Setting the right nightly fee for your Coastal Florida rental is more demanding than you might think, thanks to a myriad of different factors involved.
A major influencing factor is the type of your rental. Beachfront condos and places with stunning beach views tend to bring in more money, especially if they come with extras like pools and outstanding amenities. Besides, the number of bedrooms and how many guests each can sleep (like a 2-bedroom rental for 6 guests or a 3-bedroom one for 8 guests) also plays a role.
There are also external factors. Every market behaves differently, changing not just from place to place but also over time.
As long-time rental property managers in St. Pete Beach, we’ve learned that pricing is an ongoing demand, and needs daily attention. The constant optimization and tuning of pricing to boost earnings is called “revenue management.” Get good at it, and you’ll be profiting handsomely from your Florida rental.
Why is revenue management important?
In simple terms, revenue management is all about setting the right price at the right time for the right guest. It’s all about staying flexible with your rates, making sure you charge just the right amount to beat the competition and fill up your calendar.
You can even think of revenue management as your weapon to take your rental investment to the next level.
And guess what? There’s a roadmap to do it. Keep reading for the seven steps you need to supercharge your rental’s success.
The type of rental you offer and the amenities you provide have a significant impact on the price you can charge for your beach rental. Features like private pools and waterfront views often command higher rates. Pictured: Manatee Home in Treasure Island.
Step 1: pick the right pricing tools
We won’t sugarcoat it, figuring out every factor that affects pricing can be a real handful.
Nowadays, we’re in luck, though. There are plenty of options for dynamic pricing software that use past and real-time data, check out similar rentals in your area, and keep an eye on the demand to tell you just what to charge for your beach rental at any moment.
From our experience, these tools do about 70-80% of the heavy lifting. But, naturally, they come with a price tag: usually around 10% of your earnings. But trust us, the extra revenues compensate for it. Here’s what they do:
- They adjust rates based on how many people want to stay in your area.
- They find the best price whether it’s high season or low season.
- They tell you how long guests should stay in your rental based on the time of year.
- They deal with odd days and gaps in your calendar.
- They identify major events happening nearby that you might’ve missed.
- They handle last-minute changes and rebooking to keep your earnings up.
There are many options in the market, but our favorite tools are Wheelhouse, Pricelabs, and Beyond. Here’s a breakdown:
- Beyond: this one’s super user-friendly. It’s great if you prefer a “set it and forget it” approach (though we’re not necessarily big fans of that). This option is not great for customization, but it covers a lot of the basics.
- PriceLabs: this one’s a powerhouse. It offers flexibility and customization, but you need to put in some time to make the most of it. PriceLabs plays nice with other systems and gives you good control over your pricing game.
- Wheelhouse: this one is somewhere in between the first two. It’s a good choice to boost your earnings but be ready to fine-tune the settings every week to keep things running smoothly. Wheelhouse is also great for integrating with other tools, something that makes everything even more efficient.
Remember: these tools are a big help, but they won’t do all the work alone. If you really want to maximize earnings, you need a human brain behind them, and you should treat pricing as a part-time job.
Step 2: create a comp set
As we mentioned earlier, your rental type and the amenities you offer matter — these are the things that’ll make your place shine in the sea of competitors.
Competition is a big deal in any business, especially in the beach rental game. Creating a “comp set,” or a competitor set, is a good tool to remain competitive. It involves identifying similar rentals in your market, places like your own in terms of location, size, amenities, target guests, and overall positioning. That’s your direct competition.
Once you’ve narrowed your focus, you can use these comps to measure your rental against them. The goal is to keep an eye on how they’re doing and make tweaks to keep your rental competitive.
Beyond, PriceLabs, and Wheelhouse are also great tools to build a comp set and dive into their data to make smart decisions, but you should also know the reasoning behind everything.
Here are six key factors to think about when building your comp set:
- Location: look for properties nearby to get the lowdown on the local market.
- Amenities: check out what you offer and compare it to similar places around.
- Size and guest capacity: compare your size with other rentals and check if you’re making the most of your space. Sometimes it’s nice to maximize sleep occupancy, like a 2-bedroom rental that sleeps six guests or a 3-bedroom sleeping eight, and so on.
- Performance: keep an eye on stuff like revenue, average daily rate (ADR), and occupancy rate. The tools we mentioned can help you out with the numbers, even for your competition.
- Quality: look at ratings and reviews, not just for your place but also for the other rentals in your comp set to see how guests are feeling.
Putting together a comp set gives you the power to make decisions based on data and keep your rental competitive.
Step 3: set minimum and maximum rates
It’s up to you to figure out what a night in your beach rental should cost. When deciding your pricing metrics, start with your baseline price. To do that, calculate your expenses to know the least you can charge without taking a financial hit. Then, add a reasonable profit margin. That’s your minimum rate. Once you’ve decided on it, make sure you don’t go below that number.
Since you’ve got your comp set sorted, use that information to set a competitive base price. To help with this, try to step back and look at your cabin as if you were a guest checking it out for the first time.
Keep in mind that your occupancy rates will change throughout the year, so you’ll want to think about a minimum and maximum price. Use the minimum during slower seasons and to fill up those last-minute gaps — you can go pretty low, but don’t forget the “no loss” rule we mentioned earlier.
