When setting up and running a successful luxury vacation rental property business, one of the most crucial elements is ensuring the price is right for your nightly rates.
Pitch your rental rates too low and you will reduce your profit levels, ask too much and your occupancy levels will plummet. So, it pays to ensure your nightly price is right.
To help you maximise your profit levels, you can take advantage of various technology and techniques – or talk to experts like Shore Concierge, the Caribbean vacation property rental management specialist. We have an outstanding success rate and our clients have an average occupancy rate of 70%.
But your pricing strategy needs to be adaptive and flexible to take account of changing demands, special events, seasonality and other factors.
Here is some handy advice from Lou Jupp, founder of Shore Concierge, to help you ensure the price is right for your vacation rental property.
Look at the competition
Researching what rivals with similar vacation property rents are charging throughout the year will give you a solid baseline to examine how much your nightly fees should be. But this is only one element of pricing. Then you need to factor in expected occupancy levels to see how much your vacation rental property might make in revenue.
Factor in seasonality and special events
When thinking about daily rental rates, vacation property owners should also take into account seasonality and special events. At peak and holiday times, demand will be such that you can raise your rates, but in slow seasons, you will want to lower them to encourage guest bookings. Special events, conferences and sporting events will also increase demand. Continually test this to see whether rates need tweaking in line with demand.
Calculate your costs and expected profits
Once you have an idea of your potential revenue, you will need to factor in your costs, so you get an idea of total business profits. If you are just starting your vacation property rental business, this will be an estimate, based on competitor research and informed estimates, but if your business is established then you will have an accurate idea of costs from year to year to form your 2023 projected costs and profits. A 10% rate of return is a reasonable target for many businesses.
Take advantage of technology to set goals
Technology can really help when it comes to setting your financial goals and factoring in multi-factor elements. You can also take advantage of dynamic pricing apps and software to ensure you are charging optimum fees. They take past and present market data and information about your property to come up with a price per night. This is constantly adjusted by the algorithm and over time becomes more accurate. You can often set a minimum rate and manually input rates, if you prefer.
Reward customer loyalty
Repeat business costs less to secure than that of first-time clients and happy customers make excellent ambassadors for your luxury Bahamas vacation rental property. So why not reward customer loyalty by building in a discount and spreading the word? It will make your loyal customers feel cherished and rewarded and will pay dividends for your business, too.
Never stop learning
Pricing can be affected by so many factors that you should constantly be learning and adjusting your nightly rates accordingly.
Get professional assistance
Shore Concierge provides a comprehensive range of financial services to help you assess your accounts, increase your income, keep track of your costs and boost your profits. You can monitor performance and control all aspects.
We will apply our in-depth local market knowledge and examine your pricing policies and occupancy levels to see what can be improved to add to your bottom line. We can also provide sales and marketing help to get your properties noticed and to ensure you maximise bookings.
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