge similar rate as the other vacation rentals in the area.
Many vacation rental owners end up adding extra fees to their base rate. This can be frustrating for guests. While you can charge for cleaning and taxes, you should not charge for any other expenses that you incur while renting out your vacation rental. These costs should be included in your rental price and that is why it is so important to figure out all the costs associated with managing and maintaining your property.
The world of vacation rentals has become extremely competitive. You should not be averse to using discounts without impacting your profitability. Use discounts to attract guests during low season or offer discounts to guests for last-minute bookings to increase the number of booking.
Guests love deals and will often ask you for your best price even though you quote one on your listing. So, keep a buffer of up to 20 percent to attract and entice guests to your property and ensure occupancy.
Once you have fixed the rates for low and high seasons and decided on the discounts, don’t hesitate to ask friends and family for their opinion. This will help you see whether your rates are reasonable or you need to go back to the drawing board.
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