Apart from the seasons, there are also special events, holidays, and the fact that weekday pricing is different from weekends in most markets.
All of this needs to be adjusted over time. That’s why it’s a good idea to use a dynamic pricing tool to automate rates across all your booking channels.
Pro tip: experimenting with different nightly fees can help you nail down the perfect pricing strategy. Once you make a change, monitor how the market responds and how the price affects your booking rate.
Step 4: set your specific rules
There are many ways to fine-tune your revenue strategy. Here are some possibilities in our market:
- Raise prices outside your usual booking window: consider raising the rates for bookings that fall outside your usual booking window. If you don’t get any takers, you can always dial it back later, and if you do score bookings, well, that’s a bonus.
- Last-minute discounts: if your place is still available within three weeks of check-in, start offering discounts to lure in those last-minute guests and fill up those empty spots. Sometimes, a small discount is all it takes for new guests to make a reservation.
- Orphan discounts: drop the price for those tricky little gaps in your rental calendar, known as “orphans.” These gaps happen between two longer bookings and are hard to fill at regular rates. Having them at a lower price is better than leaving them vacant.
- Minimum and maximum night stays: choose the perfect length of stay. Say the average stay in your market is 3.5 days, if you notice guests are craving one or two-night stays, consider setting a 2-night minimum stay requirement to pull in more guests.
- Weekday discounts: weekdays are less popular for beach rentals compared to weekends. To get more bookings during the quieter times, offer lower prices for stays during the week.
- Longer stay discounts: get guests to stay around a bit longer by offering discounts for a week or more. This not only fills up those empty slots but also cuts down on cleaning and other operational costs.
Once you’ve got these rules set, monitor the data and see how they’re affecting your rates. Always fine-tune your pricing with a data-driven approach.
Pro tip: the more rules you set, the narrower your target audience becomes. Rules are fantastic for optimizing your strategy, but don’t go overboard. You don’t want to chase people away with too many restrictions.
Step 5: List your rental on the right channels
Because people look for rentals online, a smart move to get more eyes on your beach rental is to list it on several platforms. Luckily, none of the main platforms demand exclusivity, so you’re free to spread the word far and wide. The general rule is the more exposure your beach rental gets, the better chance you have to charge higher nightly rates.
But it’s always good to have a more tailored approach and choose the right platforms. Here’s a quick rundown of the top online travel agencies (OTAs) in our market:
- Airbnb: this is a super user-friendly option that handles most of the tasks for you, like processing payments and providing insurance. Airbnb is often the first stop for people searching for rentals.
- Vrbo: in our market, Vrbo is a solid alternative to Airbnb. It really shines in more traditional vacation rental spots. Plus, listing on Vrbo also gives you exposure on Expedia and Hotels.com, which is a pretty good thing.
- Booking.com: this one has a massive reach, even though it mainly focuses on hotels. If you’re already listed on Airbnb and Vrbo, adding Booking.com to the mix can widen your potential guest pool.
When you create your online rental listing, remember that it’s a direct reflection of your property. So, make sure it’s got all the comprehensive and accurate information about your rental and the rental terms.
A good online listing with a well-crafted description and killer photos is another way to attract more guests and justify those higher prices.
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Beach rentals in Florida with tasteful décor, attractive amenities, and entertainment options are excellent for commanding higher rates. Pictured: Redington Beach Townhouse in Redington Beach.
Step 6: build a reputation and gain momentum
When you’re just starting out with a new rental, there are some ways to pull in bookings and gain momentum. For example, you can check out other rentals in your area and set your nightly rate a bit lower than theirs
Both Airbnb and Vrbo allow you to offer a 20% discount on the first three bookings.
This is a way to make up for the lack of reviews and start building your reputation. Positive reviews do wonders for your credibility and give you more room to play around with bumping up your prices.
But don’t keep those low prices forever. Once you’ve earned up a good number of glowing reviews, it’s best to save this strategy for the slow season.
Step 7: review everything on a schedule
Once you’ve completed all the steps above, you should start seeing a decent number of bookings.
But remember what we mentioned about revenue management being an ongoing effort? To get the most out of your beach rental in coastal Florida, be sure to keep a close watch on your occupancy and rates regularly. Always compare them with the market and make adjustments as needed.
Here are some extra tips from our revenue management team:
- If your 60/90-day vacancy rate is falling behind the market, think about dropping your base rate by 5 or 10%.
- Conversely, if your 60/90-day vacancy rate is more than 10% higher than the market, consider raising your base rate by 5 or 10%.
- And if your 60/90 day vacancy rate looks good, but your 30-day vacancy rate is too low, think about applying a manual discount for the next month to fill in that gap.
Always keep in mind that it’s all about staying flexible and staying ahead of the game to maximize your rental’s potential.
Extra tip: skyrocket your beach rental success with a dedicated revenue manager
By now you can probably tell that revenue management is a demanding aspect of owning a beach rental. Sure, using the right pricing tools helps, and it can even give your revenue a 20-30% boost, but having a pro who really knows the ins and outs of pricing strategies is what really makes a difference.
Here at Resort Rental, we count on a full-time team of revenue managers who are all about diving into market data and booking info. Their job is to make smart choices that max out your Florida rental money making potential for every single day of the calendar.
