If you are in the vacation rental industry, you’ve likely heard of yield management or yielding. In simple terms, yielding vacation rentals is the strategic adjustment of pricing to maximize revenue in response to market changes.

However, it is much more than just discounting or increasing your pricing. You have to know when to adjust your pricing and by how much. At BookingTeam.com, yielding is one of a variety of methods we and our clients use to maximize vacation rental revenue. Here are the yielding basics property owners and managers should know:

Yielding Strategies

Yielding vacation rentals often means fluctuating prices based on two main factors, the demand and your capacity to meet the demand. You’re applying the rules of supply and demand to get the maximum profit from your bookings, and there are a few yielding strategies that hosts can use. The main and most important way of raising your rentals overall demand levels consistently is receiving as many 5-star reviews possible. The resulting increase in demand means much higher overall prices, even during the slow days.

1. Increase your price when there is high demand.

If you increase your rental prices during peak season, as most hosts do, you are already using this strategy. For instance, a beachfront home in the summer months would be priced much higher than it would be for fall and winter. During major summer holidays like the Fourth of July, the prices could be three times the average, because it is the highest point of demand.

2. Lower prices when there is low demand.

During the off-season, you expect there to be less traffic and interest. Pricing vacation rental properties is similar to pricing seasonal items. You wouldn’t expect someone to be in the market and pay top dollar for a snow blower when they live in sunny Florida weather. However, there are budget-savvy customers, people who will buy in the off-season when the price is right. As guests, they are more likely to book during the off-season months, because they see it as they are getting a deal or discount pricing.

3. Increase or decrease early booker pricing.

The time period between when a person books a reservation and when they will actually stay matters too. It may seem like a great business strategy to have a lot of guests that book months in advance of their reservation dates.

Early bookers are essential to vacation rental success. They are often the people that have specific accommodations in mind and will stay for longer periods of time.

However, if you always book your properties to full capacity months in advance, you may be missing out on last-minute guests that would be willing to pay a premium price. Where an early booker may have paid $130 a night for a room, a last-minute guest may be willing to pay $180 for the same space. You’d be missing out on $50 in revenue.

4. Increase or decrease last-minute pricing.

There are a few types of last-minute guests. One is willing to pay higher than normal prices because they need a place to stay and supply may be limited. Another will wait until the last-minute for deals, so they get the best price available. The first would book at an increased price while the other would book at a decreased price.

To implement yielding effectively, you need to know when your properties are at their busiest and anticipate pricing into the future. Get to know your guest and what they value in a vacation rental. Are they hunting for the right price or the right place? Which factor is more important to them?

Of course, demand and pricing for your property doesn’t just hinge on the time of year. As a host, there are certain things that you can do to make your property more attractive year-round.

You should also be looking for ways that you can increase demand for your properties. Improving the overall guest experience and satisfaction is key to that. Happier guests lead to higher reviews, which could result in higher rankings on rental sites and higher booking conversion rates and revenue.

BookingTeam.com does all booking management, tedious time-consuming tasks 24/7, so you as a host, have time to focus on guest satisfaction and hospitality. We also utilize Pricelabs to take care of the price fluctuations and make sure that you have the right base price according to your actual performance, this way we team up and together create the formula for optimal return.