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The Perks Of Professional Pricing

Red Adair once said, ‘If you think it’s expensive to hire a professional to do the job, wait till you hire an amateur’ ... and this could certainly apply to the advantages of engaging revenue management experts, writes Eric Hammond.

By: Eric Hammond

31 July 2023

Professional short-term rental companies like The Stay Hub utilise a hands-on approach to revenue management with industry-leading technologies. On a daily basis, experts work in tandem with advanced technology to determine the price point of each property around factors such as geography, market insights and competitive sets.

This can be managed up to 18 months into the future, with the right systems capable of calibrating a forecast of demand based on a myriad of components, including historical data, future events, seasonal changes, holidays and booking trends.

Major Drivers

When it comes to short-term rentals, events are major drivers for bookings. While there may be core demographics that favour this accommodation type over others, unless an event is well-known it can easily go unnoticed for a long time. Even more so in big cities like Auckland, where something is happening every other week.

System generated research is instrumental in pricing optimisation and driving higher average daily rates. It can identify key events before they are widely known and determine the exact dates that have spikes of activity well in advance.

Automation, Reach

At least twice a day systems will recalibrate price points and automate distribution to the online travel platforms you market on. While self-managing a property without the capacity or expertise to take advantage of such systems would limit the practicality of listing in large volumes, professional management will see your property pushed out to all major rental platforms, with the ability to automate data-sends to hundreds of websites at any given time.

This drastically increases your marketing exposure and conversions.

Experience Counts

In addition to revenue management software, another central consideration to success is having experienced revenue experts behind the tools. If you do not know what to do with the data, there is only so far you can go.

A revenue management team will review price points constantly throughout the day, monitoring traction and reservations. Their knowledge of the area, market, and properties they manage paired with technological insights will ensure pricing is adjusted accordingly, events and seasonal variations are maximised, and other decisive elements such as booking pace and minimum night stays reduce gaps in your calendar and work for demand, not against it.

Setting the right length of stay is particularly important. Longer restriction periods during peak seasons can optimise occupancy and revenue, but a minimum stay that isn’t on par with the market can impact everything from search visibility to the number of orphan days throughout the week.

Rather than relying entirely on pricing algorithms, using technology as a complementary tool in your revenue management strategy also means any unpredictable or last-minute booking influences are easily catered to.

No revenue management technology could have possibly forecast such events as the recent Auckland flash floods or the first onslaught of Covid-19.

Demand Elasticity

Mastering the elasticity of demand is key to optimising pricing and can take years of practice.

While a range of formula for this exists on the internet, a revenue management system can easily make advanced calculations for a pricing expert to dissect.

It is safe to say many people would assume an increase in price would result in a decrease in demand and vice versa, but in many circumstances this is not the case. What happens when a large portion of people then perceive the service or product as lower in value? Pricing that is seen as too cheap can also foster distrust, with many people wary of being scammed. For short-term rentals, a similar sentiment can be said when booking surges occur due to local events. Geographic demand can outstrip supply and, regardless of price, if you are travelling you will need accommodation.

Finding the sweet spot for pricing optimisation is a delicate balance of technology and market expertise. If you would like to discuss the benefits of professional property management to make an informed decision, The Stay Hub is here to help.

The Stay Hub offers a full range of Airbnb and short-term rental property management services, covering everything from extensive global marketing to hands-on revenue management, guest vetting, cleaning after each stay, and plenty more. We have a technological and data-led approach, with owner and guest experience at the heart of our operations. Visit www.thestayhub.co.nz.

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