How high are your running costs?
When deciding on a nightly rate your holiday home, it is important that you know your costs as the owner. These include not only the expenses for the purchase and furnishing of your property, but also running costs such as loan repayments, management costs, utilities etc. Only when you know exactly how much your monthly expenses are, you can calculate how much money you need to earn to make your rental business profitable.
Find out the prices of your competitors
In addition to your running costs, you also need to consider the prices of your competitors in your calculation. Especially if your holiday home is in a popular area, your prices need to be competitive. Look at the listings of other holiday rentals in your area on the major booking portals like VRBO and Airbnb, see how your rental compares, and determine a reasonable rental price. When looking at the competition, be sure to look at homes with similar equipment, location, and size.
Pricing and pricing strategy
Clarify basic questions
When deciding on a pricing strategy for your holiday rental, you think about some basic questions first:
- Is your price per accommodation or per person?
- Do you offer additional services for an extra charge or a complete price (all inclusive)?
- Are there any special offers (early booking discounts, last-minute offers, reduced rental prices for long-term stays, etc.)?
Do not set the price too low
It’s not advisable to simply undercut your competition. If you charge a much lower price for your rental than the average in your region, potential guests will wonder if there is something wrong with your holiday home. You also need to make sure that your rental business is profitable and that you are not paying more than you are taking in.
When can you charge more?
If your holiday home offers guests more than other accommodations in your area, you can charge a higher rate. Your potential guests will understand that a holiday home right on the beach or with a great view costs a bit more and will gladly indulge for this luxury.
Different prices for high and low season
In addition, you need to consider seasonal differences. In typical holiday regions, there is usually a time of year when accommodation is particularly in high demand. In this high season, you can charge higher rates, because the demand is higher. In the off-season, to ensure a good occupancy rate, offer lower prices and special offers for long-term rentals. This way you can attract other target groups, such as guests who are looking for a holiday home for a 'workation'.