Strategies for determining best nightly rate for STR?

Question

Other than going through VRBO or ABNB and looking at similar properties how do you determine what your nightly rates should be for specific days/months/seasons of the year?

On another post someone mentioned “fierce pricing” to obtain less reservations but the same income as if you priced it lower with more turnover. In theory less wear and tear on the unit itself, furniture, less cleaning, etc...

What’s your method for determining your nightly rate and how do you ensure your maximizing your potential?

Jon Crosby · Answer

@Wesley Myers

I'm certain Luke Carl will have some great advice on this front also, I will just say that using 'fierce pricing' or whatever it's called is not really a 'strategy' in my opinion, it's something you earn with a great business model and a LOT of great reviews to back it up.

Revenue is nothing more then a combination of Occupancy Rate and ADR (average daily rates) and that 'fierce' method is simply raising ADR against lower occupancy for the same revenue as high occupancy, lower ADR or a well balanced blend of both...which is what I think most hosts try to achieve. In the end though if you charge premium rates for your place, your guests should receive a premium experience to back it up otherwise reviews are simply going to force you back down to reality.

There are a lot of tools out there to help you with pricing (Airdna, iGMS, etc.), however like any tool, trust but verify by doing your own manual research on local comparable properties on Airbnb and VRBO.

Best of luck!

John Underwood · Answer

It does not take that long to look at the competition manually and it is the best method.

It is also interesting to look at the competition and see what ammenities they offer. It might give you some ideas.

Rick Bassett · Answer

Like others have said, look at the competition. I use that info to determine if it is worth standing up an STR in an area and the type (2 - 5 bedrooms). In general, if it's not going to generate at least 2.5 - 3 times net monthly revenue compared to a long-term rental would bring in then it's not worth the extra effort that STRs require.

Rick

Paul Sandhu · Answer

It's just the bedrooms that have the Hugh Hefner theme.  Living rooms have their own theme, and that's what I name each STR.  By the theme of the living room.

EXECUTIVE QUALITY FURNISHED APARTMENTS:2 BR apartment - Working Labradors - 3 beds2 BR apartment - Resting Labradors 2 BR apartment - History Channel - 3 beds 2 BR apartment - Home Theater  2 BR apartment - Sports 2 BR apartment - Ocean Sailing Ships - 3 beds 2 BR apartment - Dogs Playing Poker 2 BR apartment - Guy Movies 2 BR apartment - Rock and Roll 2 BR apartment - Quentin Tarrantino 2 BR apartment - Country Living AFFORDABLE FURNISHED HOUSES:3 BR house - Schwarzenegger Tribute - 2 baths - 4 beds 2 BR house - Garden Spot - 4 beds 2 BR house - Matchbox 20 3 BR house - Forrest Gump 3 BR house - 5th Street Retreat - 4 beds4 BR house - Grand Central Station - 5 beds3 BR house - Retro 3 BR house - The Green House - 4 beds 2 BR house - 7th Street Retreat - 3 beds 2 BR house - 6th Street Retreat - 3 beds BIG MAN CAVE HOUSES:The Hunting Lodge - 2 story - 5 beds - 2 baths The Taj Mahal - 2 story - 8 beds - 2 baths The Big House - 3 story - 8 beds - 4 baths

Paul Sandhu · Answer

My main competition is motels.  $400 gets you a room with 2 beds and a bathroom.  I charge $600 for a 3 bedroom house with a kitchen, washer/dryer that is decorated like Hugh Hefners mansion.  $400 for 2 BR, $800 for 4 BR.  I only rent to ruffians, hence the Hugh Hefner theme.

Wesley Myers · Answer

Found the enemy post. Great info!

Mark Miles · Answer

@Luke Carl I’ll let you school him on the ENEMY method

Josh Vlach · Answer

@Wesley Myers

You have to weigh your STR experience to your reviews. When I first launch my Air BNB I discount them greatly to drive my reviews and bookings. Once you are established you can adjust rates and research your market. Lastly STR require marketing. The level of your rate can be determined by the level of your marketing.

Marc Rice · Answer

@Wesley Myers

I price with peak vs off season. Weekday vs weekend. Tier A event vs Tier B event vs Tier C event.

Every market is different and everyone has their own strategies. You’ll want a pricing software to adjust your prices gradually just in case you overshoot. Vacancy is your largest expense...if you’re still profiting on a lower nightly rate then I think it makes sense to fill it. Just my opinion.

Strategies for determining best nightly rate for STR?

Most Popular Reply