For those new to vacation rentals in Breckenridge, setting nightly rates might seem simple. Think of your costs and add a profit margin on top of that, right? Not quite.
As experienced managers, we know that developing a pricing strategy involves a more complex process with many variables, and it continually evolves, requiring constant monitoring.
The base nightly rate for your rental is primarily shaped by its type, size, and amenities, but local market competitiveness is equally important. Also, understanding the seasonal patterns in your market will provide valuable information for you to make more money.
At Ski Country Resorts, we see pricing as a dynamic and continuous process, and we even have a capable team of revenue optimization specialists who work diligently to adjust prices every day to enhance your revenue.
Want to learn the ins and outs of how we manage revenue? In this blog, we'll bring you a proven seven-step strategy to boost the profits of your rental in the Rocky Mountains.
First things first: What exactly is revenue optimization?
In short-term rentals, revenue optimization is the art of working your nightly fees to get the right guest at the right time for the right price. This requires a deep understanding of market trends and ongoing pricing adjustments to keep your property competitive and fully booked.
With a commitment to revenue optimization and by implementing the following strategies, you can take your vacation rental business to the next level of success.
Let's get into it!
Step 1. Find the perfect pricing tool for your rental
While continuously adjusting your vacation rental’s price is complex, there are advanced software solutions that can simplify revenue management and dynamic pricing.
By collecting historical and real-time data and examining similar listings in your region, these automated tools help establish the best pricing strategy.
You can expect these systems to take over around 70 to 80% of your workload, freeing up much of your time. Here’s what they can do for you:
Changing prices in line with demand and occupancy changes.
Determining the best competitive pricing for both high and low seasons.
Determining the ideal stay length based on seasonal trends.
Optimizing your approach to days with no reservations.
Identifying major local events that might not be on your radar.
Handling last-minute cancellations and rebookings to minimize revenue impact.
Here’s an overview of the three tools we recommend most:
Beyond: Previously known as Beyond Pricing, this tool offers a user-friendly experience for a more automated approach. However, it's advisable to stay engaged with the platform. While it may have some customization constraints, it performs well in essential pricing adjustments.
PriceLabs: This tool offers exceptional flexibility and customization, allowing you to optimize revenue with minimal effort. PriceLabs integrates smoothly with various systems, providing owners and property managers significant control over their pricing strategies.
Wheelhouse: Positioned between the first two options, Wheelhouse excels in revenue optimization but demands regular monitoring and adjustments. Its open-source integration capabilities with various tools and platforms enhance operational efficiency.
Heads Up: Expect to pay around 10% of your earnings for each of these tools. However, despite the fees, the value they provide is well worth the investment.
Step 2: Understand and outperform your competition
In our experience as Breckenridge vacation rental managers, regularly analyzing your competition is crucial. This includes identifying comparable properties in terms of location, size, and amenities, and adjusting your strategy based on their performance to stay ahead.
While tools like the ones we've highlighted offer real-time insights to ease this process, it's essential for property owners to understand which aspects to prioritize.
Here are a few aspects to focus on:
Amenities: Evaluate the amenities you provide and compare them to those available at similar properties in your area.
Size and guest capacity: Compare the size and guest capacity of your rental with other properties nearby.
Location: Look into neighboring properties to get a clearer picture of the market landscape.
Performance: Assess metrics like revenue, average daily rate (ADR), and occupancy rate. The tools we discussed above offer comprehensive performance data, including competitor insights.
Quality: Look into guest reviews and ratings for your property and similar listings to measure how well guests are responding.
Collecting and comparing this data helps you make strategic improvements, boosting both your property's appeal and the guest experience.
Step 3: Establish your pricing strategy
Establishing pricing metrics means determining the principles and criteria that will guide your nightly rates.
The initial step is to establish a baseline price. Begin by calculating your expenses to determine the minimum rate required to break even. With competitor analysis in hand, you can strategically set this base price.
As you set your pricing metrics, consider the seasonal variations in occupancy rates. Establish minimum and maximum price points to accommodate slower periods with reduced rates and capitalize on peak seasons with higher prices.
