Setting your rental rates for 2018
The holiday rental business is an extremely competitive industry. Not only is it necessary to be aware of the predominant rental rates, but there are a host of other variables to address. Let us quickly outline a well-informed approach so that you can be prepared in advance for the coming year.
Becoming Aware of Aggregate Business Costs
First we should highlight that anticipated holiday 2018 rental rates will always be offset by business costs. Some examples of in-house expenditures include:
– General maintenance and upkeep.
– Paying for a vacant property.
– Utilities and community fees (varying from location to location).
It is necessary to balance these expenditures against the predicted 2018 rental rates. A breakages deposit can give you a contingency or insurance if any damages occur in the rental period which you will need to fix.
Keeping in Pace With the Competitors
In order to accurately appreciate the rental rates that are agreeable during the 2018 season, it is prudent to observe the actions of any other competitors. Although some would argue that undercutting prices is the best way to attract renters, this is generally not the case. Many potential clients will gauge the quality of their investment based off of the price of the rental. Thus, look at the average rates charged during both peak and off-peak seasons.
It should nonetheless be pointed out that there is a fine line between a higher price, higher quality and fees that are exorbitant to the client. Another reason to appreciate the actions of any competitors is that the owner will be able to understand the impacts of marketing campaigns, rebates and similar third-party promotions. Examining the websites of any competitors will provide the clarity and insight required to understand what is (and what is not) working.
Payment Service Directive 2 Considerations
From January 2018 you will no longer be able to pass on transaction fees to customers, set by online payment providers. The rental rates will need to cover the transaction fee if you are unable to absorb the costs. It is wise to remember that it will be illegal to offer discounts to customers paying by BACS or cash.
If you have bookings where you are due to take payments in 2018; You will not be able to pass on the transaction fee for the payment in 2018. It could be wise to set some budget aside to cover the transaction fee if the customer has chosen to pay by card.
For more information on the PSD2 changes read our blog.
Feedback, Reviews and Other Concerns
Organic reviews and feedback are just as important as the potential rental rates themselves. Let us never forget that any holiday rental business is only as successful as what others are saying. Examine multiple channels; particularly online sources such as blog posts, independent reviews and major holiday hubs such as TripAdvisor. These are all critical to appreciate how the public feels about a property. If you have a plethora of positive ratings, it may indicate that prices can be slightly raised (within reason). Occupancy figures, guest demographics and the busiest times of the year are also key metrics to interpret.
Ultimately, determining the most appropriate rental rates involves just as much intuition as it does financial figures alone. Encountering a balance between these approaches is the best way to determine how to attract potential renters.