Tips for Properly Pricing your Vacation Rental
Once you've decided to put your second home on the vacation rental market, it's time to set your rental rates. If you're brand new to renting, here are some tips for determining competitive rates for your vacation rental.Scope out the vacation rental competition. Checking the pricing of similar properties on sites like HomeAway.com, VRBO.com and VacationRentals.com can give you a good idea of what you can likely charge for a stay in your property. Pay attention to the size and type of the property, what amenities they offer, and their proximity to tourist destinations to make sure you're getting a fair comparison. For example, if you own a 3 bedroom cottage rental on the Georgian Bay in Ontario, your rates should be similar to other 3 bedroom cottages within the Muskoka region.
Figure your nightly rental rate. If your market is primarily priced by the weekend, your nightly rate should be 1/5th to 1/6th of your weekly rental rate. Conversely, if your property is in a nightly rental market, multiply your nightly rate by 5-6 to get your weekly rate.
Indicate which fees are included in the rental rate and which are additional. What is typical varies by area. Again, check the other vacation rental listings in your area to see what other owners charge in addition to the rental rate. Fees might include taxes, cleaning fees, additional person fees or pet fees.
Check the nightly rates for hotels in your area. Next to other vacation homes, hotels are your next biggest competitor. Hotels are a little bit trickier to compare in price to most vacation rentals since the size and amenities can vary. When looking at a hotel's pricing, think of it this way: If your property comfortably sleeps a family of 6, how many hotel rooms would they need for the same level of comfort? If it's 2, multiply the hotel's nightly rate by 2, then compare to your nightly rate. If your nightly rate is higher than the cost of 2 hotel rooms, consider your amenities. Is your location, kitchen, hot tub, high-speed internet, and/or flat screen TV, etc. worth the difference?
Determine if your vacation market is a year-round or seasonal destination. This may sound like a no-brainer, but don't sell your property (or your vacation area) short. If your property is in a year-round destination, you may be able to have only one or two rates for the entire year. If your market is more seasonal, you may be able to charge a higher rate in the peak season and then deeply discount rates during the off-season to attract renters. For instance, many cabin rentals along the Lake Superior shoreline in Minnesota are rented in the winter by skiers looking to tackle the Lutsen ski hill and in the spring/summer seasons by outdoor enthusiasts.
Look at school calendars to determine your peak seasons. The peak seasons for most markets revolve around the school calendar, since many travelers who stay in vacation homes have school-age children. Check the school calendars for the areas within driving distance to get an idea of what your peak season should be. And don't forget about Spring or Fall Breaks!
See where the holidays fall for the upcoming year. Often, you can charge more for holiday weeks and weekends like Thanksgiving, Christmas, New Year's, Labor Day, Memorial Day, July 4th, and Easter. Be sure to indicate the specific dates and minimum stays for these holiday weeks and weekends.
Decide upon a minimum stay. During your busiest months, a minimum stay of one week is typical. During the shoulder season, you can target weekend guests by lowering your minimum stay to 3 nights. Just be sure to check your area's short-term rental regulations to see if a mandated minimum stay is in place.
Offer a discount for longer stays during the off-season. One month during the low season should rent for around the same as one week during the peak season.
Remember, the key to securing inquiries and bookings is appropriately pricing your property and clearly outlining all applicable fees. If you're unsure at first, you may have to try out different rates until you settle on your winning combination.
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