Airbnb Pricing Strategy That Beats Your Competition (Higher Rate + Higher Occupancy)

All right, everybody, welcome back. We have got another amazing guest speaker and somebody that you will recognize if you've been doing this game for a while, if you've been on the YouTube, being on the Instagram, Obviously, Danny has been on the Boostly podcast a lot. We've featured him and his expertise a lot. And I think he's one of the Go To's AI has already said he's one of the Go to experts on Airbnb. He's mentioned it before and. And again is one of our Go To's. A pleasure to have Danny Roostein of Optimize your BNB and author of Profitable Properties, as you can see behind him on the right and left with his books. Danny, thank you for joining us. It's an absolute pleasure. Where. Where are you tuning in from? Around the world. I know you like to travel around.

Yeah, I'm. I'm in the. The capital of Colombia right now. It's called Bogota. And you mentioned AI. You know the AI. Sometimes I say that, you know the AI that recommended to me it's a Boostly AI. Yeah, you know that because you sent me the screenshot.

Yeah, 100%. That's right. So the Boostly AI. Yeah, it's a good one. So the Boostly AI, you can go check it out. Booster.co.uk AI built on Delphi. It pulled in every single podcast, any video, but we've done all the books that we've done. And, and there we go. Which is awesome. So I wanted to bring Danny in today talking about pricing. It's something that you've been talking about a lot on your YouTube and on the Instagram. Really, really good topic and really good sessions. But before we dig in further, just for anybody who isn't aware of your books and your good self, just give a quick breakdown of. Of who you are, how you got into the world of Airbnb and. And why you're talking about pricing and why it's important.

So in. In February. Excuse me, in December 2012, I quit my job. I was a CPA, public accounting. And that started off a chain of events and I made my way to air. Stayed there for a couple years. At this point, it was more than a decade ago. I was working at Airbnb headquarters. And then after Airbnb, I switched over to more of being. Although I was a host at Airbnb, I switched over to being a host, being a property manager. In 2017, I started living in Airbnbs pretty much permanently. I now have my own Airbnbs myself. So I live in those sometimes I have, and I, and I have the, as you mentioned, the YouTube. And I've been starting on pricing since about five months ago because I think that's kind of my niche. And I really feel like I have a good pricing strategy. And ever since Airbnb rolled out that Insights dashboard, I can actually prove it. I could show you my nightly rate is higher than competition. My occupancy is higher than competition.

Yeah, it's, it's been fascinating to watch your journey because like I said, I, I met, we met in the little island of Bali back in2019. So what, six years ago, which is a lot. Nearly seven years ago, which, which is crazy. And since then, as I followed your journey, traveling the world, you're one of the most traveled Airbnb guests that, that there is. And now obviously, I've got the property as well, which, which is, which is awesome to see. And your sessions that you're running. So you've got something new that's called the Pricing Power Hour. Just very quickly talk an overview of what it is, why you created it, how it works, and then we'll delve into the. To the questions on the topic.

Today, the Pricing Power Hour is meant to be a, a way to ease yourself into the pricing strategy that I teach. A lot of hosts have trouble with pricing strategy, but that the, the reason why I created Pricing Power Hour is because you can't pay for a course and sit down and watch it for three hours and then you have pricing because there's so many nuances, there's so many exceptions to the rules. So. And I just got. So, you know, even on my YouTube videos, they're not about pricing. I got comments about pricing always. Everyone's always curious about pricing. People pay private consulting, consulting calls. With me, it's pricing. So this is a low cost, low commitment way to speak with me directly and I'll talk about more at the end, but that's what I've been doing.

So let's talk about pricing then, because you're right. So many hosts struggle with it. So many hosts just turn on autopilot on, on price labs and think, right, I'd never have to check this again. You know, I'm sure in the times that you've been doing this and doing your consultancy, I'm sure you've seen all the different angles that people go on it. But the first thing I wanted to ask you, really good video that I saw you did recently about guests asking for a discount. So can you walk us through how you teach hosts to handle guests asking for a discount and when you actually think a discount actually makes financial sense, if, if ever. Let's start on the, the old discount one because we always get it a lot.

