Adjusting your prices to capture last-minute bookings is one key to effective revenue management.

As a vacant night approaches, the likelihood that the night will book drops. Therefore, its wise to adjust your pricing strategy on those days to try to get 'heads in beds'.

In any industry with expiring inventory (you can't sell last night's vacant room), an effective strategy for selling expiring inventory is based on a Distressed Pricing model.

Each day, our Distressed Pricing Model evaluates the likelihood that a night will book, adjusting your prices downward when this likelihood drops to an unacceptable level.

Lets examine two considerations that cause each day's likelihood-to-book to drop.

Approaching Vacant Nights

Usually, our Distressed Inventory Model is used to price vacant nights in the next fourteen days.

For vacancies more than fourteen days out, the Distressed Model has a minimal impact on your listings' price. This is due to the fact that about fifty percent of Airbnb bookings occur in the last thirty days. Therefore, having a few vacancies in the next 30 days is not cause for concern. In fact, its usually ideal.

However, if the rooms you've wisely held open do not book as predicted, lowering prices is the last few nights before a vacancy is an effective way to capture bookings.

Orphan Nights

The term 'Orphan Nights' refers to a vacant night between two bookings. These nights are usually very difficult to book.

Our Distressed Inventory Model begins lowering prices for Orphan Nights as soon as four weeks out. Again, the goal is to increase the likelihood that the subset travelers who are in the market for a one-night stay choose your listing.

Interestingly, while analyzing historical booking data, we found that some 'Double Orphan' blocks are also more difficult to book. These 'Double Orphans' include Sunday/Monday and Wednesday/Thursday openings. In reviewing your calendar daily, our pricing algorithm recognize these Double Orphans, and adjusts prices when the "likelihood to book" drops below an acceptable level.

Pricing Based on Nearby Listings

As noted, in order to win bookings, the Distressed Inventory Model evaluates the likelihood that near-term vacant nights will book, and adjusts the price of those nights to make them more attractive.

The most effective way to win bookings & still keep your prices high is to observe how other listings near you are priced, and basing the price of a given day off nearby available listings.

By observing nearby similar listings and pricing based on this data, we can set a price that will help you win bookings, while also keeping your nightly revenue high.

Controlling the Distressed Model

Our Distressed Inventory Model will never drop your listing price more than 30% below your Base Price. However, if you want to set a minimum price that is higher or lower than this number, you can set this price on each listing.

If you want to adjust the minimum price for your listing, please visit your dashboard, and click through to your listing to adjust your Minimum Price.