Q1 2020 has been unexpected, to say the least. With the economy changing by the hour, figuring out your pricing strategy for your short-term rentals can be difficult.
I’m here to help make it easier.
COVID-19 Short Term Rental Pricing Strategy
As a short term rental business owner, your pricing strategy is incredibly important and changes with the seasons. While there is no precedent for what we are dealing with right now you can still keep your units running and bringing in income with a few shifts to your current pricing.
First, figure out your break-even number. Then add $500 per unit, in case someone books and is grandfathered in under quarantine. That way, even if they can’t leave, they won’t be booked at a lower rate, and you’ll make at least $500.
To calculate your new “coronavirus minimum,” assume a 100% occupancy rate.
Then take your break-even number, divide by 30. Take that number and add $500 to it.
Now you have your new minimum to hit.
You also need to extend your reservation and cancellation policies.
So, for reservations 60 days from now, ask for a 60-day cancellation policy. For reservations 90 days from now, ask for a 120-day cancellation so you don’t end up with a really cheap 4th of July rate.
To further figure out your minimum, play around with your numbers. Try $1 - $2 increments until you find a sweet spot, and then leave your nightly booking fee at that. This season is going to call for patience, a willingness to test, and thinking outside of the box. You will need to get more strategic and start thinking through the long-term effects of your decisions.
Don’t let what’s going on in the economy today negatively affect your bottom line in the next quarter.
Now is the time to get serious about your strategy and embrace the role of business owner.
The most important thing is putting yourself in the position of emerging on the other side of this uncertain economy with more units than you have now, AND in a better financial situation than you’re currently in.
By implementing a few tweaks to your pricing strategy, you should have no problem coming out stronger than before!
If you need more support in how to price your units during the pandemic - join me inside my free Facebook group, where I do weekly Q+A calls answering questions like this one!