Yeah, can I have a discount? And it always seems to be the dates that are already discounted, you know, but the guest doesn't know that. So you, you watched one of my short videos, which I've been doing a good, a lot of recently, but they're only 60 seconds. So I'm glad you, because I can go into a little bit more detail here. So when a guest asks me for a discount, there are times to give that discount and I'll cover those at the end. But what I do most of the time is tell the guest something like this. I'm still working on, the phrasing is, you know, I just check the rates and they're too low. I have to raise the rates. So can you tell me if you're not going to book? So I can do that. And it oftentimes, I, I don't know, I have to go back and check it. I've done it so many times now. The strategy's been around for a few months, but oftentimes they book it the same day. Sometimes they don't, which is totally fine. Now when it, when is it good to give a discount? You have to know your listing. So discounts isn't a winning game. But if you have a, you know, some hosts just like to make a little extra money with Airbnb, they have a listing, they don't want to spend much time on it. So they're not going to get the premium rates or the premium occupancy. So maybe in your, if you're in that category. Yeah, you take, take the discount or if I know it's a low demand day. So discounts are for, I call it the three L's. So they're, they're low season, low demand and last minute days. So if someone's asking me for a discount for Monday, Tuesday, next week, that might be when I give them a discount. Right. If someone's asking me for a discount in high season during Thursday to Sunday, that's an obvious no.

Yeah, the FOMO there is really good that you give to the guests. Like say when they come to you asking for a discount, it's like, hey, Danny, you know, these discounts are already, these rates are already discounted. In fact, I'm about to go into the back end of my extranet and put the prices up. So you know instantly when you save that. And to a guest that's already crossed that barrier to reach out to you, they're wanting to book more often than not, they're being a little cheeky. So by adding that little FOMO in, I love that because it's like, hey, these rates are already low. In fact, I'm going to go and put them up. Whether you're going to buy or not, that's up to you. But what's the, what's the fine line then? So the fine line of, you know, getting as much money as possible, putting the price up, or killing that potential booking, like, how do you strike that in, in your mental models that you run through, how do you break down that barrier between getting the book in, putting the price up, or potentially killing the booking?

So putting the price up is a different thing that we can chat about if you want. I do, I do sometimes increase the price on inquiring guests, which you can do. But right now I'm just focusing on if someone is, is talking about a discount. If they're talking about discount, I'm not going to raise the price because they're very price conscious. They've already looked at the price, they know what it is. And I'm, I'm not, I'm not going to raise the price. I'm just telling them that it's a psychological thing. I'm trying to communicate this is an error. Like, you know the airline error websites. This is an error. You could book now or I gotta raise the price. So do it quick. Like, give you an hour. Respond quick. It's, it's finessing how you communicate it. But that's the idea. You want to communicate that it's pricing error, you need to raise it. But you'll honor, you'll honor what they saw for a moment.

Okay, well, let's move on to the, to the next one then. So the one where a guest inquires to you and you, you know, you can raise the price when that guest inquires, like, how does that work? And give us some examples of that. Where it's, where it's paid off and, and again, again those levers, right? When it, when is it smart to do so, when's it potentially going to like kill the book in, like, how do you sort of go through that? Because this is a real good topical point because we get a lot of guest inquiries come through.

Yeah, yeah. So this is actually a few years ago I stopped talking about some topics because I noticed that things changed on the platform after I talked about them. So this is one of the first times I'm talking about this live. So we'll see. We'll see if Airbnb changes the platform. Okay, this is, this is a real, a real time test. So currently how it works is if a guest inquires, that means they have to scroll to the bottom of the page and click message without dates. I don't think then you can raise the prices, you can lower the price, you can change the price. And I do that on an inquiring guest. Now, we all know. And if you don't, and an inquiring guest is an unlikely guest to book, I don't know what the percentage is, but I can't imagine it's 20%. So what I do though is I rate the price. Okay. If you're inquiring, I know you're not going to book and, and you're taking more of my time. I think of a lot of things, like kind of in my hourly rate might be an extreme example because it doesn't take that much time, especially with some PMS tools, adding an AI where you just click a button and they automatically respond to it, Even the ones that are like kind of personalized questions. But I'll raise the price. It won't be much. You know, on a thousand dollar reservation, I might raise it to 1,000, 50,100.

