One of the very simplest, most influential tips I share in my one-on-one consultations with subscribers revolves around the following questions:
“But Matt, I already operate at full occupancy. What room left do I have to improve?”
“Matt, we are already successful and we’re not interested in buying a second vacation rental. What can your advice do for people like us?”
“Hey Matt, we run pretty much the best vacation rental in our area. Fully booked, thrilled guests, an amazing staff. Why would we want to change anything?”
The answer is simple: to make more money.
And fortunately for us, the vacation rental industry provides lots of upward mobility.
Have You Been In Operation For More Than 1 Year?
If you are already operating a top-notch vacation rental there is one decision that can, in about 2 minutes time, increase your annual revenue by literally as much as you choose. As long as you don’t abuse this tip, you will be amazed with its results.
That decision is to increase your rates.
And before you say “Aw that’s so remedial,” please hear out my own personal experience…
Now, this is a strategy move that is not for everyone in the industry.
For instance, if you are brand new to vacation rentals (i.e. you don’t have enough historical data to make solid predictions) or if you are not already very successful (i.e. you are still struggling to optimize your business), then this move may not be for you…
But because my readers are among the creme of the crop in this industry, I think this advice will apply to more than less.
How To Make The Decision Whether To Increase Rates?
I sat down with my new business partner about 2 years ago and he demanded we increase our prices by 10%.
He pointed to our extremely high occupancy rates, incredible brand loyalty, frequent repeat guests, and (most of all) amazing value as indicators that a rate increase would work well.
For a successful rental offering a tremendous service, the luxury of increased rates is your reward.
I, on the other hand was hesitant. I always loved the fact that we were the cheapest place in town. I loved the $110/night price point. I knew people came for that reason alone.
But because of his experience (and his convincing) we made the adjustment and increased our prices across the board by 10%. *Note: One of our special terms was that repeat or frequent guests would receive the same price they always had, honoring their loyalty (and even making them feel special for being a privileged group).
The Results Of My Experiment?
Two years later, I now look back at that decision as the simplest most profitable decision my company ever made. Across the board, our revenue went proportionally up by 10%. In fact, since our occupancy slightly increased, the profits were even more.
Take some time to determine whether a slight increase in rates is fit for your business. If it is, and you execute it properly, you’ll enjoy the sweet fruit of your decision.
For anyone who have purchased The Vault, you’ll know that this is only one of the ideas that’s right for some owners/managers. It is one of the great ways to generate even more cash from any given rental (the sky is the limit).
And yes! It can be that simple!
I’d love to hear any owner/manager opinions about this decision as it applies to their property.
I have heard great success stories (please post below) but am sure there are some negative experiences in the mix…