Today, we have Marco Malafante, President and Co-Founder of The Red House Company with us. The Red House Company uses PriceLabs with SuperControl to have dynamic pricing on their direct booking website and several Online Travel Agencies (OTAs).
“Red House” was the first property that we had put up for tourist rental, and that is how our company got its name. After years of constant growth and development, the company now manages more than 40 prestigious properties. The company’s objective is to enhance real estate investments in the city of Venice, offering new service standards to both visitors and homeowners.”
Marco, first of all, who in your company is in charge of implementing PriceLabs?
I handle PriceLabs myself!
Can you tell us quickly what how were you doing pricing before using PriceLabs?
Before taking on PriceLabs, we had a pricing system based on four seasons, and it was pretty static. We understood we were missing out on sophistication that the airlines and large hotel chains have on this front.
We don’t only compare ourselves to local hotels and B&Bs, but too large hotel chains in terms of sophistication. We aspire to become a larger company. Thus, we have structured ourselves so that we can scale all its departments organically.
What were the goals you wanted to achieve by using a dynamic pricing tool?
When some of our competition started using dynamic pricing, we began losing money. They modulated the prices according to supply and demand while we were stuck with a fixed rate.
Using dynamic pricing has allowed us to take back that profit.
We wanted to match the seasonality more effectively day by day and not quarterly. We wanted to maximize the weekly trend every week, knowing that every week is different.
Another important goal for us was to have a last-minute promotion that automatically triggers ten days before the dates available. This promotion generates last-minute deals with different minimum stay and price per property. Now we’re able to automate that thanks to PriceLabs.
We also wanted to make special offers on the orphan dates. Pricelabs helps us to do this with a dedicated section where we can decide property by property to apply a discount and minimum stay on a given amount of available dates between the bookings.
What were the reasons that led you to try and use a dynamic pricing tool?
At the time, the Channel Managers and PMS we used did not have dynamic pricing embedded.
We had not tried dynamic pricing tools in the past because, even though the dynamic pricing systems increase revenue, the cost of these tools was unacceptable. However, we have found PriceLabs fixed pricing model more reasonable for us compared to the value it generates!
How was the configuration of PriceLabs for your company?
It was effortless. We just had to transfer the pricing we had on seasonality (the minimum, maximum, and base price). We then spent a few months monitoring where the base price should have been.
We regularly check the performance of the properties compared to the other similar apartments and the previous year’s performance.
Currently, we adjust settings in PriceLabs every 2 to 3 months and only for a subset of properties, maybe 30% of our portfolio.
Which features do you like the most?
PriceLabs monitors rates and availability on the primary OTAs, representing the overall market trends. This is extremely important to us.
This makes me feel safe by knowing that the trend of my pricing is checked and matched with the whole TAM (Total Available Market) and not by a simple math algorithm that does not consider public, school, local, and one-off holidays.
There are events, and there are seasons, there are repetitive situations or unique ones. The market feels this, and if a tool is not strictly attached to it, you will never be able to maximize your revenue and profit from them all.
Monitoring these OTA does give you the right trend of the following month, season, and year.
If you compare to your initial situation, without using PriceLabs, what benefits did you get? What concrete results do you see daily?
The improvement is measurable in different sections of the business:
- We can improve the occupancy
- We can offer specials for last-minute and orphan dates
- We make our homeowners happy by increasing occupancy in the low season dates at a very reasonable price – the margins for us are lower due to the lower price. These are enjoyed mostly by retired travelers, people looking to spend long periods in Venice, and young travelers that love to make last-minute decisions.
Between seasonal changes, price adjustments, & exclusive deals on apartments that were suffering from lack of bookings, we were spending a significant amount of time adjusting prices in our channel manager every day. We have been relieved of the heavyweight work of having to modify rates on several properties manually.