Navigating the numbers: The importance of dynamic pricing models.
The vacation rental industry in Atlantic Canada has seen significant growth in recent years, with travelers increasingly opting for unique and personalized accommodations over traditional hotels. In many areas of Atlantic Canada, vacation rentals are the only truly viable places to stay. Yes, it was busy before, but since the covid-era the demand for vacation rentals has really spiked. More and more families are choosing to explore new areas of the East Coast, and quite often looking to find a unique basecamp to tour from.
Vacation property owners and managers are faced with the ongoing challenge of optimizing revenue while remaining competitive in a cyclical market. An attempt to win a tug-of-war between an appropriate rate and the number of booked nights. Hotels seem ot be able to do it, so we figured there must be a way we could too.
We found the solution - it’s called dynamic pricing models. Same stuff the big hotels use to make sure they don’t give away their rooms, but also don’t end up with unnecessary vacancies. In simplest terms, it is a strategy that is created to systematically adjust rental rates based on various provided factors.
Let’s get into it.
Seasonal Fluctuations
Atlantic Canada experiences distinct seasons, each attracting very different demographics of travellers. Dynamic pricing allows us to automatically adjust our rates according to changing seasonal demand. During peak summer tourist season, you have to get your price right, you have to know exactly where the market sits. Of course, this is always balanced out against length of stay goals, but leaving empty days or offering too big of a discount on daily rates both simply can’t happen. The big season is just too short to miss here.
Conversely, during off-peak periods, dynamic pricing software ensures that our rates are attractive enough to attract guests and maintain desired occupancy levels. Everyone has different goals, but the shoulder and quieter periods of the year can be very busy if you read the market right.
Local Events and Festivals
The region hosts a variety of events and festivals throughout the year, drawing visitors from all over the globe. Dynamic pricing software enables us to align our rates with the up-to-the-minute timing and popularity of these events. During major festivals or conferences, for example, demand for accommodations may spike, allowing owners to adjust prices on the fly. This flexibility ensures that we maximize our opportunities for our property owners during high-demand periods.
Last-Minute Bookings
Not sure why exactly, but travel plans are becoming increasingly spontaneous. We see so many vacationers now opting for the less-planned and last-minute getaways. We actually love their spontaneity and secretly wish we could still live that way, I think. The South Shore of Nova Scotia has an average booking window of around 14 days for large portions of the winter months. Last minute stays happen. Anyhoo, the story is that the software allows us to adjust rates in real-time, ensuring that last-minute bookings are priced competitively while still generating revenue.
By offering attractive rates for empty nights on the calendar, we can capture a significant share of the last-minute market and avoid the potential loss in revenue due to unbooked nights.
Adjustments for Lead-time
There is always that awkward balance between booking too early and potentially leaving lots of revenue on the table vs missing your price on the high-side and scrambling for eyeballs as the window closes on heavy booking season. Dynamic pricing models allow us to keep those mistakes, on both sides, to an absolute minimum.
Maximize your profits while still achieving all of your vacancy goals.
Competitive Edge
It’s a noisy space now, and the vacation rental market in Atlantic Canada has become very competitive. With an ever-growing number of properties available to travellers, the reality is that you have very little opportunity and time to land some eyeballs. The number one search criteria for most travellers in still - price. Our models provide a competitive edge by allowing us to react to alterations in market conditions, ensuring that our rates always remain attractive compared to comparable accommodations. Even you aren’t using every edge you can, you are simply going to get lost in the noise. Gotta have it.
Individual Property Characteristics
Every vacation property we visit is unique. Way more so than city housing, cottages are all about that character. Sometimes the big highlights are the nearby amenities, sometimes it’s the location, and sometimes it’s the property features itself. Dynamic pricing models take into account these individual characteristics to set rates that reflect the unique value offered by each property. A personalized approach that ensures our owners are always compensated fairly for the specific attributes of their rental. Whether it's an ocean view, proximity to popular attractions, or high-end touches - it all gets counted.
Staying on Pace
The past won’t always repeat itself. Just because something happened in the market or specifically for your property last year, doesn’t mean it will happen again this year or next. Our software looks at future demand trends in real-time and adapts recommendations based on how any specific market is currently performing. While the past can always be a consideration, what is actually happening right now is where you need to make determinations.
So there you have it, I hope I presented my case properly. For us, dynamic pricing models are crucial to help optimize revenue and ensure the properties in our care always stay competitive. We pay for it as part of our service and implementation is always optional. We believe the choice to make decisions based on data rather than just hypothesis is always is one you want to have.
The vacation rental world has to learn from the hotel industry, they have been here a lot longer than we have and they have spent a fortune to evolve their business along the way. We need to do the same.