So that's when say that I come onto your listing at the Belmont. I scroll right down to the bottom, I hit message. I've not put any dates in. I'm just sending you a message saying, hey, your place looks cool, I'd like to book. Or do I have to put in some form of date in there for it to be able to get a price back? How, how is, how is that working exactly? Just in case someone wants to spot it.

Yeah, you do have to actually put in dates to even send an inquiry, but there's a difference. So there's three times there's an instant reservation. Everyone knows that there's a request to book, which is when they've put in their payment information. You just have to accept money goes into, well, Airbnb's account. And the third one is an inquiry. So the guest, yeah, scrolls down contact host, puts in the dates, messages you. Now, especially if a guest asks a question that I've already answered. Like for example, sometimes I have like Parquegetes is very common. So I have like in the title, like nine minutes to parqueget, then I have it again in the text, which I don't recommend repeating things, but this is such a common question. And they ask, hey, how far are you from Parquegetes? Okay, I'll answer you, but you're also going to pay 100 bucks extra for that.

It's like a penalty for asking a silly question. I like that. Okay, so very, very quickly before we move on, because I've got some questions in my mind that I want to ask you. But you mentioned the Airbnb watch your content. Obviously someone who used to be part of Airbnb and now obviously you know that they watch their content because they obviously being in contact with you. How often have you mentioned something on some of your video, short form, long form, blog posts and where you've noticed that Airbn have actually actioned it maybe weeks, months or years later. Is there any examples that you've got? And it's, it's fascinating for me to sort of hear that.

Yeah. So the biggest. There's a lot of them. So there's one of them. So there was a Airbnb put in simplified pricing. Right. And no one at the company actually is an Airbnb host or a guest, I'm convinced, maybe a guest. But they don't really know how the platform works. So there was a way to kind of play the game by the rules, but leverage it to your case. So I recommended you don't do simplified pricing, which is add the 15 on your, your listing. Because at the end of the day, if two listings were a thousand dollars and one had simplified pricing on and the other one didn't, the night rate of the listing that did not have simplified pricing on would have showed a lower nightly rate, meaning their pool of fp, their pool of guests would have seen them more, which means they would book more. So Airbnb, it took them a while to take that out, but they, they took that out. The, the, the WI Fi speed. I've been putting WI fi speed in my listings for 12 years. They eventually, they eventually put that in. So.

And are they still doing that with the WI Fi listings? It's gone a bit quiet on that. Are they still doing the one where you have to go into the room in your property and measure your speed? Is that still like a big part of their ranking factors or. Not so much anymore.

That is. Yeah, you still have to go in and connect to the same WI Fi and that's the WI Fi that comes up. And it comes up typically in the top area, which is bullet points. Again, bullet points is a good idea. And something that, something that I've been doing. Airbnb removed emojis from titles. That was a good hack.

You were the one who told me about that. I remember you were the one who told me about that all those years ago. Was the emojis and the emojis in the title all those years ago.

Yeah. And then there was a hack where you could actually use guesty to circumvent it and still put emojis. I went public with that on YouTube video. They took that away. That was very quick. They took that away. Of all the things they could focus on, they focused on taking out emojis. There was also, there was also a hack on how to lengthen titles more than 50. They took that away.

Yeah. So they, they are watching, which is, which is fascinating. And again, if anybody's ever seen Danny's content, please drop it in the chat below. He's been around for a long time and if you've read any of the books Profitable Properties and Optimize your bnb, drop it in the chat. All right, I want to talk about, about market occupancy. So I feel like a lot of people in this room who are watching this now, where it's live or on the replay, they're either chasing 100 occupancy or they're just looking to copy competitors prices. What's your framework for deciding the right occupancy range for a listing in any given season? And, and how do you adjust that as a market occupancy shift throughout the, the year? And you can use yours as an example or a student of yours or just any examples that you've got that comes to mind.

