If you have any experience with traditional property management, either with "Old School" property management companies or with self-managing, it can take some time to adapt to iTrip® Orlando's methodology for pricing your short-term rental property.
We at iTrip Orlando have a singular focus on helping you generate the maximum amount of revenue from your rental property. As a result, we keep an eye on the "big picture" first, and dig into fine tuning individual aspects of our strategy once we've got a handle on that big picture.
In the past, property managers would plan out rates for a home a year or so in advance. In Orlando, this might mean that we would plan our Winter, Spring, Summer, and Fall Rates- each with a different nightly rate based on anticipated demand for those time periods. Then we would add in special holiday rates like Spring Break, Christmas/New Year's holidays, Fall Break, and others. Overall this would result in having 9 or 10 different seasonal rates for a home.
Let's compare two nearly-identical bookings. One booking is for 4 nights in a two-bedroom condo February 1-4. The other booking is for 4 nights in that same two-bedroom condo for February 5-8.
The booking for February 1-4 earned $300 total- or $100 per night. The booking for February 5-8 earned $450 total- or $150 per night.
What's going on here? Both of these bookings fall into a traditionally slower season between New Years and Spring Break. They are both for the same number of nights, in the same home? It might look like we left $50 per night, or $150 total on the table when we booked out the property for $100 per night. Why would we "give away" this revenue, when it's obvious we could have booked the home for $50 per night more?
Well, one piece of information not mentioned yet is this: The $150/night booking was booked in August of the previous year. The $100/night booking was booked the week before- in the last week of January.
The amount of time bookings are created in advance of their planned stay is called Booking Window or Booking Horizon. In the Orlando and Little Harbor markets- the average booking window varies seasonally somewhere between 45 and 60 days. Meaning that most bookings are generated 6-8 weeks in advance.
The larger the booking window, the less we need to "compromise" on price. But once we get inside 5 weeks or so from a date on the calendar- the likelihood of that date being rented drops dramatically.
Under the "old" way of doing things, we would hold on to higher rates, because other bookings (like that $150 per night booking) would have "proven" that we can get higher rates for that time period.
But, armed with the knowledge of booking windows, and the principles of Supply & Demand, we know that unless we lower the nightly rate as we approach a date, we are very unlikely to book that date at all!
Especially once we are within two weeks of a particular day. We are not choosing between a higher, more preferable nightly rate and a lower, less-desirable rate; we are choosing between lowering the rate, or not booking those days at all!
And booking horizon/window is just one factor that plays into dynamic pricing. If overall demand for a specific neighborhood is lower than it normally would be in a certain time of the year- our dynamic pricing sees that and will adapt our prices accordingly.
If your home has a higher occupancy rate than other comparable homes in your area for a certain time period, we'll raise your nightly rates in order to capitalize on it. But then if we get close to an empty spot in your booking calendar, we'll lower the rates back down in order to capture some last-minute bookings.
Essentially, our dynamic pricing system results in (most of the time) 365 unique nightly rates within a year. If you are used to more traditional property management looking at a single booking can give you a lot of information about the pricing strategy. But with dynamic pricing, there are a lot of other factors that have to be considered.
Just because we rented your home for $119/night this week, doesn't mean that it will always be rented for $119/night.
Our goal is to maximize overall revenue from your home. We believe the best way to accomplish this is to earn every nightly dollar that we can during the busy times, and achieve the highest occupancy possible in the slow times- and then fill in the gaps in the calendar as much as possible.
We also understand that not everyone has the goal of maximizing revenue. If that is the case for you- please reach out to us and let us know. We can disable dynamic pricing or severely limit it, if you have other goals for your home!
This is a revolutionary approach to maximizing short-term rental revenue and- alongside our award-winning Software partnership with VRBO, Airbnb, Booking.com, Expedia, Marriott, and others- is one of the reasons why homeowners earn more with iTrip than any other property management company. That's one of the many benefits of partnering with iTrip Orlando!
