Coming up with the ideal rates to charge for your vacation rental property can be a confusing and stressful exercise. If your rates are too high or too complex, fewer travelers will book your home. If you set your rates too low, you’re likely to leave money on the table and you might attract disrespectful guests.
To make life easier, we’ve compiled some of our best rate setting tips to help you determine the optimal amount to charge for your vacation rental.
Research the Competition
If other homes in your market are charging significantly less than you, you’re going to have a hard time convincing people to book your property.
To figure out the average rates for vacation rentals in your area, try researching listing sites like HomeAway and VRBO. Take note of how much other owners are charging and always check calendars to understand which properties are getting booked on a regular basis.
When comparing rates, be sure to look at homes that are similar to your property. A 4-bedroom home with a private pool is likely to command a much higher rate than a 2-bedroom condo with shared amenities.
Is your property new to the market? If so, it’s a good idea to set your rates on the lower end of the spectrum when you’re getting started. This will help you get some quick bookings and gain credibility by securing great reviews from travelers. Once your listing has a few awesome reviews, you can consider raising your rates.
Adjust Your Rates
Every market has high and low seasons, so don’t forget to account for fluctuations in traveler demand when setting your rates.
Usually seasonal trends are fairly easy to spot. For example, if your property is located in a warmer climate, demand is likely to increase during the winter months. Try researching hotel rates in your area to determine the best times to adjust pricing for peak seasons, major events and holidays.
In addition to adjusting your rates for seasonal demand, it’s a good idea to offer discounted rates for longer stays. Stays of 7 days or longer should receive a discount of approximately 10% off the total nightly rate. Encouraging longer reservations helps to keep turnover costs down and minimizes wear and tear on your home.
Say “No” to Extra Fees
Nothing frustrates travelers more than finding a great vacation rental only to discover that an excessive amount of extra fees have been added to the base rate. This “bait and switch” approach might entice people to click on your listing, but you’re likely to see a decrease in confirmed bookings.
Vacation rental travelers are used to additional costs like taxes and cleaning fees, but all other expenses associated with renting out your property should be included in your nightly rate.
It’s also important to charge a reasonable amount for cleaning services. Most cleaning fees range from $40 to $60 per bedroom and people are likely to shy away from listings that exceed this amount.
Many travelers are on the hunt for the best deal possible when searching for vacation rentals. As a result, employing the right discount strategy can have a huge impact on the performance of your property.
You obviously don’t want to discount every booking, but offering reduced rates during low season can help your listing stand out from the crowd. Don’t forget to promote any special offers by highlighting the details within your listing’s headline.
Travelers will often ask for the “best price” when making short-term inquiries, so try leaving some room to negotiate. Offering discounts of up to 30% to last-minute bargain hunters might give you a leg up on the competition.
Ask friends or family to review your rates and take note of how they react. Getting candid feedback can be a great way to determine if your pricing is reasonable.
At Evolve, we offer free rate consultations to every homeowner in our network. After comparing your property to similar homes in the area, we work to establish pricing that is sure to optimize the performance of your rental. Better yet, our Success Management Team will continue to monitor your rates and make suggestions for improvements whenever market conditions change.
To learn other ways Evolve is making vacation rental easy for owners, click here to check out a 60-second video about our services.