4 Times You Should NEVER Drop Your Airbnb Rate

Lowering your prices when your short term rental is not staying occupied can be very much like putting a band aid on a broken arm. It might feel a little bit better, but you're not actually fixing the real problem. In fact, you might actually be making it worse. So today we're going to jump through four scenarios where lowering your prices does not help and what smart hosts do instead to uncover why their property is not staying booked. Stay tuned.

First scenario, when you should not be lowering your prices is when the rest of your market is charging more for a very similar property. So same size, same amenities, same location, and they are staying occupied, then lowering your prices further and further is not going to help because you already have proof that the market is booking at these rates. So what you need to do instead is really compare your property to the ones that are already getting booked, see if there's something missing there. We know that bad reviews can really tank your visibility, which is another reason why you should always be on all the OTAs, all the different listing platforms, and also another reason why your guest experience should be top notch to avoid that in the first place. But the reality is, is if you're in a market with a lot of data and the rest of your market staying booked at higher prices, if they're significantly higher, you know, let's say 10% or even more, and they're staying booked and occupied, then there's something else going on with your property. You're going to want to check out your visibility on the different listing platforms, see if you can identify when that visibility dropped off. The second scenario when lowering your prices is when your market occupancy and the expected occupanc is very low. So maybe your property is in a seasonal area where it just hardly gets booked in the winter. For example, let's say the market occupancy is like 5%. In other words, five out of every hundred properties in that market are getting booked. And so the chances are not that high. Now let's imagine that there's already five properties booked in that market and the average occupancy has been historically 5%. Well, you could drop your prices further and further and further, but the chance chances are, unfortunately, you're very likely not going to be getting booked. Lowering your prices does not create more demand in the market. So this might seem like maybe a tricky thing to look up, but it's really, really easy. So if you're using a pricing tool, dynamic pricing tool, our team uses price labs, you can go to the section that's called Neighborhood data. You can scroll down just a little bit, you can click a box. I'll show this on the screen. It's really simple. It's basically neighborhood data. You can see the historic market occupanc and rates. So if you have a brand new property and you're expecting it to stay booked and you're just scratching your head and you've lowered your prices and you don't know what's going on, well, check out this neighborhood data. And it could be that just no one in your market is really getting booked because of seasonality or whatever it happens to be. The third scenario is when you're well ahead of your booking window throughout the year. Your property has a booking window. Now, it's not one single booking window. It can change based on seasonality. This is basically the amount of time someone reserves your property before check in. So let's say you're in a market and the average booking window is 120 days. Well, if you're 150 days out and you're scratching your head and you're like, why is my property not booked? And you start to lower your prices, you are lowering them far too soon. So again, you're going to need a dynamic pricing tool to check out this information, but it's really easy to come up with. And then you're going to want to take it one step further. So you're going to want to look at the peaks in the year where the demand was higher. Because. Because very likely what will happen is that booking window will get longer. So if someone wants to book your property for Thanksgiving because it's in the ideal place to eat that delicious turkey and celebrate with your family, well, then they're going to want to reserve it earlier. And so maybe that 120 days becomes 150. So again, you've got to monitor this and make sure that if you're 180 days out and you're like, why has no one booked my property for Thanksgiving? And you start lowering your prices, you're lowering them too soon. Now, of course, this does depend, depend a little bit on your risk level. If you just want to get a booking in and you're okay at those lower rates, then lowering your rates is going to be more attractive and your property will get booked sooner. But if your risk level is moderate, you could say, then I would wait until you're in that prime booking window. And if you've passed the booking window and you still haven't got booked, well, then that's the time to Start dropping those rates. Okay, the fourth scenario when dropping your rates is not going to be that helpful. And that is when your property's already staying really well booked and you're still within your booking windows. So let's say you're at 80% occupancy. And when you're at 80% occupancy, you have some rules set up to automatically start discounting your property to fill those remaining gaps. Well, if you're in your booking window and there's still demand in the market, then you're just giving money away, right? You want to hold out for that booking window, keep your rates competitive, of course, and ideally, as long as you have really good reviews and you could expect to fill that remaining occupancy as long as there is more expected occupancy to come in the market. So real quick, you want to look at July for any given year. You could do this with your dynamic pricing tool and you could see that the market usually ends that month at 80% occupancy. If you're at 70% and you're in June, well, then you could expect there's 10 more percent of occupancy to fill. You can use that same neighborhood data available in Price Labs or whichever pricing tool that you use to see those occupancy levels. So I know these things get a little more detailed, but they really are very simple. You can check out these pricing tools. Check out any of our prior episodes. We talk about a lot of these things. You can go to strict. Com, you can see all of our prior episodes. We also have a ton of free guides and resources for you there. And of course, if you don't want to do this yourself and you're scratching your head and you're lowering your properties prices, you're still not getting booked. We would love to help you out with it, Strict. Com, you'll see a little partner with us button in our team would love to chat with you, learn more about your property. Well, I know I said four scenarios, but I actually have a fifth one here. So this is going to be a bonus one for any of you out there that have a truly unique property that doesn't have a comparable comp set. What do I mean? There's not other properties similar to yours where you can use market data to help base your decisions. Maybe you have some sort of historic property that's truly one of a kind. Maybe you have a property that's really large and it hosts like 30 people, but no one else in your market has that property. Well then you don't have a lot of comparable data. And so your pricing strategy is going to be based off historic performance. That's always helpful if you have it. If not, then it's really a testing scenario. Right. And you have to watch things very closely. If you book the that property in the past, it sleeps 30 people for 20 grand for a weekend. Well, even though historic data doesn't predict the future, you do know that people are out there willing to pay those prices. Of course, the lower the price is for something, the more value people often perceive. If it's a brand new property and you don't have any historic performance or any historic data, well then you really just have to test things out. Operating your short term rental like a pro is really understanding your market or your guests. So if you have that unique property, you know what types of guests are going to be staying there. That's going to help you with your pricing decisions. But in a nutshell, it comes down to supply and demand. The fundamentals of economics. There you go. There are five reasons we're lowering your prices. Might not be necessary at all. Might be hurting you, cutting your revenue potential. If you are finding these episodes helpful, I'd really appreciate a thumbs up. A like please comment if there's something else you would like us to talk about or something that I've been leaving out. Till next time. I hope you have a fabulous week.