By now, most short term rental managers and owners have at least heard of, if not tried or used, a tool to help them set prices for their listings. While adopting a pricing tool is a much needed step in the right direction — that is where your pricing strategy should start, not stop.
We sat down with Beyond Pricing's own Kyle Harris, former Director of Marketing and Revenue Management with a large ski market property manager. Kyle now spends his days working with Beyond Pricing customers, and we asked him: what one piece of advice do you have for property managers as they consider their pricing strategy?
His advice: Rethink your minimum prices.
Most owners of short term rentals consider their property as an investment, and they expect to earn a return on that investment. This is where minimum prices come into play. Often, owners think of their mins as the amount they need to earn to be ROI positive. But as Kyle tells us, we need to help how owners think of minimums in order to actually get the most ROI out of their property.
Kyle encountered this firsthand at his former company, where the owners were used to setting a seasonal minimum price and moving on. As he analyzed the occupancy and ADR data using Beyond Pricing, Kyle was able to glean that the seasonal mins owners set were holding them back from earning ROI in the non-peak season.
One by one, Kyle worked with the owners to have them truly understand what their occupancy costs are — said differently, what does it cost PMs and owners when their unit is rented? Kyle was able to show the owners that this amount, the variable cost of occupancy, should be the seasonal minimum, not the owner's targeted ROI rate.
As Kyle used Beyond Pricing to put the new minimums in place, the results were outstanding. Across the portfolio, owners started to see occupancy and revenue in months and seasons they had never experienced. A November booking in the mountains of Utah? With a new keen eye on how to set minimums, per listing revenue increased, which drove an improvement in portfolio performance. And, most importantly, this drove a stronger ROI for their owners.
If you have questions about your minimum prices or want to speak to a member of our team, please don't hesitate to reach out!
Stay safe and healthy,
The Beyond Team