Should I lower my rates on airbnb?
Listen to the podcast episode and read along with the transcript to find out.
Estimated reading time: 7 minutes
Airbnb Price Optimization 2023
Read the transcript to understand Airbnb Price Optimization for summer 2023. Key here is to be affordable.
Hi Everyone its John. Welcome to vacation rentals with John the podcast that goes over Airbnb vacation rentals, and all things short term rental. I want to share with you a phone call I had last night with my good friend Amanda, she runs a vacation rental management company out of Florida, she has about 16 units, 16 doors, and she was freaking out, because her clients were a little upset about performance. They weren’t seeing a lot of bookings, their August is empty. And they were just feeling like they wanted a change of company because of factors that are beyond her control. So I advised her to look at why. And it’s really obvious as to why. And when you look at the rates, she has her rates sitting exactly where they were six months ago.
Vacation Rental Rates in Florida Are Super Low This Summer of 2023
However, we’re going into probably the worst economic environment we’ve seen in a very long time since 2008, since the pandemic, so what’s going on is if you are not affordable, you are probably not seeing a lot of activity on your Airbnb listing. And affordable means a very different thing than it did last year. Now we’re talking extremely different. There’s eight, nine bedroom properties going for $180. By Disney World, there’s three bedroom condos going for $40 a night. And these are not nasty properties with bad cleaning standards and horrible furniture, these are actually pretty nice places to stay with over 60 plus positive reviews. So what’s going on? Well, we hear it a saturation thing we hear about all the factors affecting our industry in our markets. But what’s going on is people don’t have as much money to travel that should be obvious at this point. And a lot of hosts haven’t really adjusted their pricing. So they’re on Facebook groups, they’re complaining to their property managers. They’re upset about performance.
Affordable Airbnbs are in right now. They are more bookable.
Well, there’s one thing you can do to increase your performance in the short term. And that’s becoming bookable and becoming affordable. Because cheaper properties are sexier. Right now, people want to book cheaper properties, we need to think there’s families that just got out of school, and they want to travel to the beach, they want to go to the theme parks, they want to go to see nature. However, the chief budget officer of the house mom and dad are worried about spending because people are taking a defensive position and cutting back on their spending, because there’s no telling what tomorrow is going to bring. So by becoming more affordable, and becoming an affordable travel option for them, you’re increasing the chances that they’re going to book with you, which is a great thing.
Flexible cancellation policy on Airbnb and VRBO is the way to go.
A couple of podcast episodes ago, I discussed a couple of tactics you could use, I just want to sum them up these tactics you can actually use to increase your short term performance. One is allowing your cancellation policy to actually be flexible and not so strict, because people are afraid to book with those who are going to lock them into an agreement that they can’t get out of. So by being more flexible, it’s not going to impact the bookings you already have, it just impacts the future bookings, bookings, you’re going to get with that setting, right.
Instant Booking helps you rank higher with the Airbnb algorithm.
So you’re going to open the door for a brand new group of guests that only will book with people who have a more flexible cancellation policy. So that’s one thing you can do to Instant Booking. If it’s not on the search algorithm on Airbnb, it heavily favors the listings that have Instant Booking on, so you want to turn it on, if you’re not getting a lot of interest. Three, it’s super important to look at your clean feet. If your cleaning fee is super pricey, you want to reduce it or eliminate it altogether. You may be wondering how I’m going to pay the cleaner, but you can still pay the cleaner, you just have to bake in the clean fee into your nightly rate. Or that’s a cost that you may need to eat because guests are going to really prefer a rental with no cleaning fee or with a very low cleaning fee.
The number one thing you can do to increase bookings and your occupancy rate is make your airbnb more affordable.
The number one thing that you should do to increase your bookings right now, if you haven’t already, is to make your listing more affordable. Consider decreasing your rates by first going in analyzing your competition. What are your competition doing right in your own backyard? Look at the Airbnb map right where your resort or your neighborhood is, look at your competition and ask yourself, What are they doing? What are they priced at? Find out what their policies are, find out what amenities they have, and then go back to your listing and more competitively price your rental and I guarantee you you will see an increase in search traffic. If your rentals actually bookable doing those small changes will increase the search activity there and it will increase the likelihood of you landing more bookings.
Airbnb is returning to their roots that made them big during the Great Recession.
Airbnb is going back to their great recession roots how they started their company and that was becoming an affordable travel option for 20 Somethings who needed a place to crash when they were in a large, expensive city going to a conference, that’s how they started their business.
So by going back to their roots, they’re going to champion more affordable travel options, because that’s going to increase the likelihood that they’re going to have more bookings and more transactions, so they can make more money and grow their stock price. So by you being in line with that mission and being more affordable, give the guests what they want. Right now, the guests want more affordable travel options. If you give them what they want, you will benefit, you will increase your occupancy and you will make more money.
Any revenue is better than vacancy in this vacation rental market.
But right now, there’s a lot of hosts in the greater hosts community, that they have this mentality that Well, I bought this place for this much money I furnished it with for this much money, and I need to make this much to break even. Well, that’s all fine and dandy. But if you don’t get any bookings, you’re not breaking even right, like the vacancy is going to kill your your net income. So it’s better to even if you have to dip below your breakeven, get your place rented. Because if you get your place rented, you’re earning income, right. And this is a slow period, but you still want occupancy, you still want revenue, revenue keeps you afloat and revenue keeps your business going. So now’s the time that you need to be a little more flexible on your rental rates. And the more you can be affordable, the more bookings you’re going to generate at this slow period.
2023 will be one of the slowest summer seasons for vacation rentals.
This is going to be one of the slowest summers that we’re ever going to have. And yes, bookings are going to pick up as we’re heading into the heat of summer, the end of June, July. It’s very busy, but it’s not going to be as busy as we’re used to. It’s definitely not going to be busier than that post pandemic travel boom we had, right so it’s super important to become affordable.
Conclusion
And if you have one takeaway today, it’s check out your listing, see how your rates are stacking up with your competitions. If you’re more expensive than them, that’s going to kill the chances of you earning revenue in this slower summer. With that being said, the number one thing you can do to increase the chances of getting more bookings right now June 2023 is becoming more affordable. That one simple step is going to work wonders if you’re really slow right now. Please subscribe to the newsletter to get your exclusive resources. More details in the show notes. And until tomorrow friends take care.
