Customer type: Property Manager & Realtor
Region: USA
Products: Dynamic Pricing, Market Dashboards,
Number of listings: 30+
As Mike Chen’s property management business picked up, managing a growing portfolio of short-term rental properties became challenging, especially concerning pricing. Initially, Mike and his wife were manually pricing their properties, doing market research on competitors and updating prices constantly. However, as they added more properties to their portfolio, this process became increasingly tedious and time-consuming.
PriceLabs’ Dynamic Pricing and PriceLabs Market Dashboards tools have enabled them to
- Maximize revenue potential based on market data
- Stay competitive by comparing with other similar properties in the area
- Make more time for activities that contribute to growing their business, such as
- Acquiring more clients
- Analyzing markets and competition
- Studying past and current performance
- Spending more time on their properties to prepare for guest arrivals, oversee maintenance and cleaning, possibly meet guests, or even make subtle changes in decor or interior arrangements
About Mike Chen
A former accountant today, Mike Chen and his wife run their own real estate and property management business based in Orlando. They specialize in buying and selling short-term vacation home properties.
Their journey started about 15 years ago when they started investing in real estate, focusing on long-term rentals initially before discovering short-term rental investments in 2017. A couple of years ago, Mike quit his job as an accountant to pursue a new, full-time career in real estate and property management.
Currently, Mike and his wife manage around 30 properties, including nine short-term rental properties of their own.
Before PriceLabs
Initially, Mike and his wife manually priced their properties, doing market research on competitors and updating prices constantly.
Challenge 1: Researching and updating pricing manually was getting tedious and time-consuming
As their portfolio grew to nearly 20 properties, they knew they needed to move from manual operations to a more streamlined, automated process. They spent several hours a day just looking at prices and changing them by hand on platforms such as Airbnb and VRBO.
“We would do our own market research. We would look at competitor pricing one by one on Airbnb and VRBO, and that discovery was very tedious and very tiring. When we grew to about 20 properties, and we were researching the prices constantly, it just got a little bit too much for us and that’s when we started looking into softwares that could help streamline this process.”
– Mike Chen, Property Manager & Realtor
Challenge 2: Constantly shifting market trends and trial & error pricing made it difficult to maximize pricing to its full potential
While pricing manually, Mike realized that it was nearly impossible to keep up with the ever-shifting market climate. One can rely on past trends or the previous years’ trends to forecast, but one is never sure of
- The exact high or peak seasons
- How significant local events could impact demand
- When there might be a slowdown
Often, they used a trial and error system to set pricing – a little higher, and then lowering pricing last minute – when they didn’t get any bookings. This meant they were second-guessing and adjusting prices frequently based on when they did and did not get a booking.
Choosing PriceLabs
While looking into pricing softwares, Chen considered a few options. PriceLabs provided everything he was looking for a pricing software, and what he appreciated most was the transparent flat-monthly pricing and volume discount structure that PriceLabs offered, a model that he felt was ideal and one that they could grow with.
After PriceLabs
Mike and his wife use all of PriceLabs tools – Dynamic Pricing, Portfolio Analytics and Market Dashboards, and here’s how it has added value to their business processes and bottom line.
Flexibility to go aggressive or conservative when it comes to occupancy and pricing
Chen appreciates that with PriceLabs Dynamic Pricing, they have the flexibility to go aggressive or conservative. PriceLabs gives the recommended rates; with that, they can set their own base rate. He finds it exceedingly important to have the flexibility to set his own ‘lowest’ price and continue to have the flexibility to increase or lower it.
Automated management of gap days/orphan days across platforms
“Managing gap day/s is crucial for the short-term vacation rental industry because you’re not going to have 100% occupancy, but you want to get to 100%. Finding a good way to manage it is important, and platforms such as Airbnb and VRBO do not allow that kind of automation. Through your channel manager, Airbnb or VRBO, you can set a 5-day minimum stay. Then you have a 3-day gap, and you have to go in and manually open those days up for booking.“
– Mike Chen, Property Manager & Realtor
However, with PriceLabs, they can now do this automatically and seamlessly across platforms.
Understanding and maximizing revenue potential through market analysis
With the PriceLabs Market Dashboard tool, the Chens can gauge their own performance against that of the market and see where they stand.
Mike illustrates this with an example.
“If you have a home that grows to, say, $100,000 a year – it sounds great. But what’s important is how you perform in the market and against others in the neighborhood. What if you are the lowest home? What if you’re not performing well even if you’re achieving your goal? Are you in the top 10% or bottom 10%?”
– Mike Chen, Property Manager & Realtor
With PriceLabs, they have been able to capitalize on data to maximize their revenue potential and overshoot their goals.
Impact of PriceLabs on business
It’s been about 4 months since the Chens began using PriceLabs; a little early to comment on revenue, but here’s what they’ve noticed since adopting PriceLabs.
Price correction has led to more future bookings and increased occupancy
Occupancy has improved dramatically. Mike feels he was over-pricing his properties earlier, causing him to scramble and play the catch-up game and lower prices to fill rooms and get bookings last minute.
After PriceLabs, he’s been able to study data and set prices, with booking coming in at least one month in advance, compared to earlier, which was about two weeks.
Time, money, and energy saved can now be redirected into time spent on growing and improving the business
Time, money, and energy saved can now be redirected into time spent on growing and improving the business.
Earlier, the Chens would spend about two hours a day just on pricing – researching and updating them on different platforms. There were days when they could not do this, costing them revenue. Now, with PriceLabs, it’s instant, giving them more time to focus on acquiring new clients, analyzing the market and their competition and, spending more time at their properties to prepare for guest arrivals, oversee maintenance and cleaning, possibly meet guests or even make subtle changes in decor or interior arrangements.
Data-backed recommendations and projections that they can present to current and potential clients
With the PriceLabs Market Dashboard tool, they can study the list of top-performing properties in a specific area code – their occupancy, their price-per-night, and also see where they place on the chart.
They can use this data to illustrate a client’s current performance against competition or, in some cases, predict future revenue potential and forecasting.
PriceLabs Best Practices
Here are a few little nuggets of wisdom from Mike.
Number 1: Focus on occupancy and gross revenue over per-night pricing
Pricing varies, so set a target of gross revenue for the year. And then, accordingly, adjust pricing based on your chosen strategy – aggressive or conservative.
Number 2: Study the competition!
Make sure you’re using the right comparables when studying the competition. For e.g., If you have a 4-bedroom home, and you’re comparing it against another 4-bedroom home in the neighborhood – that has a swimming pool and game room that you don’t have, then it’s not the right comparison.
Recommending PriceLabs
“If you’re in any business, you need to benchmark and learn from the best. For the short-term rental business, that benchmark is the hotel industry. They don’t just maintain flat rates; they change prices every minute. They figure rates by comparing prices with other hotels, they look at the market on a bigger scale – based on seasons and trends, and you have to learn from them!
Without dynamic pricing, you’re really in the dark.
You could be undercharging and being booked all the time – but that would mean you’re leaving money on the table. Or, you could be over-charging and have lean occupancy.
Hotels want to achieve their highest occupancy with the highest rates, so they have a team of people researching rates right all day.
With PriceLabs, you don’t have to hire anybody, you can pay your flat fee and let PriceLabs do the rest for you. You do have to put in your work and make adjustments and customizations based on whether you want to be more aggressive or conservative. So that part of the business you need to figure for yourself. But, PriceLabs gives you all the tools, features, and customizations to reach your goal.”
– Mike Chen, Property Manager & Realtor
