A Caveat on Lowering Prices
With a lot of uncertainty right now, we caution you against lowering prices too aggressively to gain occupancy in the short term. Lowering your prices to be more competitive can be easily matched by your competitors, and can ultimately lead to a nasty price war.
While occupancy may rebound quickly in the near future as guests begin traveling again, lower ADRs can take years to recover. Use market data insights to assess how aggressively you need to update your strategy on a daily basis. Avoid lowering prices in response to low demand, and instead, analyze booking pace, pricing by listing type, average length of stay, and more key indicators to make informed pricing decisions.
While staying competitive with your pricing is important, it's best to avoid digging price holes in the short term, which could take years to emerge from in the future.
Revenue Management is More than Just Pricing
Revenue management and dynamic pricing are not one and the same. Employing dynamic pricing is a great practice, but with low demand in many markets, property managers are going to have to evolve their strategy to stay competitive when markets begin to bounce back.
Dynamic pricing is one component of a larger revenue management strategy that should also include channel management, marketing, forecasting, and more. Right now is a great time to get a grasp on a comprehensive revenue management strategy to implement in your business, starting with how your inventory is sold and distributed.
Getting Creative with Distribution
If you are currently only selling on one channel (your direct website, Airbnb, Vrbo, etc.), have you looked into expanding your channel presence and getting more eyes on your properties? Low prices may not be enough to get occupancy levels up, and there can be completely new audiences for you to sell to on different channels.
If you are not driving more traffic to your website via increased marketing efforts, then you should not expect more guests to find you. Expanding your online channel presence can be an easy way to increase your potential guest pool. As always, it’s important to be mindful of the cost of distribution on various channels, since we know that commissions and fees can vary. Be sure to review any associated costs with expanding to new channels, and the net rates that you would see after booking.