Vacation rental marketing and pricing strategies are moving more in the direction of data science, much like many hospitality industries – including apartments – have been doing the past eight to 10 years.
It starts with properly measuring demand, Amber Carpenter, Chief Marketing Officer, Acme Homes, Palm Springs, Calif., says, and differentiating it from conversion.
"[Owners and managers] in our industry refer to demand, but there’s confusion over what that is,” Carpenter says. “Many think it’s the number of bookings, or the number of bookings in a given period compared to that period a year ago. Bookings are conversions. Demand is search traffic. Even further, it’s search traffic for a certain type such as those looking for a 4-night minimum vs. 7-night minimum. It’s whether they are looking for a 3-bedroom or a 4-bedroom home."
“Operators who struggle to get bookings at their vacation homes might think they have to lower the price to increase business. Really, if no one is searching for their type of home in a given market or reservations details, then lowering the prices won’t make a big difference. What it comes back to is better marketing, not price.”
Donald Davidoff, President, D2Demand Solutions, has worked in and studied rental pricing for more than 20 years.
“I want to be careful not to overly parse the word ‘demand,’ he says. “There’s overall demand, demand as presented by leads, and realized demand (aka signed apartment leases). It is absolutely correct that marketing is often a better solution than pricing; you can’t simplify that lowering prices can increase leads.”
Davidoff says that professionally-managed properties know the difference and recognize the need for both marketing and pricing solutions.
“There’s a tendency to hit the price button because it’s simple and immediate, but it’s worth spending a lot of time on marketing solutions. Maybe mom-and-pop operators ignore marketing, but most [larger scale] operators at least consider it.”