How to build a strong revenue management strategy?

Revenue management is a key concept within the short and mid-term rentals sectors. Effective revenue management enables property managers to respond to market demand and optimise rates, ensuring their pricing is competitive and their occupancy and income are as high as they can be.

Hospiria users are able to use two different revenue management methods: dynamic nightly pricing, and seasonal pricing (also know as Length of Stay pricing).

Here we'll take a look at how to make the most of dynamic nightly pricing.

 

Should I use dynamic nightly pricing for short-term rentals?

 

Dynamic pricing constantly reads the market data on prices, occupancy, and bookings trends for similar properties close to your property location. This provides users with the most up-to-date view of the market.

Just as importantly, dynamic nightly pricing automatically adjusts the nightly price within the criteria that you set for a property. This enables your prices to constantly respond to changing demand, pushing prices higher to reap higher nightly rates or making them softer to drive more booking.

The combined advantage is that the rates of your properties are constantly optimised to suit market conditions, and the regular updates show major platforms like Booking.com and Airbnb that your listings are frequently optimised. All of which helps your listings to come higher in their search results.

 

How can I use dynamic nightly pricing in Hospiria?

 

Hospiria has integrated with Pricelabs for our dynamic nightly pricing data. Pricelabs are one of the leading revenue management data companies, and integrating deeply with them fits our ethos of only integrating with the best.

For our Software Subscription Partners

To set up your dynamic nightly pricing, all you need to do is connect your Pricelabs account to your Hospiria account.

Once connected, you can customise your prices and set your revenue management strategy.

Users are able to set minimum, base, and maximum prices. In addition, property managers can choose the minimum length of stay that varies by the time of the year, days, and weekends. The minimum length of stay and date-specific overnight automatically adjust within the property management system. Moreover, Hospiria users benefit from customized seasonal profiles and discount profiles. 

Software-only users can define all of the above settings within their PriceLabs account, and these will pass through Hospira and out through all the online travel agencies.

 

 

For our Software + Service Partners

One of the major benefits of our Service Suite is that we can execute a pricing strategy that is agreed with a Partner. As part of your onboarding, we will agree your minimum rates, base rates, and target income and build the best revenue management strategy to achieve your aims.

We will then oversee the execution of the revenue management strategy, and review it with you regularly - weekly to start with, then monthly once the strategy has been proven to be successful.

One of the major advances of this approach is that we can manage the complexity of executing a good revenue management strategy and bring all of our experience to help get it right first time.

One further bonus of this approach: your Pricelabs subscription is included within your Hospiria subscription. So you get the benefits of dynamic nightly pricing, and no extra cost.

 

How should I create a good revenue management strategy?

 

Technology can be a significant help for executing a good revenue management strategy. But it doesn't replace a good revenue management strategy.

Here are the top tips on how to execute a good revenue management strategy using dynamic nightly pricing:

  • Be flexible: dynamic nightly pricing is likely to stretch your pricing further than you otherwise would, both up and down. Sometimes you'll take cheaper bookings in lower seasons, but this can really help you get better traction on platforms and take higher-priced bookings in high season
  • Make use of adjustable criteria: did you know you can auto-adjust the length of stay based on how far away your stay is, or automatically provide last minute discounts? If you establish these criteria during set-up, then you can loosen or strengthen them depending on how strong your performance is.
  • Be honest about what you really want to achieve. Everyone wants the highest occupancy and the highest rates combined. But it's a competitive market out there, so try not to let the great be the enemy of the good.
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So... Should i use dynamic nightly pricing for short-term rentals?

 

In our experience, the core advantage of dynamic nightly pricing beyond the market data and automated updates is that it will “stretch” your prices lower and higher than you otherwise would. This strategy will increase the occupancy rate during lower demand periods as well as nightly rates in higher demand periods, therefore, maximizing revenue.

The benefit of using a dynamic pricing strategy is the competitiveness of your rates generating more bookings and increasing occupancy overall. Some Hospiria partners have seen gross profit increase by 40% because of introducing the dynamic nightly pricing.

You should consider some key factors, such as your typical guest stay, where they book, and your type of market. But dynamic nightly pricing can really help make a big difference to your revenues.