Why Dynamic Pricing Is Essential To Maximizing Your Short Term Rental Income
Any property owner, investor, or property manager should have a strong understanding of how to optimize their short-term rental income. One of the ways to achieve this is through leveraging data to make informed decisions and automate processes. Today's world moves faster than ever before and it is practically impossible to keep up with the everchanging daily trends that have an impact on our business.
Pricing is a significant factor in maximizing revenue for any short-term rental investment or portfolio. While the thought of consistently staying on top of the seemingly infinite factors that affect the pricing of your rental property may seem daunting, it can be done effectively with the right resources. The solution lies in accessing and optimizing against real-time booking data.
Short Term Rental Revenue Management
Even the best Airbnb investment properties require the right management and marketing to ensure they are profitable. Simply stated, your short-term rental income is heavily impacted by the tools that are used to manage your listing - particularly those that adjust your daily price. Unfortunately, most rental property owners don’t have the time or resources necessary to maximize their rental income due to factors such as limited time, expertise and/or resources.
Because so many different factors contribute to determining the seasonal pricing of a rental property, a deep level of understanding regarding your property’s location is key. While relying on historical data in the past may have provided adequate insight into how to price short-term rentals effectively, this is simply no longer the case. In the wake of the COVID-19 pandemic, previously understood consumer behavior is no longer relevant.
Daily rates in Dubai during Q1' 2021 represent a prime example of how Covid-19 has completely changed conventional wisdom surrounding 'seasonal rates'. When Western Europe mostly closed its borders after the 2nd Wave (or was it the 3rd?), prices quickly came crashing down - leaving owners asking "do we decrease by 20% or 60%?" The only way to know the answer to that, is to have a real-time view of forward looking demand and a pretty clever algorithm.
The good news for Dubai short term rental investors was that by Summer 2021, rates had swung the other way - as travelers looked to ‘safe cities’, like Dubai, to retreat to after coping with heavy COVID-19 restrictions in their home-countries.
Key take away: In both "the dip" and "the surge" highlighted above, daily property prices that were reliant on historical measures of 'seasonal pricing' almost certainly left significant sums of money on the table. Real-time, forward-looking tools that automate daily rates based on future demand is critical to maximizing returns!
Short Term Rental Companies
So, what can property owners do to ensure they are maximizing the revenue that their property can create? One of the easiest and most effective solutions to this problem is to hire a property management company that is using dynamic pricing tools to maximize performance. Here at Shosty, we use sophisticated pricing tools that allow us to stay up to date with the dynamic and ever-changing market.
Unfortunately, optimized pricing is not a ‘set and forget’ kind of task. Even if you are knowledgeable about the many different factors that contribute to properly pricing a rental property, it is crucial to keep a constant eye on factors that can only be monitored with access to real-time data that allows the decision making process to be backed by current evidence. A sophisticated and dynamic pricing tool that provides current and relevant pricing information can make all the difference with respect to maximizing rental yield.
Without using these resources, your rental property, or even your entire portfolio, may experience unforeseen and avoidable losses.
With our AI-powered technology, your property’s rates can compete with the best in the market based on real-time, forward-looking data from a number of variables:
Demand or neighborhood occupancy
Factors such as seasonality and demand for properties in the same niche as yours
Booking specifics such as length of stay, and gaps between bookings
Short Term Rental Companies in Dubai
Which markets can benefit the most from dynamic pricing tools for short-term rental companies? Because Dubai has quickly become one of the world’s most sought-after locations for both business and pleasure, each year more and more people need short-term rentals.
With more competition comes more challenging circumstances related to effectively pricing short-term rental properties. The larger the offering of available rental properties in a single location, the more volatile the market, as well as the factors that affect the pricing. If your rental is in a highly dynamic and challenging market, such as Dubai, it is essential to use a revenue management company to ensure that you are earning the most income on each and every one of your rentals.
Rental properties can be an incredibly lucrative source of passive income. However, if they are not properly managed on all fronts, they can quickly become a liability, rather than an asset. By using the right resources, which includes utilizing dynamic pricing technology, you can ensure that your property continues to earn income and generate the most revenue possible.
To Learn More (and eventually Earn More!) about the properties that are wildly successful across Dubai at the moment, check out our blog post on the 5 Things that make a property stand out in the short term rental market.