Fixed or dynamic pricing for holiday rentals

April 2024

Lately, the holiday rental market has been showing variability, and as owners, we must keep an eye on price fluctuations in the market. Determining the right price for your property is vital to attract guests and ensure stable income. But, beware, setting a price requires careful and honest consideration of various key factors such as location, amenities offered, season, and/or competition.

How do you know the best price for a holiday rental? It’s not always easy, but in any case, you must ensure that your holiday home offers what it’s truly worth.

In this article, we’ll discuss how to set prices in holiday rentals, explain what dynamic pricing is, and in contrast, how fixed prices work and what advantages and disadvantages they entail. Join us in this guide to establish prices and ensure your holiday rental business runs smoothly.

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What are dynamic prices?

Dynamic prices, as the name suggests, are constantly changing. They are set based on supply and demand and can vary in real-time. The parameters by which these prices change depend on each owner, but we could say that the main ones are as follows:

• The current season. Depending on whether it’s high, low, or mid-season, prices fluctuate. The aim is always to keep the apartment or rental house occupied for as much time as possible.
• The location of the property and the rental date. There are areas where the stay is more valued depending on the season or the activity taking place nearby. For example, renting an apartment in Seville in summer, when the heat is on and half the city moves to the coastal areas, is not the same as during the Seville Fair, which takes place in spring and there is high demand for holiday rentals. The same applies to renting an apartment in central Barcelona compared to doing so in Badalona, which is essentially a commuter town. Location-season factors are key when setting dynamic prices.
• Availability of holiday rental. It makes perfect sense that during periods when the property remains unoccupied or has low occupancy, prices decrease or that attractive discounts or offers emerge to entice travellers. For example, the winter season in coastal areas, especially if it’s harsh, is a time when owners usually lower prices.
• Social demand. There are extrinsic factors that can increase the demand for a particular property. For example, the hosting of a concert, a specific conference, improvements in weather conditions, or the celebration of a particular festivity in the surroundings. These are factors, some unpredictable, that can increase or decrease hospitality demand. And in that regard, it’s indeed interesting to establish dynamic prices.

Advantages of dynamic prices

Let’s review the main advantages of establishing dynamic prices for our holiday rental:

• Your rental will be more competitive in the market. It’s obvious that by adjusting the offer to each season or weekend, we will obtain better income. This way, you can position yourself above the competition. Especially if we manage to build loyalty with the appropriate target according to the rental period.
• You’ll optimise income according to supply and demand. As mentioned earlier, during periods of lower occupancy, you can offer interesting discounts or personalized offers to specific groups: students, companies, retirees, etc. For example, June and July are conducive months for student groups on end-of-year trips, while winter is the season favoured by elderly travellers.
• You’ll have greater adaptability. It’s not the same as having a rental that remains constant and neutral all year round as having one that is flexible and adaptable according to the circumstances or external possibilities. However, this adaptability requires constant monitoring.
• You’ll open the door to personalisation. Adapting our property to the demands of supply and demand also propels us towards personalising the rental: there will be guests who travel during a specific season or for a specific event, so we can offer an experience package for the occasion or simply tailor the house according to the season, whether it’s summer, winter, or spring. A higher price will require more attention and care from our side.

Fixed prices and their main advantages

With fixed prices, we know what to expect from our holiday rental in different seasons of the year; the predictability factor provides certainty to both owners and guests.

Because there are fewer changes, you’ll also have less work. Establishing fixed, transparent, and continuous prices will facilitate the booking process, as you can always adhere to a predefined template. There won’t be price fluctuations, but rather they will remain stable, saving you work in configuring offers. This will give you more time to focus on other things.

Fixed prices are also a hallmark of established accommodations. You can present your price catalogue with transparency and seriousness. These are highly valued aspects by guests, especially those who repeat stays in the same holiday homes and seek certainty and trust. Some guests even negotiate a price from one stay to another, which further facilitates the owner’s task.

This type of pricing is usually more balanced and tends to be adjusted to demand. It’s ideal for owners who don’t want to be constantly monitoring their accommodation and are satisfied with stability in the rental period.

Monitor the competition

Discreetly and respectfully monitoring your competitors is important for determining a correct price tailored to the demand for your holiday home. It’s also a way to gauge the pulse of the market and customer demands.

Researching similar properties in your area of influence will help you understand market prices and set yours. If your main competitors launch significantly higher or lower offers than yours, perhaps it’s time to reevaluate your pricing strategy.

From Holidu, we’ve provided you with a series of tips and recommendations to help you establish the best price for your holiday rental. Now you can study and analyse the pros and cons of each formula and predict how it will affect your day-to-day and your guests’ experience. The key is to achieve a satisfaction balance for both parties. Rent out your property with Holidu now and get the most out of it.

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