Pricing and adding amenities

[Luke Masaschi]

Ive been in the STR space for a few years now and wanted some advice on the following and would love to connect!

I have a solid property that cash flows really no matter what and I believe is a little nicer than most comps in the area. Now in 2021 I got 225 a night with a $150 cleaning fee and was 98% occupied may-aug and never adjusted prices due to not knowing about demand as well as pricing tools.

Last summer I didn't see as great of prices just because of how crazy 2021 was but was still full. Now that I am going into the high season im trying to figure out how high to push my prices without staying vacant. I use price labs now and was wondering if you guys have a suggestion on how to price a prop as well as if there should be a minimum for orphan days as well as cleaning fees.

For my second question: I want to add cool amenities such as hot tubs ect at this same property. How much should someone increase their prices after adding such amenities or does it vary? I feel as if I could definitely get more but I do not want to push it to the point where it crazy high and im keeping months open. 

Now I know a lot of people will say test prices which I plan on doing eventually but at the moment I am being aggressive on the remodeling / re investing side and since high season is only a few months a year in my area I dont want to miss out on revenue when I do not have to. 

[Bruce Woodruff]

I think the best and most realistic way to see if your pricing is in line with the market is to check your competition. Don't really on a computer algorithm, go directly on VRBO, and AIRBnB and find similar properties in the same area or close. 

What are they charging? How booked are they? What amenities do they have?

[John Underwood]

It's really trial and error on pricing. Check your competition to see what you think you can get away with without hurting occupancy too bad.

Similar answer on hot tubs and other amenities.  How much more is your competition charging for these amenities?

One possible answer is no extra rate increase  but better occupancy numbers.

[James Carlson]

@Luke Masaschi

Like above advice, unfortunately, there's no calculation that says X amenity in an STR equals Y price increase.

Go on Airbnb and VRBO, see if any other comparable properties also have hot tubs. Try out some increases, see if bookings remain solid.

That said ... I'm also of the mind that if your vacation rental is already ahead of the competition, do you absolutely need to invest in more amenities? It's not a bad idea to stay a step ahead, but if you're already crushing it, then I'd want to see what extra I could get and do some quick math on the ROI of a hot tub.

(Definitely not discouraging the hot tub by the way. All of my Colorado short-term rental buyers who add a hot tub are outperforming competition by 25% at least.)

[Sarah Kensinger]

Definitely plug your property into a pricing software and educate yourself on how to use it. I know Pricelabs has some articles, videos, a few webinars a year, and a demo you can schedule, that teach how to make the most out of their software for your property. Once you see what the software is suggesting depending on the settings you have, double check on the OTA and see if it's comparable. I wouldn't really worry about being too high unless it's like wow we're hundreds of dollars more. Many times, hosts have been very surprised over how much they could get from their property. You would also benefit from a ranking software like Rankbreeze or Intellihost which would also show you the pricing of your comps and where you fall in the rankings of the OTA. Airdna would be beneficial for you to learn the booking lead times of your area, which would help you know when your property is not getting booked or people are just booking last minute. This would also help you not drop your prices to soon! 

Learning the market of a STR never ends and you can't learn it overnight. But if you keep paying attention to the area, how your guest avatar behaves and how much they're willing to pay, you'll have a very successful property!

[Andrew Steffens]

If you were to use AirDNA paid version as a starting point you could find specific properties and their trailing 12 months of performance.  That is what I do and then check what they are currently doing.  If you have enough comps, with some luck you can see what some properties are doing in comparison to others with certain amenities.  Far from a perfect science but the more data the better!

[Jake Baker]

@Luke Masaschi

I was recently in the same situation and made the following adjustments:

1. Pricelabs - a dynamic pricing tool. I know it's hard to trust an algorithm, but this is a game-changer. It increased my rev by 10-15% and I stay booked.

2. Putting my top amenities in the Airbnb post. i.e. "Luxury Downtown Condo - Free Park, New Jacuzzi" 

[Judson Heess]