Dynamic Pricing FAQ
What is the process for assigning rates for my vacation rental?
To start, a licensed property manager gathers data like past performance, rates for comparable properties and what time periods required discounting to secure a booking. Using this data the property manager will arrive at an average nightly rate. This average nightly rate is the starting point for dynamic pricing. Computer algorithms then take into account seasonality, market demand and other factors to determine a rate for any given day over the next year.
How do you determine what is a comparable property?
A comparable property typically is another vacation rental among OIA’s offerings that has the same number of beds and baths, is a similar distance from the ocean or nearest beach access, has comparable amenities and is in a similar state of repair. Computer algorithms then take the analysis a step further by using some of the same factors to analyze rates among the outside competition. The algorithm looks at vacation rentals from sites like VRBO, Airbnb and other local property managers. It even analyzes hotel rates.
How will my rates change over time with dynamic pricing?
You’re likely already familiar with the pacing of seasonal rate tiers as they have been used here at OIA. This seasonality is very much a part of dynamic pricing (ex. rates are typically the lowest during the winter months and build during spring before hitting their peak during prime season). Dynamic pricing taps into the power of an algorithm that daily analyzes demand across the market and adjusts rates up or down accordingly.
How will dynamic pricing maximize my rental income going forward?
Dynamic pricing is designed to allow for quicker responses to periods of increased demand. In such instances, for example the week of Independence Day, rates will increase. The inverse is also true. During periods of low demand, the algorithm will decrease rates so that they are competitive for the local market to help attract rentals.
How does OIA ensure the rate does not go too low?
OIA has a dedicated revenue manager on staff who will review the dynamic rates system on a regular basis. Though the software we are using is powerful in its own right, regular monitoring and adjustments (where needed) by a local expert on the market are what truly makes dynamic pricing sing. We’re also setting nightly minimums (otherwise known as floor rates) for each vacation rental to ensure that, even in seasons of low demand, rates never drop below a certain rate.
How will rates display on the OIA website?
The OIA website will no longer display a tab with static weekly pricing. Rather, guests must enter a date range to receive a quote when searching for a vacation rental. Once a date range is entered, the system will return a rate. A search performed for the same date range, but say made three months from the original search, could display a different rate depending on how factors like demand have changed in the interim. This is a familiar experience to anyone who has searched for a flight or hotel online.
How far out will rates display for guests?
Online, guests will see rates for close to a year out. The reason for this setup is two-fold. First, it allows repeat guests a chance to secure their typical timeframe by phone or in person at our office at a small discount (off of the next year’s rates), increasing customer loyalty. Secondly, if a repeat booking is not made, it opens up the chance for a booking at a premium rate for those guests looking to secure their favorite vacation rental.
We’ve covered a lot! OIA truly believes in the power of dynamic rates. If you still have questions after reviewing this page, set up a virtual meeting with one of our property managers at a time when you can be in front of a computer with internet access.
