There’s a lot to consider when trying to get the most out of your holiday rental. Appealing photographs, a powerful description and – perhaps most importantly – the right pricing.
Price your property too low and you won’t be maximising profits. Price it too high and you’ll be losing out on bookings to cheaper options nearby.
When it comes to seasonal pricing, it’s all about having an awareness of the rental demand in your area. As demand rises and falls in your area, you can fluctuate your pricing in order to maximise bookings and profit.
A great place to start is looking at peak visitor times for your area, be it the holiday season or special local events and celebrations.
Then, by getting a sense of the pricing of nearby holiday lettings, you can establish a competitive rate. Setting rates for future seasons well in advance is essential so that early bookers are paying the right price – and you can make the most out of your rental.
Your Baseline Pricing Strategy
Before considering seasonal pricing, you’ll need an effective baseline pricing strategy.
In order to best work this out, you should know your minimum price – this is your ‘break-even point’. To calculate this, you’ll need to work out the monthly and yearly costs of maintaining your property. These include:
- Monthly overheads such as rent and bills
- Renovation and maintenance costs
- Cleaning services if relevant
- Toiletries, food & drink if relevant.
You can then use this to work out how much you need to take per night or per week in order to break even.
Next comes profit. You can decide how far to go above your break-even point by researching other properties nearby that have similar features. These include:
- Number of bedrooms
- Number of bathrooms
- Whether you have a garden
- What amenities you offer
- The style of the décor.
While sometimes overlooked, all of these elements can drastically change the pricing.
It can be helpful to consider your target guest when making comparisons – in order to find and research properties that could be your direct competition. Research is an essential step. If you skip the research and price your property too high for the area, you could lose bookings to better deals nearby!
So, you have your baseline pricing secured. Now you can start thinking about how to adjust the price of your rental throughout the year.
By pricing in a way that increases alongside the demand for your rental, you are maximising your profit and bookings. Additionally, you are still keeping a competitive price within the local market.
Pinpoint your unique peak seasons and days. This will depend on your location and the popular holiday periods of your target market – be it school holidays, summer or the Christmas season.
A property in a skiing location will have a different peak season than a property in Cornwall, which will in turn be different to properties in London. The months in your peak season will be your most profitable and the most important to price high for, while still aiming to stay competitive.
In the months outside of your peak season, however, you may receive far fewer bookings. You might find that your competitor’s prices have been lowered – have a look at them and lower your own. Optimising your bookings can be a constant learning curve, especially in the first year when you don’t know what to expect.
Be aware of when and why guests might be looking for accommodation in your area. There will be certain days throughout the calendar when you can expect a spike in holidays and mini-breaks or a rush of people to your area in particular. These include:
Bank Holidays and Celebrations
- Bank holiday weekends
- New Year’s Eve
- Valentine’s Day
- Mother’s / Father’s Day
- Christmas and Boxing Day
- Easter Sunday and Monday
There will usually be a rush of demand around state school holidays. Around this time you can expect parents to be taking time off work and looking for family accommodation in beach towns, country getaways, or to be closer to relatives. Autumn half-term, Christmas, Spring half-term, Easter and Summer holidays are all times when you can expect a spike in bookings.
Special Events in Your Area
These are events which bring tourists, and therefore demand for your holiday rental. If for example, your property is in Notting Hill, your area will likely see a burst of demand around Notting Hill Carnival. This makes this a perfect opportunity to raise your rental price while still remaining competitive.
If you live in North or North West London you can also expect to see increased demand on the nights of big rugby and football games, as 75% of London matches are held at Twickenham and Wembley. These price surges also occur around the time of festivals and events, like the Chelsea flower show.
More generally, you may find that weekends are more likely to be booked than weekdays. In this case, lower your weekday prices to make these days more attractive to flexible bookers.
To Sum Up…
A great place to start when working out the right price for your rental is your competition. Ensure that you take into account how the features of your property compare. The ideal rate for your short-term letting is attractive and competitive but takes advantage of dates when rentals are in demand.
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If you think you could benefit from some help to find the best pricing strategy for your property, speak to one of our experts at Keey today!