Are you wondering why vacation rental stays unoccupied while your competition is always booked full? It could have something to do with your high vacation rental rate. If your rate is too high, your guests will have high expectations and you will be unable to deliver on and hence, you will lose repeat business. Also, high vacation rate could work as a deterrent to prospective guests. On the other hand, a low rate means you will not attract the right kind of guests and also you will not be able to generate a profit. So, it is imperative you fix the right rate every season.
Here are some tips to help you fix the perfect vacation rental rate without disappointing your guests or attracting unsavory guests.
CALCULATE COSTS ASSOCIATED WITH YOUR RENTAL
Remember, your vacation rental will not be occupied every single day of the year. There will be times when the rental will be vacant. So, it is imperative you calculate all costs associated with managing and maintaining your rental and then take a conservative guess of the number of weeks it will be occupied in a calendar year. This will give you a fair idea what you should be charging your guests during the weeks it is occupied.
The costs you should be looking at include:
- Repairs and renovations
- Utilities
- Insurance
- Landscaping
- Cleaning services
- Advertising and marketing
- Management services
- Licenses and permits
- Accounting
- Transaction costs
Once you have the amount, take a closer look at your competition.
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GET TO KNOW YOUR COMPETITION
Your competition is vacation rentals that are similar to yours. Compare apples to apples and not to oranges. This will give you an idea what vacation rentals that are similar to yours are charging. If you find out that your rate is still too high, you need to take a second look at what you are charging your guests. If your rate is in line with the prevailing rate in the area, you have nothing to worry about. And, if the rate is too low, push it up so that it is as per the market.
BE READY FOR HIGH AND LOW SEASONS
Each area has its own high and low season and the rates that vacation rental owners charge varies based on the season. You too should follow the trend prevailing in the market. Make sure you have one rate for the high season and another for the low season. The rate should be calculated taking into account how you can cover the costs associated with your rental and still make a profit. Basically, in the first couple of years you shouldn’t be looking to make a profit. Your focus should be in establishing yourself and creating a loyal customer following.
You can overcome the difficulties of low season by setting up a minimum stay period. However, do check the local laws before you make any plans. Some areas stipulate the minimum number of days for short-term rentals. You can also offer guests a discount for longer stays. This will help you reduce your turnover costs and also the wear and tear your property undergoes. Usually, if guests book for 7 days or more, you should be looking to offer them a 10% discount on the daily rate.
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DO AWAY WITH EXTRA FEES
Many vacation rental owners end up adding extra fees to their base rate. This can be frustrating for guests. While you can charge for cleaning and taxes, you should not charge for any other expenses that you incur while renting out your vacation rental. These costs should be included in your rental price and that is why it is so important to figure out all the costs associated with managing and maintaining your property.
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