How Operators can Increase Revenue and Optimize Occupancy?

Short-term rentals require juggling occupancy rates and nightly prices. To do this – a dynamic pricing model and optimized inventory are key. Our software’s Seasonal and Weekend pricing module helps set a base price and then adjust multipliers to maximize revenue and occupancy. 

Why did we choose to address this problem?

Let’s look at an example to understand the need for this module: 

Assume two operators who handle a similar portfolio:

  • Number of units they have – 2000 
  • Channels they are listed on – MTL Booking Portal, Airbnb, Booking.com, Trip.com, Makemytrip, etc. 
  • Prerequisite – Both the operators are aware of the fact that peak seasons like the Chinese New Year, Christmas, a concert in town, and an F1 race are occasions when rates need to be high because of the high demand. 

Similarly, rates need to be lowered when occupancy dips to attract more tenants. 

Let’s delve into some numbers – 

Operator 1 – John: 

Operator 2 – Clara:

The only reason for the significant dip in Revenue for operator 1 (John) is: 

The challenge to constantly keep adjusting rates on multiple platforms: John failed to update the revised prices on all the platforms that they are listed on. With multiple bookings and multiple channels, the loss in revenue can be significant (as much as 65%  in this case).

Amidst the busy, packed days that operators go through, manually updating all of the pricing for all the categories (Private, Twin, Studio, etc.) on all channels is cumbersome, time-consuming and certainly not the right approach. 

What is the ideal way to approach this problem?

The ideal solution is to set multipliers that will automatically change the price rather than the constant change in rates for every category. 

Operator (Clara) achieves this by setting all of this information once using our system. Consequently, all of the platforms that she lists her rooms get updated ensuring no loss in revenue. 

Clara achieves this by following the below steps on our system: 

  • Creating a base price of the category on the system. Think of this as the minimum selling price of the category.

  • Since she knows when the demand is going to peak, she can set the Seasonal and Weekend multipliers over time. 

 

For example, 

1/12/2023 – 18/01/2024

1/04/2024 – 30/04/2024

 

16/09/2024 – 24/09/2024

Such multipliers can be set for multiple date ranges spread over time and the operator can choose to adjust them if the need arises. 

The final price is now automatically updated on all the channels and the booking portal enabling prospective tenants to pay accordingly.  

How can an operator maximize the use of this module?

  1. If your occupancy rate is low but your average nightly rate is high, you may need to consider whether your prices are discouraging potential bookings.
  2. Conversely, a high occupancy rate with a low average nightly rate might indicate that you could earn more by adjusting your rates upwards.

Ultimately the adjustment in prices will be based on significant factors such as demand, market conditions, competitive pricing etc. Using Property Management Software at least removes the complexity of setting these prices for every category each time. 

Calculation behind pricing:

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3 Responses

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