Do you know you can always improve your revenue stream and profit level from your short-term vacation rental?
Even as a Super Host on Airbnb or the owner of a 5-star accommodation on Booking.com, you can always improve your strategy and increase your profit.
Occupancy Rate is important when managing short-term vacation rental, but it is not the only factor that you should highlight. Both Occupancy Rate and Profit have to balance each other, to make sure that your investment works for you.
Here are the top 5 strategies to increase your profit from your short-term vacation rental accommodation, without hurting your occupancy rate.
Audit and Diagnose
List down all factors which support your business, from your interior decor, guest management, cleanliness and many other things. Afterwards, make a range of rate to compare each of these factors, for example from 1 to 5 or from 1 to 10.
Once you have the list and the range of rate, give ratings to all these factors, based on your guests' feedback, your point of view and your cleaning team or accommodation manager. Based on this ratings, you will be able to prioritise the factors with low ratings.
Do NOT Engage in The Price War
The main key is not to engage in the Price War.
"Price war is a competition exchange among rival companies who lower the price points on their products, in a strategic attempt to undercut one another and capture greater market share." (Kenton 2019.)
According to Harvard Business Review, price war is becoming more common as product owner view price change as something quick and reversible, while it is NOT. Especially when the price is below the margin, then it would suffer from lost. (Rao, Bergen & Davis 2000).
Hire an accommodation manager who has the capability to read the price trend based on the data of your previous business activities and historical data of income and reservation. A competent accommodation manager has the keen eye to analyse the data and read the trend before predict the suitable price for your accommodation on different date and month.
Upgrade Your Accommodation
As long as your accommodation does not offer something unique, you will forever be trapped in the price war. 50% of the accommodation listings in Helsinki offer regular minimalism decor which mimics the regular apartment in the Nordics. The key to break the mould is to find a different angle which still represents the Nordics style without having similar decor with the majority accommodation.
You can either hire an interior decor or do your own research to style your accommodation. For example: the green accommodation with plenty of indoor plants, the sustainable apartment, the boho chic, the countryside chic and many other trend. They is to have consistency between each room at the accommodation.
Increase The Number of Accommodated Guests
In the high season, there will be guests in big group who prefer to stay in the same accommodation to allow them enjoy the vacation together. Most of the time, they will stay in 5 to 9 or 10 guests in a group. Whereas in the low season, the number of guest may vary from 1 to 4 in a group. This is a great opportunity for you to check the possibility of increasing the number of sleeping arrangements at your accommodation.
Keep in mind that increasing the number of accommodated guests still have to suits the size and the capacity of the accommodation, the number of bathroom and/ toilet and decor of the accommodation. You don't want to squeeze your guests in a cramp space which may lead to a disaster. Thus, consider carefully.
Increase The Number of Sales Channel
Do not stuck with just one sales channel. Guest around the globe has numerous options to book the favourite accommodation, from Airbnb, Booking.com, Flipkey, VRBO, Agoda and many more. By widening the number of your sales channel, you have more opportunity to sell your accommodation.
Do you know that the number of travellers in Helsinki which made the reservation from Booking.com is increased? And do you know that Agoda is more popular than Airbnb and Booking.com for tourist from Asia? By keeping your eggs in different baskets, you will have more opportunity to attract more travellers, especially during low season in Europe.
One strategy might work best for an accommodation but it might not suit the other accommodation. The best way to know which strategy works for you best is to analyse your current business and make a diagnose.
Get a FREE audit and diagnose from our expert.
Kenton, W. Investopedia. 2019. Price War. URL: https://www.investopedia.com/terms/p/price-war.asp Accessed: Feb 23, 2020
Rao, A. R., Bergen, M. E. & Davis, S. Harvard Business Review. 2000. How To Fight a Price War. URL: https://hbr.org/2000/03/how-to-fight-a-price-war Accessed: Feb 23, 2020