You, the, the, there's one data tool I use a data tool to fit. So I need to know the market occupancy and I need to know the market occupancy for my level. Am I a luxury, am I at the very top or am I just an average listing? I have to be honest with myself and know about that. So each market has different seasons, some don't have seasons, which is my preferred markets where that occupancy line just bumps, it bumps up close to 100 all year round. So that's how I be, that's what I base it on. If, if the market shows that the, the 90th percentile is getting 90 occupancy year round, then I know I can get 90 and maybe 95. Now that's the case in Medellin and I get 94% is my occupancy so, so those tools are pretty accurate. That's not true for every market. Some markets, the 90th percentile is getting 75% for six months and 45% for the other six months. But knowing that is super important because then you can. Because if you don't know that and you're in slow season or shoulder season, you're going for 70, 80 or 90% when the market, realistically you're only going to get 40, 50 or 60%. What are you going to do to reach that occupancy? You're going to lower your price. So you can go into the back of your Insights Dashboard and confirm this. You can confirm if your pricing is good. I have a few recent videos about this where you can look at two things. One is look at your occupancy first. Occupancy is easier for hosts to know. If I fully booked, I'm fully booked. That feels good. But oftentimes, if your occupancy is high, you'll go into the next metric, which is your nightly rate. And you can, in Airbnb's Insights Dashboard, you can compare to similar listings. Oftentimes, your nightly rate will be lower than competition and you have less insight into night rate. So you don't know if you're charging 20% less or 20% more, but Airbnb now tells you. So I encourage all the users to go in and verify that. So with my power hour that I've been doing, which is basically just strategy that I'm teaching, you can also go to the YouTube and learn for free there or the book. Well, this. Where's my hand going to come up.

Profitable properties.

Yeah. Part five is all about pricing. So.

Yeah, I think, I think we're talking about the next topic which I want to talk about, which is last minute discount strategy. Now you, you mentioned it there about obviously pricing and, and being reactive to the, to the market or being proactive to the market. Now, last minute discount, we're at a time of a year where it's the shoulder season for a lot of people. Like obviously, if you're in the southern hemisphere, maybe different, but for the most people that are watching, they're in the northern hemisphere and you know, the majority people are in their quiet time now. And last minute discounts is something that crops up a lot. So can you walk us through how you use the booking lead time and occupancy to decide when to start that discounting conversation in your mind and, and how steep to go and how to avoid training guests or your Future potential guests, FPGs as you call it, to just wait for cheaper prices.

My strategy that I teach for last minute discounts is I want to be a little bit cheaper a little bit sooner than the competition. And so I do that based on what most of the competition does and then I take it a little bit extra step. Now let me be clear. Last minute strategy is not a winning strategy. So you don't want to have a totally open calendar and lowering dates. But what I do. So, so here's the strategy and then there's nuances. So we start with the, we start with the, the default. The default is 50 gradual discount up to your booking lead time. So if you're booking leads in 60 days, or let's say 50 days and your, and your discount is 50%, that means at 51 days there'd be 0% discount. At 50 days there'd be 1% discount. At 25 days into the future there'd be 25 discount. So most. So, so you're going to be a little bit more discounted a little bit sooner than your competition and that's going to result in ultimately higher prices.

And how are you setting this all up? Are you doing it straight within, like the Airbnb back end? Are you using a pricing tool for this? Like, is there any third party software solutions that you're running? Are you just literally doing it straight in the back end?

I use Price Labs. I use and recommend Price Labs. I've been using them for many years. I over the years have went into other pricing tools and. But at this point Price Labs is not only the best, but they keep making advancements. So it's been a few years since I've been into the other tools. With that said, using a pricing tool is much better than not using a pricing tool, even if you price manually. That just doesn't make sense because it takes so much more time and oftentimes you're going to leave money on the table. So that's a different kind of conversation. But that's, that's a tool that I, that I highly recommend over Airbnb Smart pricing and every other method.

The Airbnb Smart pricing. What's your quick sort of 60 seconds on the Airbnb smart pricing tool that they use within? Is it getting better? Is it something you just straight avoid? What's Your sort of 60 second sort of synopsis of the Airbnb smart pricing tool?

Airbnbs is for Airbnb. They have more inventory than they can sell inventory, meaning beds or Airbnb listings. So for them, it's a lot more profitable to sell all of the inventory at a cheaper rate than half of the inventory at a beneficial rate to the host. Now, most hosts think their properties are worth more than they are, but that's where Airbnb is. So don't expect to be profit maximizing. If you're using Airbnb's smart pricing, which is free, but I think price labs cost like 20 bucks a month. I forget.

