Dynamic Pricing strategies for Villas & Chalets

Dynamic pricing for villas and chalets

With the popularity of dynamic pricing in the Airbnb world, most hosts and property managers listing their properties in cities realize the value of smart pricing and revenue management. Many assume that dynamic pricing is just about increasing prices for high demand events. While, Villas and chalet owners think that dynamic pricing and automated revenue management is not something for them, notably, because they understand the high demand and low demand seasons reasonably well for their markets! Also, there are probably not that many events that go unnoticed by property managers who operate villas. 


However, dynamic pricing & revenue management goes beyond just thinking about  increasing prices for event days, but is about setting optimal rates & night restrictions to maximize revenue. Equally important is using gap fillers to not miss out on revenue from days where static rates or stay restrictions make bookings improbable (or even impossible)!

Revenue management for villas requires unique strategies

There is no one size fits all approach when it comes to revenue management, especially for villas, each of which may have unique characteristics. Below we have summarized some ideas we hear from property managers on how to maximize the revenue from villas.

For villas that operate in seasonal areas, property managers have minimum night restrictions for their properties. For example:

  • 3 or 4 nights Min stay in low/middle season
  • 5 to 7 nights mandatory in high season

Traditionally, we saw a lot of Saturday to Saturday bookings during high seasons, booked well in advance. However, lately, we are starting to see more flexible booking patterns as guests start thinking about the cost of plane tickets or traffic on the road for the commute to and from the property. 

The trends were already changing, and it’s to anyone’s guess what the post COVID world will look like. With folks working from home, will the holiday patterns change? (read about “How Covid-19 Will Change Revenue Management For Vacation Rentals

Adapting to these new travel behaviors, forces property managers to make their stay restrictions more flexible. Thus they might see orphan day gaps with lost revenue opportunities with static minimum stay restrictions!

For example: Joe has a 7-day minimum restriction during the peak July season for his properties. He gets a booking from 4th to 10th of July, a great Saturday to Saturday booking. The one he likes! Next, he receives a booking from 15th to 21st. It’s excellent to lock-in that revenue, but suddenly, he is left with five days from 10th to 14th where he could still get a booking had he not set a static seven-day minimum for his rentals.

Especially for villas in seasonal areas with low rental potential (just a few weeks will be rented over the year), it is crucial to have the best occupancy and profitability.

If this sounds like something you are looking to tackle. Read below about pricing and minimum stay strategies that might be suitable for your villa rentals:

Minimum Stay strategies for Villas/Chalet rentals

Strategy 1: Make your minimum stay restrictions flexible, depending on the lead time booking window. Using PriceLabs, you can easily set-up a dynamic minimum stay to increase your occupancy:

  • Two nights minimum stay for last-minute (last 1 or 2 day for example)
  • Three nights minimum stay as the “normal” rule
  • Four nights minimum stay beyond 30 days
  • Five nights minimum stay beyond 90 days

Strategy 2: Secure revenue during your strategic high season nights by adding custom settings to impose extended minimum stays on these dates using date level overrides.

Strategy 3: For those gap days between bookings that could remain unbooked if you overlooked them, set up an Orphan day booking rate strategy. You will be able to open your calendar for those 3, 4, or 5 night gap bookings, while keeping a seven-night minimum stay. 

(read more about how to set minimum stay customization here)

Pro Tip: One of the first steps in your revenue management strategy should be to think about client segmentation. If you understand who your clients are, you can determine booking behavior. This will help you set your last-minute and far-out rules. Example: 30% of my guests are German and usually book seven months in advance. On the opposite, 20% are Spanish and book one month previous from arrival.

Related pricing strategies:

Strategy 4: For the orphan days where you just set-up a plan to allow bookings by lowering your stay restrictions, apply a “premium” on the pricing (or discount, depending on your client segmentation).

For example: Travelers willing to book a pool villa for two nights in the height of summer will not have many offers. And for your part, this short stay on this type of accommodation which requires much work, must be profitable.

Strategy 5: If you have reduced your minimum stay rules at the last minute, you could also apply a premium (or discount) on the last-minute reservations to ensure that the bookings are profitable or that you can lock in revenue for sure. 

Making Base Price adjustments

Once the above strategies are in place and automated, you can further customize your rate strategy according to the villa. Each villa is different, even with the space or number of bedrooms, the services can be very different: gym, spa, luxurious decoration, etc.

As PriceLabs calculates your daily pricing starting from the Base Price of your listing, adjusting this Base Price is an excellent way to easily position your property in the right price range corresponding to its quality or desirability. If you are in an extremely seasonal area? Consider setting your Base Price (and minimum/maximum rate thresholds) using our custom seasonal profile setting (read more about them here).

While setting rates, it’s important to know how others in your area are setting rates. Look through the ‘neighborhood data’ tool to see how other properties are setting their base prices and what occupancies they are receiving.

Advanced user? Use the Market Dashboards to gauge what the prices for other similar-sized properties are in your area. Look through the amenities section to see if you have the desirable amenities. Get a sense of your standing in the market, and set your base price accordingly. 

On top of all of the above, PriceLabs’ robust dynamic pricing algorithm continuously monitors your area and adjusts the market demand rates. If you need to make any adjustments to the final prices, use the date-level overrides to change your rates for specific dates quickly. 

The power of automation

All of this perhaps can be done manually. Why even consider a pricing solution? The answer lies in the simple fact that machines are less prone to making an error than humans for repeat jobs. 

With our nightly price calculations and rate syncs, you don’t have to log-in every day to check if you have an orphan day that might get missed. Or to drop your stay restrictions for close-in bookings. 

Leveraging automation can help you save time, reduce effort and increase revenue. Would you rather be manually adjusting rates?

In summary, using a revenue management platform, you will be able to: 

  • Offer different last-minute discounts for each villa depending on the discount levels you accept for each of them or your owner agreements.
  • Change your minimum stay rules on specific periods to adapt to local events.
  • Test short stays with increased rates and see if it is an exciting business lever to generalize (perfect to fill gaps for example)

We hope that these tips have given you food for thought for your pricing strategies for your villas or chalets. Do you have any tips or tricks to share yourself? Send us a note at support@pricelabs.co

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