Tim Hubbard breaks down Airbnb pricing with multiple minimum night rules: one absolute minimum for last-minute bookings, separate minimums for weekdays and weekends, and different rules for holidays and events. Use market data and competitor pricing to set these levels, then watch your booking patterns to adjust.
Questions this video answers
Tim Hubbard.
July 3, 2024.
As low as 10% occupancy during the week.
About 40% occupancy if booked every weekend in the year.
PriceLabs.
Chapters
We see properties in some markets that drop as low as 10% occupancy during the week, and then they're really high on the weekends. They're just weekend markets. Right. Well, welcome back to the show. I'm glad you're here. If you're new to the channel. My team and I have been managing properties in lots of different cities and lots of different states for years now. Tens of thousands of guests, including guests in my own portfolio. And I'm excited to share our insights. We're learning a lot. And one of the things we're learning a lot about is revenue management. And I know that a lot of people are out there, There's a lot of good resources. It really becomes a rabbit hole. And the reality is that people dedicate their careers to revenue management. So if you're already using a tool like Price Labs, for example, well, then you're probably like 80% of the way there if you've adjusted your settings well and you know what to look for. But we want to do better than that, right? 10% increase in our revenue year over year. I mean, that adds up to a lot. All that to say we no longer just have one minimum price. I know that if you're setting up your property on Airbnb, yes, there's a minimum price. If you're on Price Labs, yes, there's a minimum price. But I'd argue that you need more than one. And so before we get into the additional two, you've got to ask yourself what your absolute minimum price should be. And now, depending on what price point your property's at, if you're at a really low end range, well, you could risk getting some bad guests. But I say could because we can do a lot to protect our properties these days. A lot of things that we've talked about on this channel, vetting our guests. And so I wouldn't let your minimum price deter you. I would first set up all of these things to make sure you're getting good guests and then lower your price down to an absolute minimum. And remember that absolute minimum is generally going to be to capture some very last minute reservations to fill up those little gaps in your calendar. But we should be getting the majority of our bookings out a little further than that. So first, just make sure you've taken a good look at your minimum price. And how do we really determine what our minimum price should be? Well, we always want to look at market data, right? We've got to have something to compare to. We recommend Price Labs. We're not sponsored by them or anything like that, but they have some market dashboards and some ways to really look at your pricing. So the second minimum pricing set that you should have is a minimum price during the week versus a minimum price on weekends. And so a lot of times we just set up one minimum price. Right? But you might have a property in a market that has drastically different occupancies and prices during the weekend and during the week. So of course your dynamic pricing tool is going to account for this a little bit, but it might not be getting you all the way there. We see properties in some markets that drop as low as 10% occupancy during the week and then they're really high on the weekends. They're just weekend markets. Right? And so you need to know that and you need to make sure that your price is being adjusted accordingly. You do have a nice little handy feature in price labs where you can just adjust the premiums by creating a discount or a premium for weekends or weekdays. But you really don't want to set that up until you know what you're comparing your property to. So you want to make a comp set, you want to see what prices you can actually achieved during the week. Because if we're a weekend only market, then that might mean that we get 40% occupancy throughout the year. Let's just assume, hypothetically you're a weekend only market and you can book up every week in the whole year. Well, maybe you're going to be able to get to 40% occupancy, right? But if you're able to get an extra 10% during the week or expand those weekend reservations so it's no longer just Friday, Saturday, Sunday, or Saturday, Sunday, and you can add a Monday on there, you can add a Thursday on there. By heavily discounting those prices if you need to, then that's really going to boost your overall revenue. So that is the second set of minimum prices that you definitely need to have. That's a minimum price during the week and then a minimum price on the weekend. The third set of minimum prices that you really should have in place are for specific dates, potentially specific seasonality or events. And so we want to know these ahead of time, obviously. And again, if you're using a dynamic pricing tool, most of these things are going to be adjusted for you a little bit. But sometimes you could be leaving a lot of money on the table. Or maybe someone's booking five nights during a big event when it should be seven nights. I know my property down in Brazil, where I am right now during New Year's, it's crazy here and the city goes from like 250,000 people, like over a million. My neighbor literally told us when we were getting back here earlier this year that the traffic was so bad because so many people had come into town. The street right in front of our home that goes to the ocean was so backed up with traffic that people literally left their cars there and went home because so many people had come in. And so all that to say is that during New Year's this place is crazy and people book it for crazy prices, but also for a really long period of time. And so I believe we had someone in here for like two weeks and I could have just as easily rented to someone for five days or one week. And so by making sure that your minimum night settings are set up appropriately by events and by holidays and by seasonality, you can make sure you get the maximum occupancy, maximum revenue. And how do you know this? Again, just take a look at your comp sets and you can see average booking lengths during certain periods. I know some of this gets a little advanced, but honestly, you can go to price labs and you can search booking lengths by booking window. So how far out in the future people are booking a period of time and for how long that period of time actually is. And so until next week, hopefully you've got these minimum prices set up. Remember, if you're a weekend only market, then you really want to keep a good eye on those during the week prices to make sure you're not overdoing it and leaving some occupancy on the table. Until next time. I hope you have a fabulous week and we'll see you back here soon.
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