By The Hospitable Team
Ever wondered why short-term rental hosts fall into the revenue traps of financial oversights? Tim Speicher, Co-Founder and CEO of Buoy unravels the mystery and shares his golden rules for “steering clear” in the latest Hospitable Hosts episode.
In our chat, we focus on common revenue management mistakes and, more importantly, how to dodge them like a pro. Not only does Tim chart the pricing strategy for vacation rental platforms and online travel agents (OTAs), but he also lists the DOs and DON’Ts when it comes to pricing your direct booking business.
Tune in to our Hospitable Hosts podcast now and learn all about common revenue management mistakes and how to avoid them.
Prefer to read the highlights? We’ve got a summary of the key takeaways below.
Common Revenue Management Mistakes
To navigate the revenue management waters like a pro, you have to know what pitfalls are waiting for you out there. Here are just some of Tim’s remarks in this regard:
- Timing Troubles: Hosts often spend sleepless nights worrying about the high-value dates and how to juggle them on the calendar. “It occupies a big place of anxiety in people’s minds as they’re sort of getting everything set up,” Tim says.
- Overcomplication Blues: Tim warns against the unnecessary hustle of everyday monitoring, analyzing historical data like an oracle, and trying to predict the impact of industry growth. In other words, “Throw it all out. You don’t need to do any of that.”
- Wrong Mix: In a world where guests choose from a handful of options, your competition is limited. Tim recommends looking at a set of 25 to 50 listings, ensuring you’re in the mix. “You just need to be in the right mix, just be similarly priced.”
Why Do Hosts Have Errors?
Tim reveals that short-term rental hosts, in a bid to avoid common mistakes, tend to overthink and dive way too deep into the intricate details. Another challenge is gauging where others are priced. Tim reassures that modern dynamic pricing tools now provide an overview of competitor rates.
However, he still calls on hosts to be cautious in what they analyze and focus only on the most significant indexes: “All of the tools have like 500 other levers that you can pull. You don’t need them.”
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Pricing Beyond Airbnb
Tim shares the art of pricing differentiation beyond Airbnb, providing insights that will make your listing shine on every platform:
- Rate Inflation: Tim suggests a clever strategy — a dash of rate inflation that aligns with different commission amounts on various channels. “A dollar is a dollar,” Tim asserts, advocating for consistency in the core rate.
- Utilize Native Discounts: Tim encourages hosts to dive into special promotions on Airbnb, and other platforms, “Whenever you do that, you get visibility boosts on each of those individual channels.”
- Quality Over Quantity: Tim addresses a common concern: disproportionate bookings across channels. He reassures hosts that a heavy reliance on one platform isn’t a crisis, “If you’re crushing on one channel, celebrate that and don’t try to damage your success.”
Direct Bookings & More
We also pop the question on every host’s mind: How should we dance with pricing on our direct site compared to Airbnb?
Tim suggests acknowledging the usual 15% OTA commission and sliding in a tempting 10% direct booking discount. “You add just a blanket 10% discount on your own site. And then already you’re going to be earning 5% more.”
Want more revenue management tips, learn about pricing at different platforms, and the tools at your disposal? All of this and even more in our Hospitable Hosts podcast!
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