[Matt Landau]

IDEA

Small incremental changes in pricing and price structure can yield significant cumulative returns over the course of the year. The better your track record, the more bold you can get with these kinds of changes. You don't need software to do this: you need conviction.

ACTION

As 2019 closes, do an audit of your vacation rental business and look for areas in which you can make small incremental pricing changes based on insight from previous months/years. Some of them may feel risky, but worst case, you can always revert back. Here are two examples:

• In high season, consider increasing your prices 5-10% across the board (and promise former guests their “grandfathered rate” to build loyalty)
  
• For direct bookings, consider introducing a Reservation Fee (greater than $0 but less than the fee that OTAs charge) for each booking (Kudos to CJ and his philosophy on 'acting like OTAs' for this idea -- blog post to come)

Keep an eye on the results of these small changes. They will not throw anything off too much one way or another. Use them like temperature gauges that lead you in the direction of your optimal income.

Oh and if you have tried or plan on trying any of these, please chime in below?

 

[Randy]

Matt Landau - This is so true! We had a major issue with our previous PMS allowing us to update/change prices in a smart way and in bulk. We didn't realize the negative impact it was having until we had the ability to do smart pricing. We are now able to do regular adjustments and the outcome has been more than a 50% increase of revenue YOY.

After attending the Data and Revenue conference this year we took it a step further by integrating PriceLabs with pricing automation. So far it is impressive but need to get a year under our belt to give an accurate report.

We also have been charging reservation fees for direct bookings for years now and proves to be a profitable revenue stream. Another added income stream we use is self-insuring the properties instead of offering this through third parties. All reservation incur a non-refundable $49 insurance fee that we collect and use for damages. Since we don't have many damages it has been very profitable over the years.

***Audits for pricing and expenses are a must regularly to optimize a VR business.

 

[RuthM]

Yes, I have done this pricing increase for 2020 and it seems to be working! I have also increased my cleaning fee by €5 and bookings are steady. I have NOT considered a booking fee on direct bookings but will try it. Thanks for the tip!

 

[PatrickP]

Matt Landau i am fan of this idea.
3 years ago, i took your idea to drasticaly incrase my rates (you did this in your hotel), and it went well
i charge no 50% more than before and it is all weel : no drops in the reservations rate, and few angry clients...

I don't charge fees for direct bookings but maybe i do the same thing without kwnowing it : i charge 5% or 10% less than Booking or Airbnb including their fees

For the cleaning fees it used to be a good tip but not anymore (or only for direct bookings) car now in europe, OTAs must show the whole price immediatly

For the insurance Randy how do you apply this non refundable assurance fee ? You force the guests to take this insurance ? Is it full part of your price or an option ?

Regards

 

[Matt Landau]

Matt Landau i am fan of this idea.
3 years agon, i took your idea to drasticaly incrase my rates (you did this in your hotel), and it went well
i charge no 50% more than before and it is all weel : no drops in the reservations rate, and few angry clients...

YESSS! What was the profit increase over the course of 1 year?

 

[Randy]

Matt Landau i am fan of this idea.
3 years ago, i took your idea to drasticaly incrase my rates (you did this in your hotel), and it went well
i charge no 50% more than before and it is all weel : no drops in the reservations rate, and few angry clients...

I don't charge fees for direct bookings but maybe i do the same thing without kwnowing it : i charge 5% or 10% less than Booking or Airbnb including their fees

For the cleaning fees it used to be a good tip but not anymore (or only for direct bookings) car now in europe, OTAs must show the whole price immediatly

For the insurance Randy how do you apply this non refundable assurance fee ? You force the guests to take this insurance ? Is it full part of your price or an option ?

Regards

PatrickP - Glad to hear this increase has been beneficial for you business. The non-refundable insurance is just a charged fee similar to any other fee you may add (screenshot attached). We originally tried to work with CSA Travel Insurance but they wouldn't work with international companies so we created our own. It covers all accidental damages and has proven to be very profitable as these types of accidents are rare.

Hopes this helps!

 

[PatrickP]

YESSS! What was the profit increase over the course of 1 year?

In fact 50% as i am in a town with no many hotels
I am full booked