That’s the question on the mind of vacation rental homeowners as another peak booking season approaches. Before making a decision on which of the three is right for you, we recommend first asking yourself a few other important questions.
How were bookings last season?
If you were completely booked by February, you could probably raise your rates. If, on the other hand, it was a struggle and you had to reduce your price for those several weeks that continued to remain available, that’s a sign that you should keep your prices the same.
What is my competition charging?
One of the best methods of assessing your pricing is to see what comparative rental properties in your area are asking for their homes. Conduct a targeted Power Search to view other homes similar to yours. First, search in your immediate town. Put in the number of bedrooms, the number of guests your home accommodates, and some of your home’s key amenities. How does yours stack up to similar homes in terms of price?
Next, put in a larger geographic area, such as all of the Mid-Cape or the entire islands, for example. After all, your competition can be located in surrounding towns. Some vacationers have never even been to the Cape, Martha’s Vineyard or Nantucket before, so they may be conducting a very broad search.
I agree that it’s not easy comparing homes – your home might be newer and have more amenities, while another in the same price range might be closer to the beach. But you’ll get a good sense of exactly which properties vacationers are comparing your home to and how they are priced.
Can I adjust my price cap?
While you’re conducting the Power Search, check out the price cap options, keeping in mind that when vacationers choose a price cap, the listings that suit their requirements will be presented in order from most expensive to least. So, let’s say you’re thinking of asking around $2000 a week. Don’t be tempted to tack on an extra $50 to make it $2050 – your listing would not come up in a search with the cap of $2000. By the same token, resist the temptation to ask $1,995 (an old marketing trick to make the price sound lower) – all of the homes listed at $2000 would come up before yours.
Would I benefit from using tiered pricing?
Keep in mind that the most popular weeks of the summer are the last two weeks of July and the first two of August. The most difficult weeks to rent are the last week of August and, believe it or not, the 4th of July week. With schools starting earlier these days, the last week of August is no longer popular with families who have school-age children. The 4th of July is a real enigma. My theory is that some vacationers feel that the Cape and Islands will be too crowded that week. Others may have longstanding, annual, family or community events elsewhere preventing them from vacationing then. At any rate, you might price at least the last week of August at a lower rate than the other summer weeks, and perhaps offer additional incentives for vacationers to book either of those weeks. Our listings include the option to post “Owner Specials,” for example, or “Last-minute Availability Alerts” to further highlight a property’s availability, incent vacationers, and draw greater attention to a listing.
Should I lower my prices in the shoulder season?
It’s all about supply and demand. The shoulder season – particularly the fall – offers so many advantages for vacationers: warm days, cool nights, no humidity, no crowds. But the inventory of available homes goes way up as the demand goes down. If you want to rent your home as much as possible during the shoulder season, you’ll want to offer attractive rates, which might be as much as half of your high season weekly rate. Also consider a shorter minimum stay, perhaps a 3-day minimum, but a high enough daily rate to make renting for such a short stay worthwhile to you.
Am I comfortable with my pricing and booking process?
Occasionally I’ll mention to a homeowner that I think their prices are low. Some respond that they are more comfortable with their prices where they are – they book early, few vacationers ask about a discount, and they get a lot of repeat renters (the best kind of renter!). Other homeowners are okay with more aggressive pricing, especially in the early booking season, even if it means they end up negotiating from time to time and even lowering the price as the rental season nears. My advice is to find your own comfort zone and stick with it.
I’d love to hear what your pricing plans are for next season.