But it's not very cost effective. Very cost effective. You might as well use a third party tool because at the end of the day, Airbnb's price and tool is there to benefit one person and one person only. It's Airbnb. So I've got one more question that I want to ask you about. The, the thing that you talk about are far out premiums. And then I want to quickly just jump back to the, to the power hour, how people can get involved, YouTube and all that good stuff. So there's a two part. So number one, we as a me and my family, we've been looking at booking our summer excursions and that is what, six months into the future. I noticed so many people that when we're checking their listings or checking their website, they haven't opened up that calendar six months ahead. So can you talk to us about opening calendars up like in the future? How do you do it? And secondly, I want to talk about this thing that you talked about, which was called Far out Premium. So how for a host that's watching this, how do you even decide what a far out premium is? How do you get your head around it? How do you avoid overpricing and just walk us through, walk us through that before we sort of look to wrap things up.

There was a moment where I lost my train of thought earlier and it just came back to me. So I want to jump back one question.

Okay.

Which was about the last minute discounts. So there was one more thing I wanted to mention which is slow season strategy. You can type that on Google and my blog and YouTube video will come up. But in slow season, which is one of the 3L times low season, you want to. It's not just about last minute gradual discount, which is what we talked about. You also have to do a season strategy which essentially says getting there are guests searching six months into the future, nine months into the future, that next slow season, we have a strategy to scrape up as many of them as we can to get some blocks on our dates. Far out. So as it relates to a host side of when should we open it up and how much. If you don't know what you're doing, the rule is just three months as you start to understand what you're doing. Six, nine and then 12 months maximum. The reason is because if you don't know what you're doing, you're going to, guests are going to. You probably, you're probably going to have a low far out pricing or too high far out pricing, both of which aren't ideal. Okay, so that's how, that's how far you should open it up. Now there's you, you. We've talked about that. There's three time periods in pricing that you would need to optimize. One is around the booking lead time. We've discussed that. One is near term pricing, last minute pricing. We discussed that. Now the last time period you need to optimize is far out premium. On a lot of the tools, the far out premium is elevated higher than it should be. So if my average nightly rate is 500 bucks, I notice that my far out is like, you know, 800 bucks. I know I'm not going to get that. So what I do typically is I turn, I reduce the far out, the generic default far out premium. So realistically, there's so much competition on Airbnb, it's a true market there, there's perfect supply and demand. So what I want, typically you're going to get a 5 or a 10% premium on far out bookings. Maybe sometimes, luckily, you'll get a 25 or 30% premium. Those are on guests who aren't price sensitive. There's few of those in this world, so betting on them, but we're happy to take them. So, and here's how I structure my default basic strategy. And then, and then it would get optimized. But I consider far out pricing one and a half times your booking lead time. So if it was 50, going back to our example, I would start by far out premium 75 days and then I would raise it gradually 10% over the length of my booking lead time. So in this case, 50 days. So from 70 to 75 to 125, I would gradually raise the price 10%. How do I change that? How do I change last minute? How do I change booking? Depends on the real world booking patterns. If no one booked me at that rate, what would I do? It's easy. So get that base strategy down and then it's going to become easy. If you get a lot of far out bookings you're booking these, miss 50 days and you get four or five months booked out. Okay, well, then you know what to do. Raise the price a little bit.

Yeah, it's fascinating. Again, I feel like so many people who are watching this live or replayer are very susceptible to the fact that they'll just set a price and they'll just leave it. Like, what would be that one bit of advice that you would give to people? And what's that one bit of advice you give to people in the pricing power hour when it comes to like, really pricing their product, really pricing that. That property? Is it. You know, what is the dangers of just set and forgetting and like, how. How do you sort of get around people when they come to you and go, danny, you know what? I know I need to do the pricing. I've watched your videos. We've chatted a few times now. But yeah, this is a lot of work. What do you say to that?

