If you’re tired of tracking your competitors’ pricing, researching events in your area and manually setting your own rates — and you want to earn, on average, 10 to 40% more revenue — then it’s time to take control of your revenue management. With the right strategy, you can dramatically increase your payout without expanding your portfolio.
Our partners at Wheelhouse are here to help you get started with some key insights on revenue and yield management, so you can make the most out of your vacation rental business and stop “leaving money on the table.”
The basic concept of revenue management (also referred to as yield management) was first pioneered in the ‘70s by British Airways (then BOAC) when they experimented with differentiated fare products. Since then, it’s taken off, implemented into countless industries, including hotels, car rentals, ride sharing and even Walt Disney World! Wheelhouse aims to bring this data-driven decision-making to all short-term rentals so property management companies can maximize their potential.
While every property and market is unique, there are certain measures property managers across the board can take to optimize their revenue and protect their bottom line. Let’s take a closer at minimum night stays, a prominent component of revenue management, and some proven strategies for adjusting your requirements to yield the highest occupancy and greatest profit possible.
Booking Lead Time
Protect yourself from undesirable bookings made far into the future by enforcing a higher minimum number of nights. Typically, guests make bookings well in advance hoping to get good deals, so you may want to consider lowering your prices for far-off dates. An example of this would be setting at least a 10-night minimum requirement for any stay date more than 1 year into the future. As some channels positively reward you in search rankings for having an open calendar far into the future, setting prices and minimum night rules down-the-road dates is one way to take advantage of that perk while adding some protection.
On the flip side, consider lowering your minimum night requirement for last-minute bookings. If your operations can handle the short notice, it can be a good way to drive more occupancy. For example, if you normally have at least a 2-night minimum requirement, consider lowering it for anyone looking to book the next 7 days. Be sure to keep a cleaning fee in place so you don’t lose money on the quick turnaround.
Seasons & Events
While price is an obvious lever for this — and any good dynamic pricing tool should automatically detect big events and seasonality — you can also capitalize on high seasons and big events by implementing longer minimum night requirements. Consider raising your minimum by at least 1 night during high season, and make sure to set custom minimum stays for the duration of big events.
On the other hand, you’ll want to make your property appealing during low season by reducing your minimum night requirement. Keep shoulder seasons in mind too.
Day Of The Week
Conventional wisdom says to require a higher minimum on weekends than on weekdays. While this is generally true, business travel markets, for example, actually experience greater demand during the week and need to model their minimum night requirements accordingly. When setting day of week-specific minimum night requirements, ensure they reflect the market in your specific location so you’re maximizing on demand. And if you’re in a weekend-driven market, consider placing a higher minimum on Thursdays as well to help minimize Saturday night gaps.
Gap Nights
A lot of the above advice has been to increase your minimum night requirement during periods of higher demand. But that also means you might be stuck with 1 or 2-night gaps that fall below the minimum requirement for that period. Consider reducing minimum night requirements for quickly approaching vacancies so your properties don’t sit empty, collecting dust instead of dollars! This way, you’re optimizing for longer stays, but have the flexibility to accept shorter stays when convenient.
From our experience, opening up gap nights leads to about 3-4 more booked nights per month! That’s serious money you could be leaving on the table.
Wheelhouse helps you manage your short-term rentals as professionally and efficiently as major hotels—from understanding performance insights to setting optimal nightly pricing. The service is currently available in over 600 short term rental markets around the world.
There’s More Where That Came From
Wheelhouse is just one of the many partners in Guesty’s rapidly expanding Marketplace. Check it out to see what third-party solutions you can integrate with Guesty to save time, enhance your guests’ experience and streamline every aspect of your property management business.