This document provides an introduction to dynamic pricing and yield management strategies for vacation rentals. It discusses how demand fluctuates significantly based on seasonality, events, and day of the week. Dynamic pricing allows owners to adjust nightly rates based on changes in supply and demand to maximize revenue. While most managers currently use basic high and low season pricing, truly dynamic pricing that responds to real-time changes can significantly increase profits. Determining the optimal average nightly rate and identifying demand signals are challenges but important for maximizing bookings and revenue.

1. Intro to Dynamic Pricing &
Yield Management
FOR VACATION & SHORT-TERM RENTALS

2. Panel
• Ian McHenry, Co-Founder & President, Beyond Pricing
• Scott Breon, Chief Revenue Officer, Vacasa
• Ari Eryorulmaz, Owner, AE Hospitality
• Emily Vandall, Director of Marketing, Beachwalker Rentals
@beyondpricing
beyondpricing.com

3. Some Quick Clarification
• What is yield management?
• Selling to the right person at the right time for the right price
• Can include:
• Dynamic pricing
• Cancellation fee policies
• Length of stay adjustments
• Channel management
• Promotions
• Marketing
• “Yield” was traditionally an airline term and hotels started
calling it “revenue management”

4. What is Dynamic Pricing?
Changing your price based
on changes in supply and
demand
@beyondpricing
beyondpricing.com

5. Why is this important?

6. Demand Changes A Lot
2014 San Francisco Short-Term Rental Occupancy
50%$
55%$
60%$
65%$
70%$
75%$
80%$
85%$
90%$
95%$
100%$
1/1/14 2/1/14 3/1/14 4/1/14 5/1/14 6/1/14 7/1/14 8/1/14 9/1/14 10/1/14 11/1/14 12/1/14 1/1/15

7. As Demand Changes, So Do Prices
Price
Rooms Booked
High Season
Low Season
$200
$150

8. Sometimes, Supply Changes, Too

9. Pope’s Visit to Philadelphia

10. What Happens When You Don’t Vary
Your Prices
Owner #3
!$100!!
!$120!!
!$140!!
!$160!!
!$180!!
!$200!!
!$220!!
!$240!!
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15
Owner #2
Owner #1

11. What Happens When You Don’t Vary
Your Prices
• Owner #1 - $140/night – Chronic Under Pricer
• She will be filled 95% of the time and excited about her high
occupancy
• Owner #2 - $180/night – Average Jane
• She is excited because she is filled from March-October and
thinks winters are just “slow”
• Owner #3 - $220/night – Occasional Olivia
• Her calendar is usually open, except for big events which are
booked months in advance
Beyond Pricing

12. But You Already Know This

13. Most Managers Already Vary Their
Prices
• Most managers will have at least:
• High season
• Low season
• Weekend
• Last-minute discounts

14. Question
How many different rates
does your average
property have?

15. What is Variable Pricing?
Charging a different price
for different nights of the
year

16. All Managers (We Hope) Do Some
Degree of Variable Pricing

17. Example Owner

18. Homewood Occupancy

19. Example Sophisticated Manager

20. Clearly, There is A Lot More We Can
Do with Truly Dynamic Pricing

21. Managers Are Losing Millions of
Dollars by Using Flat (or Semi-Flat)
Pricing
$200
$100
$300
$400
Date
Single Nightly Rate
Optimized Rate
Lost revenue
Lost bookings
• Money left on the table
during periods of high
demand
• Units sitting empty during
periods of low demand

22. Dynamic Pricing Helps in 2 Ways
1. By lowering your price when
demand is low, you can
increase your occupancy
2. By increasing your price
when demand is high, you
can increase your average
nightly rate
$200
$100
$300
$400
Date
Additional
$200
$100
$300
$400
Date
Higher
Nightly

23. 1. Seasonality
2. Day of Week
3. Events
3 Biggest Factors Driving Demand

24. Seasonality is Different in Every City
ChangeinDemand
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Jan$15' Feb$15' Mar$15' Apr$15' May$15' Jun$15' Jul$15' Aug$15' Sep$15' Oct$15' Nov$15' Dec$15' Jan$16'
Miami' SF'
San'Diego' NYC'

25. Seasonality is Different in Every CityChangeinDemand
!30%%
!20%%
!10%%
0%%
10%%
20%%
30%%
1!Jan% 1!Feb% 1!Mar% 1!Apr% 1!May% 1!Jun% 1!Jul% 1!Aug% 1!Sep% 1!Oct% 1!Nov% 1!Dec%
Kona% Des@n%
Myrtle%Beach% Asheville,%NC%
South%Lake%Tahoe%

26. Seasonality Also Differs in
Neighborhoods of the Same City
ChangeinDemand
!20%%
!15%%
!10%%
!5%%
0%%
5%%
10%%
15%%
20%%
25%%
30%%
Jan!15% Feb!15% Mar!15% Apr!15% May!15% Jun!15% Jul!15% Aug!15% Sep!15% Oct!15% Nov!15% Dec!15% Jan!16%
Lake%Tahoe:%King's%Beach%
Lake%Tahoe:%%Kirkwood%/%Sierra!at!Tahoe%

