Making more money. Supply & Demand

Making more money. Supply & Demand

Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes

There seems to be an improper focus on occupancy. I can put a place out there at a dollar a night and get 100% occupancy. I can put a long-term rental apartment out there at 30% off and be occupied all the time. It doesn't mean it's good.

high-occupancy usually represents an underpriced unit. High-occupancy usually means more wear and tear on the unit and the owner. And more maintenance needs. High-occupancy is nothing to brag about.

An understanding of supply and demand means that you know what the price should be for each unit everyday both near and far. That is what things like Beyond pricing, pricelabs, and other dynamic pricers can do automatically. Not perfectly, you might want to monitor at some in your area to see if they reflect reality.

an understanding of supply and demand means you want to be listed in every major location that can bring you good paying guests.

the major online listing sites include Airbnb, VRBO HomeAway, booking.com, TripAdvisor FlipKey

and using the Sync features available on any of those to avoid double bookings in or perhaps something like free to book or smart B&B or owner res or another channel manager

a good website can capture people who look at these sites and see if they can book direct without paying commissions. Research indicates that about 7% of people will look at one of these and if you're easy to find will book with you instead.

you want to be on any travel sites that perhaps your hotel taxes pay for. Here there are things like 800 Poconos and visit PA. Com. Your location also probably has things like that and you should be on them. traffic coming to your website.

back to occupancy. It is not about being full, is about getting as high a price possible with reasonable occupancy. Raise your rates and see what happens to your occupancy. It's still high, raise your rates again. Of course this interacts with seasonal factors.

Thoughts?

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    I fully agree. I'm not going to lower  my price to $100 just to get more bookings.

  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    6y

    I’m a butts in the seats guy. I charge less and I’m never empty. But each property does have a number I won’t go below. 

  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y
    I agree for the most part. Sometimes a high occupancy means a high quality stay and they have earned that while still having a high nightly rate.
    I consider our place as having high occupancy but overall it is low. We are booked solid from mid June to after Labor Day. After that it gets pretty spotty. We have a Thanksgiving booking for the first time.
    Bottom line for us, no one really wants to take a vacation to the lake in the winter. It is cold and snowy but you can watch the ice floe move back and forth between the 2 feed rivers we are between.
  • Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    6y

    i think occupancy is for realistic seasons. it is dead here in winter

    Some places may only have a few active months

  • Plantation, FL · Member since 2009 · 329 posts · 119 votes
    6y

    It's all about supply and demand. Someone who knows their market well can hit the sweet spot and get high occupancy while maintaining a healthy rate. I can charge $10K for 7 nights during Christmas but during September I'd have to charge around $500/night and I still won't get full occupancy. 

    As a sanity check, I always check my top competitors to see what they're charging and their occupancy and then I adjust mine accordingly. 

  • Member since 2019 · 65 posts · 48 votes
    6y

    This is something I struggle with. What is the right financial metric to optimize for? Ideally a high rate of occupancy at a high rate but we all know that is hard to achieve. Seasonality is key - cabo prime time is November to April but I got 3-4 good bookings in September (hurricane season) at decent rates this year. I also play with weekend rates and minimum stays. Given wear and tear, utilities (pool), and cost of turning the property, I try not to accept any bookings below $1500-$2000 for a minimum 3 night stay. I also increase my rates on the weekend as there is a pattern of 3 night party crew bookings from Airbnb and I want to ensure they don’t get too good a deal.

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