How dynamic pricing for vacation rentals helps you earn more

At Vacasa, we’ve spent the last decade perfecting vacation rental pricing so our homeowners can make the most out of their investment. Our proprietary dynamic pricing technology—combined with the expertise of regionally focused revenue analysts—has enabled us to consistently deliver higher profits for vacation homeowners and become North America’s leading vacation rental management company.

For a look at how it all works, we’ve outlined our playbook below—or you can tune into this short webinar with our resident rates expert, Natalia Sutin, to learn more about Vacasa’s dynamic pricing.

How dynamic pricing works

Demand isn’t always consistent, so why should pricing be? Big data and machine learning are allowing companies across industries to charge fluid prices that adjust based on market conditions. And here at Vacasa, we’re leading the vacation rental industry with this tech-enabled approach to pricing.

Powered by machine learning, our dynamic pricing system monitors rates throughout the day and makes changes in response to changes in demand. It knows when to command peak pricing—say, for a holiday weekend or a popular event—and when to adjust for softening demand in order to keep the bookings coming. This method of dynamic pricing relies on advanced algorithms that factor in millions of data points to set the right price at the right time.

As this technology becomes more widely adopted, fixed prices are becoming a thing of the past in many digital marketplaces.

But we don’t leave it all up to machine learning. We pair our industry-leading technology with regionally focused analysts, so you benefit from the best of both worlds. Your dedicated regional analyst monitors your home’s performance and fine-tunes the algorithm for optimal impact. This one-two punch of technology and human expertise helps us deliver vacation homeowners around the world the best return on investment—especially during more volatile times.

Optimal moments optimize revenue

We don’t just look at what’s happening in the moment to set rates—instead, we look at the big picture. We analyze the booking pace of your market, then compare that to the current and historic pace of your home and its competition, slowly adjusting rates to deliver the best return. Through this system, we can deliver you the optimal rate by booking your home at the optimal moment.

Sometimes, optimizing your revenue means shortening the booking window (how far in advance guests book). For example, you may be used to seeing your peak season calendar fill up months in advance. That’s convenient for property managers who have to manually book out their homes, but it can leave money on the table.

Imagine for a minute that your bookings are retail products. Early bookings for peak season are a bit like discounted retail products at a Black Friday sale. Your bookings may fly off the shelves, but your product is selling at a sub-par price point. By waiting for the availability of homes to shrink, and decreasing your booking window alongside it, we’re able to hold out for the optimum rate and drive more revenue for your home.

The first 90 days

Your first bookings position your home for long-term success. They’re crucial for two reasons: getting your home prominently featured on booking sites like Vrbo and Airbnb, and getting positive reviews.

Many of our major booking partners have a ramp-up period during which they judge how desirable your listing is for guests—and how highly it deserves to be ranked on the site’s platform. We build a perfect listing with eye-catching copy and images to meet these sites’ extensive criteria, but we also need to show early conversions (bookings) to demonstrate guests’ interest in your home. Our system can help entice last-minute reservations by gently lowering rates on upcoming available days. So, while you may notice lower rates when your home first goes live with Vacasa, this strategy of promoting last-minute bookings is key to helping us capture those first guests (and reviews) early on.

As your home’s listing ranks higher on booking sites and your number of positive reviews increases, we are able to attract guests at a peak market rate. More reviews lead to more bookings, improving your conversion score and, as a result, your ranking and ability to command higher prices, too. It creates a positive feedback loop—and we call that a win-win.

Pro tip:

Avoid setting minimum rates that limit dynamic pricing and block your ability to maximize booking activity.

Dynamic rates increase overall revenue

Homeowners who have never experienced dynamic pricing may be hesitant to embrace a pricing strategy that involves variable rates. We understand it’s a new approach for many. But our data shows that the best way to deliver more revenue is by dynamically adjusting rates.

Our system is all about specifics and can adjust one nightly rate to optimize your overall revenue. For example, if we see most people booking three-day weekends (checking in on Thursday and checking out on Sunday), we may drop the nightly rate on Wednesday so guests are encouraged to book four nights instead of three. While the average daily rate (ADR) is lower for the four-night trip, incentivizing the extra night ultimately results in more revenue for your home.

Though the difference seems small for one reservation, the more competitive ADR benefits revenue in the long run. We know through experience that having competitive pricing for a home in the off-season adds up and, in turn, increases conversion to put your home in a stronger position when peak season hits.

Long-term profitability

Our dynamic pricing technology is designed to help you win the long game, earning higher annual revenue. We might not advertise the highest rate every night—but we charge the smartest rate (remember the pricing feedback loop?) to get you the best return overall.

Though it may take lowering the rate on an individual night, the benefit of turning a three-night stay into a five-night stay, or raising occupancy by an extra 10 percent during the off-season, really adds up over time—especially as your review count increases.

If you’re not already one of our valued homeowners, let’s talk. We’re confident we can earn you more money with our dynamic pricing system, which you now know all about.