27. Seasonality Also Differs in
Neighborhoods of the Same CityChangeinDemand
!10%%
!5%%
0%%
5%%
10%%
15%%
20%%
25%%
30%%
Jan!15% Feb!15%Mar!15% Apr!15% May!15% Jun!15% Jul!15% Aug!15% Sep!15% Oct!15% Nov!15% Dec!15% Jan!16%
San%Diego:%%Gaslamp%
San%Diego:%%Mission%Beach%

28. ChangeinDemand
Day of Week Variations Are Different
in Every City
!20%%
!15%%
!10%%
!5%%
0%%
5%%
10%%
15%%
20%%
25%%
Sun% Mon% Tue% Wed% Thu% Fri% Sat%
Madrid%
SF%
Mountain%View%

29. Events Can Have Big Impacts on Demand
40%$
50%$
60%$
70%$
80%$
90%$
100%$
1/1/14$ 2/1/14$3/1/14$ 4/1/14$ 5/1/14$ 6/1/14$ 7/1/14$ 8/1/14$ 9/1/14$10/1/14$11/1/14$12/1/14$
JP
M
organ
H
ealthcare
G
D
C
C
isco
LIVE
G
oogle
I/O
O
utsidelands
D
ream
force
O
racle
O
penw
orld
AmericanSociety
ofHematology
Occupancy

30. Event Impact is Highly Local
VS
Event Location X
Hotel CenterX

31. One More Important Question

32. Are You a Motel 6 or a Marriott?
VS
VS

33. 0
20
40
60
80
100
120
140
160
180
200
<$75
$75-100
$100-125
$125-150
$150-175 $175-$200
$200-225
$225-250
$250-300
$300+
Finding the Right Average Price for
Your Place is Tough
South Beach, Miami 1 Bedroom Prices
NumberofListings
Motel 6
Marriott
Ritz?
Avg=$140

34. Many Factors Contribute to How
Much You Can Charge
• Amenities
• Number of Reviews
• Average Star Rating
• Quality of Pictures
• Number of Pictures
• Stainless Steel Appliances
• Location
• Response Time
• Listing Site Search Ranking
• Number of Bedrooms
• Number of Bathrooms
• Number of Beds
• Extra Guest Fee
• Cleaning Fee
• Instant Book
• Listing Title

35. What Matters is How Quickly You
Book Versus the Average

36. You can then vary your average rate
based on changes in demand
$-
$50
$100
$150
$200
$250
$300
Jan$14' Feb$14' Mar$14' Apr$14' May$14' Jun$14' Jul$14' Aug$14' Sep$14' Oct$14' Nov$14' Dec$14'
Ritz Marriott Motel 6

37. Booking Curves Tell You How Far
in Advance Are People Booking
PercentofBookings
Days Out
0%#
10%#
20%#
30%#
40%#
50%#
60%#
70%#
80%#
90%#
100%#
1# 31# 61# 91# 121# 151# 181# 211# 241# 271# 301# 331#

38. Two Implications of the Booking Curve
2. Tells You What Percent of Demand is Still Left
Allows you to know whether and when to discount
1. Tells You Whether You’re Booking Up Too Quickly
If you are, chances are you can increase your
average nightly rate, or “Base Price”

39. What About My Competition?
1. Comps help you figure out your average price
• However, keep an eye on how quickly your units
book up relative to your booking curve. This is the
best indicator of your “Goldilocks” average price
2. If you have smart neighbors (ahem, Vacasa),
tracking the changes in their prices for events,
seasonality, day of week, etc. can help
• However, you never want to copy off of a ‘D’ student
if you’re going to copy
3. In periods of low-demand / last-minute availability,
making sure you are competitively priced can be
important

40. Hotel Competition
• Hotels can sometimes be a substitute for your vacation
rental product.
• In addition, some of them have incredibly sophisticated
software to help them predict demand.
• Tracking their prices for the next year will help you get
an idea of when major events and seasons will be

41. What About Distressed Inventory?
• Distressed inventory is any last-minute or hard to book
nights that you need to fill
• Don’t want to train guests to wait until the last minute
because they know you are going to discount
• Want to know how early to start discounting - some
markets have a lot of bookings in the week before.
• People use different strategies including opening
inventory on channels with more last-minute bookers
• Hotels use sites like Hotwire which mask their name so
loyal customers can’t book the special rates
• Any other channels people use?

42. This is All Great, But How Do I figure
Out “Demand”?

43. 1. Historical Demand Curves
• Lots of third parties offer data on occupancy rates
throughout the year - start there
• Your own historical data probably has some good
insights

44. 2. Real-time Demand Changes
• Hotels use their inventory of, say, 200 rooms to see
how quickly they are filling up vs. last year
• This works for hotels because they are trying to
optimize prices across the whole PORTFOLIO of rooms
• So if they don’t realize until half of the rooms are
booked that there is more demand than expected, they
make it up on the second half
• If you do this with vacation rentals, half of your owners
will get booked at too low of a rate
• However, it’s better than all of your owners getting
booked at too low of a rate

45. 2. Real-time Demand Changes
• Better is to look at the whole local market to see
changes in supply and demand
• You can use third-party services that are emerging to
help you do this
• You can build your own bots to track this
• Or you can do it manually

46. Example

47. Advice on Getting Started
• Scott Breon, Chief Revenue Officer, Vacasa
• Ari Eryorulmaz, Owner, AE Hospitality
• Emily Vandall, Director of Marketing, Beachwalker Rentals

48. Questions?
Contact: ian@beyondpricing.com