Yeah, let's keep. Why are we doing this front and center? We're doing this because of something that I've proven now many times, but with myself twice. So the difference is a hundred and twenty thousand dollars, which is the difference between what the property manager made in the. In Airbnb that I have. So I bought two Airbnbs in 2021. The prior property manager was the worst kind of pricing manager. One price all year round. They made. They showed me $42,000 a year. Now I bought that house, that Airbnb ready to go. The dude left the liquor on the shelves. He took a painting. That was it. So basically it was the same. Sure, maybe some hospitality differences. I did optimize the online listing, but pricing was the thing that earned me four times the amount of what that property manager was doing. I repeated it on the second place. I bought in October 2024, that manager was making about 32,000. I'm less clear because there were less. Less transparent about it. At about 32,000, I'll be making 65,000. That's mostly to do with pricing. So that's the. That's the goal that we have to keep in mind. So. So you know, if that depends if that's worth it.

If.

You know if it's worth it, it's worth it. So that's the main challenge for me, is because it is. I spouted off a bunch of numbers. My background as a cpa, so I guess I'm good with numbers and maybe other people aren't. So my challenge is to make it as simple as possible, which it is. It is not difficult. But I think that's why the power hour, you come on live, you ask the questions that I've already covered. But sometimes just talking with it through and through and getting your specific example, okay, my booking lead time is 37 days. It's not 30. So what do I do? Okay, it's the same thing. 50, you know, look, market occupancy. 50% of market occupancy at 37 days instead of 30 days.

So we talk about the power hour. How, when did it start? How has it been going? How does it work? And more importantly, if anybody's thinking, wow, I want to tap into that mind of Danny. How can they join? How can they join in the next power Hour?

They can. There's one. Once a month, we are doing a power hour. Power hour for one hour. The next one will be in February, the end of February. For those located in Europe, it'll be in the afternoon time, somewhere between 3, 5, 6pm we do it live. It's live and the recordings are there. There's. There's two ways to join. You could join a monthly at a very low price. And in fact, for you guys, I'm offering a discount code book, Direct day. It'll let you try the first month, including one live mastermind for 10 bucks. That's only good for today. And in the mean, in between classes, I have a private forum for members of my profitable properties program and my course program, the two programs. And that's where we interact there. And there's some interesting threads on there, including how to get negative reviews removed. And a few hosts have posted, including one recently who got a Airbnb changed their negative review removal process about maybe a year and a half ago. And it's been extremely difficult even. Yeah. So anyways, this host got it removed and he documented his whole process.

Nice. So the link is O M. So of Oscar. M for mother, b, n b.me forward/, product forward slash, P for Peter. P for Peter, H for our go there, I'll pop the link. If someone could pop the link in the chat for me, that'd be amazing. I'll also get around to it and when we. Sorry, say again.

You know, you could just. Rather than that like crazy link pricing Power Hour, it'll pop up.

Pricing Power Hour. Go and do it on your search engine and on the Instagram. Optimize my Airbnb. On the YouTube. Optimize my Airbnb. Danny's name is like you say, you pop it into any Google Search, Bing Search, or any LLM of your choice. His channels will come up. Like I say, he's been around for a long time. He knows what he's doing. And you can just tell from this interview and this chat and this discussion that we've got with us super, super smart on the top. Any final words of wisdoms you want to leave for our audience? Anything you want to leave us with?

Just thanks for having me on. I'm honored whenever you ask me. And your community has always been very good to me. If you have questions, you can reach me via my chat, my webs, my website chat, YouTube. And I have, I just want to promote my YouTube real quick. I have some very good, I think, videos coming out. Top 10 Ways to Increase your nightly rates, your search rank, your occupancy and your review rating. And so, so keep, keep your eye on that. Those are coming out early, starting to come out early to mid February.

Nice. Yeah, the, the YouTube videos I've noticed personally from, from watching your content have leveled up a lot over the last, I'd say year to 18 months. So it's been great to see. Fantastic to have you on. Can everybody please say thank you to Danny in the chat below? All right, Danny, I'm gonna let you go. I've got my next speaker. I can see him in the waiting room. I'm gonna, going to be back in a minute, so everybody go get a drink. Go do what you need to do. Go share this video, Drop all the comments, all that good stuff. Say thank you to Danny and we'll be back in about one to two minutes. Thank you very much.