Optimizing Pricing Strategies For Mid-Term Stays
Updated on May 6, 2020
As we navigate this new booking landscape, two trends are becoming apparent: midterm stays and last minute bookings are on the rise. Today we will be sharing our recommendations for using PriceLabs to optimize your portfolio for mid-term stays, and sharing tips for incorporating short term inquiries into your mid-term strategy to maximize occupancy between guests.
Strategies for Maximizing Midterm Bookings in PriceLabs
- Identifying Trends With Market Dashboards
- Dynamic Minimum Stays
- Orphan Night Settings
- Adjacent Day Pricing Discounts
- Reducing Price Fluctuation
- Seasonal Rates
- Weekly / Monthly Discounts
Identifying Trends With Market Dashboards
When optimizing your listings for taking mid-term stays, having a good pulse on a few market-specific metrics can be very helpful:
These metrics have been changing frequently as the needs of guests change during this pandemic. Luckily, our Market Dashboards (free for all users until June 30th) update trends daily and show this data in an easily digestible format.
- Lead Time - How many days in advance guests are booking their stays
- Length of Stay - How many days are guests reserving their stays for
- Pricing - How are others in your area setting prices, and what rates are getting booked
The lead time graph shows what percent of bookings are coming in X days out. In this example, we can see that last minute bookings (within the last 7 days) currently make up roughly 40% of all bookings, while bookings 7+ days out make up 60%. These trends can help you determine how to set your dynamic minimum stay strategy to capitalize on both further out, and last minute bookings.
Length of Stay
The length of stay graph shows how many days guests are making reservations for. This can let you know how much demand there is for longer stays, and what lengths of stay are getting booked most frequently. This graph can be filtered by bedroom type to see if a mid-term stay strategy is more appropriate for some of your listings, than others.
The graph below shows how the portion of stays reserved for two days or fewer (blue) increased recently, while the portion of stays reserved for 3-7 nights (yellow) decreased. About 30% of all bookings that came in are for 7+ day stays, so while there is some demand for mid-term bookings, there is more demand for shorter stays, which could be incorporated into a hybrid mid-term strategy.
Knowing what others are charging in your area for both mid-term, and short term stays is crucial for pricing your own listings. The future prices graph shows what others in your area are charging for different bedroom types. The median booked price can be displayed if you toggle the selector (circled) on the right-hand side.
Doing a manual search of your area on Airbnb and other OTAs can help you determine what length of stay discounts are being offered most commonly, so you can ensure you are discounting your listings competitively.
Dynamic Minimum Stays
To attract longer bookings, your calendar needs to be available for longer stays. This would logically correspond with setting a higher minimum stay for your listings, but with a significant number of shorter bookings coming in last-minute these days, longer minimum stays can leave vacant dates unbookable to those looking for last-minute short-term accommodation.
Our solution is to use dynamic minimum stays to open up your calendar for shorter bookings last minute, while still requiring longer stays further out.
Our market dashboards can be a great resource for seeing when most bookings are coming in to determine what cutoff to set for when to accept short stays vs longer bookings. The settings below can be a great starting point for filling your calendar with shorter stays last-minute, and reserving the rest of the calendar for longer bookings. Having multiple ‘far out’ categories lets you incrementally increase your stay requirements over time. Read more about dynamic minimum stays...
Orphan Day Bookings
With longer minimum stays come longer gaps between bookings that are typically ‘unbookable’ for guests. The ‘Minimum Stay For Orphan Bookings’ automatically updates your minimum stay settings to make all gaps between bookings automatically available for shorter stays.
Choose which lengths of gaps will be affected using the dropdown menus on the right, and choose what minimum stay will be assigned to these gaps using the menu on the left. When assigning minimum stays to gaps, the “Length of gap” setting requires guests to book all dates between two reservations, while the “Length of Gap - 1” setting can provide more flexibility to guests by requiring they book a stay that is one night shorter than the gap at a minimum.
The “Orphan Day Prices” setting can be used to increase the price of gaps to incorporate the higher cost of short stays, or provide a discount to make the dates more attractive and increase your chances of getting booked.
Reducing Price Fluctuations
When guests are booking longer stays, they typically aren’t making reservations specifically to spend a weekend, or attend an event in your area. Event and day of week factors typically increase your rates in PriceLabs, which can lead to a higher total cost for mid-term guests than they would typically see from other hosts who are not implementing dynamic pricing.
You can decrease your day of week premium to provide more consistent pricing throughout the week using our “Day of Week Pricing Adjustments” customization, or email us at email@example.com to decrease the intensity of the event premiums our algorithm typically applies to your listings.
Seasonality for longer stays can sometimes be different than for short-term rentals, depending on your market. Use the ‘Custom Seasonal Profile’ customization to set different minimum, base, and maximum prices for different seasons. Email us at firstname.lastname@example.org if you would like our system to ignore the seasonality trends we are already using for your account. Read more about seasonal rates...
Adjacent Day Pricing Discounts
Adjacent day discounts automatically increase or decrease the price for any dates following a check-out, or preceding a check-in. This can decrease gaps in your calendar by incentivizing back to back bookings. Email us at email@example.com to have this feature enabled for your account. Read more about adjacent day discounts...
Weekly / Monthly Discounts
Offering discounts based on the number of nights a guests books is a great way to incentivize longer stays and charge higher rates for any dates where you are still accepting shorter stays for. Length of stay discounts also typically show up as a discounted rate in OTAs, so guests see they are getting a higher cost listing for a discounted price.
To determine how big of a discount to offer when accepting both short term and longer term stays, we recommend thinking about what occupancy you would typically achieve, and discounting by the percentage of days that would typically sit vacant. So if you were expecting 70% occupancy, a 30% discount for a month-long booking would make you the same amount as accepting shorter bookings at your standard rate, but with a much lighter workload and higher guarantee of filling your calendar.
If you do not see this option in your customizations dashboard, length of stay discounts should be applied in your PMS or directly in your OTAs.