The New STR Economy: The Challenges Facing Independent Short-Term Rental Hosts Today
Perhaps you've heard the genesis story...
Believe it or not, not every revenue-boosting strategy requires you to add an expensive hot tub.
The vacation rental market has grown tremendously over the past decade, driven by the rise of Airbnb and other online platforms that connect homeowners with travelers. However, as the market has matured, competition has intensified, making it more challenging for hosts to increase revenue and profitability. This article offers strategies that top performing short-term rental hosts use to drive higher revenue across their properties.
Underpricing is one of the biggest missed revenue opportunities. For example, pricing weekends 30% lower than weekdays routinely undermines full-week bookings during peak seasons, resulting in thousands of dollars lost per year. Overpricing far-out dates, then lowering prices as the date nears, also cuts into potential earnings.
Aim to find the optimal balance between occupancy and pricing by leveraging dynamic pricing tools. These use algorithms to help maximize nightly rates while still maintaining target occupancy levels. Services like AirDNA, Wheelhouse, and Beyond Pricing integrate with Airbnb to automate optimized pricing year-round.
Larger groups are often willing to pay more in total, especially for unique properties like cabins or beach houses. But most Airbnb pricing structures actually deter group bookings by charging excessive per-guest fees.
Instead, consider reducing the per-guest charges and proportionally increasing the base nightly rate. This can make your listing more attractive for events, family vacations, friend getaways, while still earning more revenue overall. Just ensure you maintain high-quality amenities, service and reviews to justify the pricing shift.
Major events like concerts, conferences, festivals, and sporting events can drive up lodging demand significantly. Research your area's annual event calendar and look for patterns of early bookings or sold-out status to identify dates that warrant a major rate hike.
Increase prices 2-4 weeks prior to major events, or utilize the "event pricing" feature within Airbnb's pricing settings. Monitor bookings over the next year to collect data on ideal event premiums for each occurrence.
Gaining visibility across multiple vacation rental sites means more booking opportunities. Cross-list your Airbnb property on VRBO, Vacasa, Booking.com, FurnishedFinder, or other platforms popular in your area.
The incremental bookings require almost no additional day-to-day work, while generating thousands in potential revenue. Utilize a calendar syncing tool like Avail or Streamline to prevent double-bookings across sites.
Photos and listing details have a massive impact on bookings, with optimized content raising bookings up to 15%. Invest time into professional photography that highlights your best features. Craft compelling descriptions that connect with guest emotions and illustrate the unique experiences your property offers.
Also evaluate your amenities and house rules to identify opportunities to appeal to more guests. For instance, allowing pets can significantly expand your potential audience, since so many potential guests filter for properties that "Allows Pets."
During a guest's stay, reach out to offer a special discounted rate if they extend their trip. This is a mutually beneficial arrangement - filling in gaps in your calendar while also saving the guest the hassle of relocating.
Focus on targeting guests staying during slower weeks or with several open days preceding or following their trip. Even a 25% discount on the extension can be profitable compared to zero earnings from empty nights.
Reviews significantly influence where you rank in search results, so maintaining a high rating is crucial. If your overall rating dips below 4.85 stars, consider deleting your listing and creating a new one from scratch to reset.
Also politely reach out to guests who left less-than-5-star reviews. Thank them for their feedback, explain improvements made to address their concerns, and request they update their review, which Airbnb allows.
Upgrading amenities can help justify slight increases in your rates. Consider additions like ultra-comfortable linens, luxury toiletries, 100% cotton towels, or bathrobes to enhance the guest experience.
For business travelers, laptop-friendly workspaces and quick WiFi enhance appeal. Outdoor spaces like patios, lounges or hot tubs also warrant rate premiums.
Implement supplemental charges for amenities not included in the base rate, like early/late checkout, pet cleaning, event premiums, or required mid-stay cleans for longer rentals. These can generate revenue without inflating base rates.
Clearly disclose additional fees upfront in your listing descriptions and house rules. Also explain charges in booking confirmations to prevent surprises. Keep the fees reasonable based on actual costs incurred.
If your property accommodates different types of travelers, create separate listings for portions of your home. For example, promote a private office area or guest house specifically to remote workers.
This expands visibility in more Airbnb search categories without requiring any physical changes. Just ensure your booking calendars are synced to prevent conflicts between the listings.
With the vacation rental market more competitive than ever, Airbnb hosts must implement robust strategies beyond just listing their property if they want to maximize revenue. As ever, the key factors for success are focusing on delivering an outstanding guest experience to build loyalty and great reviews which perpetuate bookings, constantly fine-tuning your pricing and content based on data to stay competitive in Airbnb search results, and relentlessly testing and optimizing to take your rental business to the next level.
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