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How do you make sure the price is right?

When it comes to letting your holiday home there are lots of factors that are important to make it a success, but pricing is one of the most sensitive. We all know that being the cheapest doesn’t guarantee more bookings and it certainly doesn’t guarantee that you make money. Then again, neither does being the most expensive. Getting the pricing right and controlling the factors that influence your margins are central to helping you make a commercial success of your holiday let. Here are a few examples.

Highfield, Salcombe

Agency commission

Agency commission is really going to set a baseline for what you can afford to play with when it comes to pricing your property and responding to market changes. If commission is at the 16% to 32% of the letting revenue that traditional letting and marketing agents command, that will limit the elasticity of your pricing according to seasonal or wider socioeconomic trends. 

Then again, there can be something too good to be true about the 3% to 4% charge of an unsupported self-let via an online travel agent like Vrbo and Airbnb when you take into consideration the intangible cost of your time to manage all the administration that goes with it. 

The middle ground that we offer at HolidayHost equates to a combined commission of 13-14%, including the online travel agent fee for professionally hosted support. In turn, that is likely to improve customer experience and support repeat bookings, make cost-effective use of your time, allow you the highest margin possible and also minimise the likelihood of complaints and refunds.

Knowing your market 

The rise and rise of big conglomerate letting agencies since 2016 has seen a reduced emphasis on local 'boots on the ground’, and the market knowledge that goes with it. Knowing the local restaurants, the difference between one property’s walk to that beachside cafe and another’s and understanding not just what other properties are letting for, but why, are all nuanced reasons why detailed local market knowledge is a game changer for getting pricing right. 

Anticipating inflation

Inflation is another one of those unavoidable elements that will influence pricing, your profits, or both. This becomes a particular issue when you have guests who want to return to your beautiful home year after year and become disgruntled at rising prices. For this reason we never set prices more ahead than 12 months, unlike old school agents which often open bookings 24 months in advance. 

In 2020 HolidayHost anticipated the price increase due to inflation and when setting 2021 property pricing classes in September, we made sure that our owners didn’t just enjoy inflationary increases but that prices were considered in general alongside that so that owners could benefit from the profits they deserved.

Gauging public mood

The other reason we don’t set prices more than 12 months in advance is because the demand for holidays changes and it’s vital that owners’ pricing strategies reflect  that feeling in a timely manner. 

On the other hand, we do commit to prices annually, setting them each September. This is because we don’t think it’s fair on guests when larger agencies use algorithms that change prices moment to moment. From a customer service perspective, this helps to develop good and trusted relationships with customers, who are much more likely to accept price rises if they’re given fair and adequate warning.

As we operate by leveraging the use of online travel agents, owners are subject to the conditions they set when it comes to pricing. We therefore place your property listing on a variety of platforms instead of just one. This not only spreads your marketing exposure, but it also reduces the risk that one platform might change its terms overnight.

How you communicate price rises  

We all know that it’s not just what someone does but how they do it that has an impact on the way we respond as individuals. We have been in the holiday home and hospitality industries for a long time and we know and understand the importance of customer service. Being open and honest about price changes, ensuring that they’re clear and visible with due warning and being quick to respond to guest queries are all part of what we do to ensure customers not only know the pricing of a property, but also feel that it’s fair and reasonable, even at the height of the market.

Contact us any time to talk to us about making the most of your holiday home this year.

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