While offering lower prices than competitors can seem like a good strategy to attract bookings, it’s important to be cautious. At Sky Country Resorts, we establish a minimum rate and never go below it.
In addition to seasonal changes, local events and weekday versus weekend variations can impact pricing. Dynamic pricing tools are effective in automatically adjusting rates based on these factors across all your booking platforms.
Step 4: Define your pricing guidelines
Having set your baseline, minimum, and maximum rates, it's time to apply specific rules to optimize your revenue strategy.
Here are a few examples:
Adjust Rates for Extended Booking Windows: Consider higher pricing for bookings beyond your standard time frame.
Last-minute discounts: Attracting last-minute guests by offering discounts for short-term vacancies can effectively fill gaps between bookings.
Orphan day discounts: Consider reducing rates for “orphan days”—those isolated gaps in your rental calendar between longer bookings.
Minimum and maximum night stays: Modify the length of stay requirements to better suit the preferences of your target market.
Weekday discounts: To boost bookings during slower weekdays, consider offering reduced rates compared to weekends when demand is higher.
Discounts for longer stays: Encourage longer stays by providing discounts for bookings of a week or more. This strategy can help reduce vacancies and decrease cleaning and operational expenses.
Once these rules are in place, review their effect on your occupancy and revenue. Analyzing the results will enable you to continuously enhance your pricing strategy.
Heads Up: Keep in mind that setting too many rules might limit your property's appeal to potential guests. Maintaining a level of flexibility helps ensure your rental remains accessible to a wider audience.
Step 5: Select the right booking channels
At this time and age, when it comes to vacation rentals, at least, we know very well that everything happens online. For that reason, listing your property on multiple platforms increases your visibility and attracts a broader audience.
Where to start? With millions of daily users, popular sites Airbnb and Vrbo will greatly increase your exposure. Here’s a closer look at each platform:
• Airbnb: With its user-friendly interface, this platform simplifies tasks like payment processing and insurance. Airbnb is a favored option for many new renters.
• Vrbo: In the U.S., Vrbo is a strong alternative to Airbnb, especially in traditional vacation rental markets. Listing on Vrbo also provides visibility on platforms like Expedia and Hotels.com, which is a significant advantage.
Note that your listing is the online representation of your property. To keep guests satisfied, make sure to provide all relevant information about the rental and its condition.
Step 6: Monitor your performance and boost visibility
With your metrics, rules, and channels in place, it's time to track your rental's performance. Keep a close watch on booking activity and make any needed pricing adjustments based on early results.
In the beginning, a good approach is to price your rental just below similar properties in your area. Enhance your visibility by providing a 20% discount on the first three bookings through Airbnb and Vrbo, as these platforms often provide a promotional boost for new listings with few reviews.
However, avoid keeping prices low for an extended period. Once you’ve accumulated positive reviews and built a strong reputation, consider reserving lower rates for off-peak seasons. Good reviews will provide you with the leverage to explore higher pricing strategies.
Step 7: Regularly review and adjust your revenue management strategy
To maximize the success of your Breckenridge short-term rental, regularly track your performance, analyze competitor data, and adjust your strategy as needed.
Here are additional tips from our experts:
If your vacancy rate over the past 60 to 90 days is lower than the market average, think about reducing your base rate by 5-10%.
On the other hand, if your vacancy rate for 60/90 days is significantly above the market average (over 10%), it may be time to increase your base rate by 5-10%.
If your 60/90-day vacancy rate is fine, but the 30-day rate is too high, you might want to offer a discount for the upcoming month to fill those open dates.
Extra tip: Enhance your revenue potential by working with a property management expert
At this point, it’s probably obvious that optimizing profits from your Breckenridge rental involves a strategy beyond just adding a profit margin to your costs.
If you think that all this sounds too complicated or like too much work, you can always find the experts to do it all for you.
If all of this seems overwhelming or too much to manage, consider hiring professionals to handle it for you. Experts in property management and revenue optimization, like our team at Ski Country Resorts, can take care of the complexities and help you achieve your rental goals efficiently.
With our deep knowledge of pricing strategies, we are dedicated to maximizing your revenue continuously, from season to season, month to month, and day to day.
