Enhance your pricing strategy with Host Advisory Board top tips

[Jenny]

Hi everyone,

We all know that pricing is something that is very important to all Hosts, even more so in our current economic situation. 

We asked Host Advisory board member and 10 year Airbnb Host, @Daniel1651 , to share his thoughts on pricing and making the best of every opportunity possible to maximise your earning potential. We hope his tips are useful to you when you think about your pricing strategy.

Introduce yourself please!

I am Daniel Chamillard from Tenerife, Canary Islands. Spain! I have been Hosting since December, 16th. 2012. I have been a Superhost, 8 years in a row, since the programme started in 2014 to date, 2 years as Superhost Ambassador and have just started my 2nd year as an Airbnb Host Advisory Board member.

What do you wish you knew about pricing before you started Hosting on Airbnb?

When I started, I didn't know much about pricing and gradually, with time and experience, I learned how to get more out of my listings. Ten years ago there were not so many options available in the system and, if I were to start again, I would like to know what tools I have available and how I can use them to achieve my goals as a host.

Could you share your strategy for setting your price? 

I will gladly do so, warning (although it may seem very logical) that strategies do not work the same for everyone and that there are no magic recipes. 

Each host must previously establish their objectives by being aware of the environment surrounding their listings. There are internal factors (motivations, needs and/or expectations) and external factors (type of property, seasonality of the destination, market behavior, etc.) that will condition our general strategy and, in particular, our pricing strategy.

In my case, being a solo Host of 4 small properties located on a tourist island with elevated demand, a high percentage of occupancy  is key to obtain profitability at affordable prices in a highly competitive market.

My first task is to set a reasonable expectation taking into account the expenses I will face and the benefits I expect to obtain.  

I am sure that here everyone will have their own answer: from those who have had to create their own job and this is their main activity and source of income (as is my case), to those who expect to get extra money to pay the mortgage, maintain or renovate their house, send money to the family, or even those who want to generate the highest possible profit by comparing other market options.

Secondly, I conduct a study of similar properties in my area which I call my "real competitive set", and which allows me to know the reference price, future occupancy and guest satisfaction through their reviews.

With these three parameters I analyse the average base price and project an estimated monthly/annual occupancy percentage, while obtaining information on the degree of satisfaction that guests have experienced. With this data I finally establish the price based on the characteristics of my listing, the quality and the value I provide as a host compared to other options examined.

What tools do you use to maximise your listing potential?

Among the tools I use on a daily basis I can mention the setting of minimum nights, weekly and monthly discounts, and promotions.

I set a "high" minimum stay that guarantees at least 4 bookings per month. I then use the option to create custom rules to shorten that minimum and get more bookings between two already confirmed. 

I get longer stays by offering weekly and monthly discounts, so that when the guest is visiting my ad they get the caption "this host offers a weekly discount". Usually guests end up booking for a week and that's a small victory 🙂 

Promotions are one of my favourite tools. They allow me to price up for the long term, usually 3 months out, and then have the option to discount if there has been no interest in that time period. In case of not immediate occupancy, I use any of the 4 options, both those that break down the price or show the previous price crossed out, as well as the one that shows a special message or includes the ad in promotional emails that increase the number of visits and improve positioning.

I visit my calendar daily and analyse the prices suggested by the system. In some cases they are usually similar to the ones I offer, so I accept the suggestion directly. In others, I simply take them as a reference to know the degree of supply and demand and act accordingly.

What advice would you give a Host who is concerned about bookings?

We all worry when we do not have sufficient reserves.

Faced with this, we must mobilise ourselves and carry out actions to position our ad, making it more attractive and competitive.

Just as our houses need almost daily maintenance, I understand that the same thing happens with an ad. It is not a matter of creating it and leaving it there, alone and waiting for bookings. You have to pamper it and pay attention to it.

I recommend entering daily to review calendars and move prices, detect market trends, play with promotions and minimum nights, as well as renew photos and redo descriptions; treat our ad as our real showcase because it is. 

Finally, share it and generate traffic to it. 

Get it on the “Wish list” of all those who have the opportunity to see it and want to visit it!

Thank you @Daniel1651  😊

[Daniel1651]

Thank you @Sarah5000 
As you say, it is important to know the break-even point to know in advance from what number of nights booked and, at what price, we are going to make a profit.

This also depends on the situation of each host. There are many who prefer to set a price per night regardless of whether they get more or less reservations.

Like you, in my case, I try to make the most of the number of nights available and thus make an extra profit.

Best!

[Mady10]

We opened our Airbnb 8/2017.  Just raised our nightly rate $10 in 2023.  100% (excluding $60 cleaning fee) of the reservation revenue goes back into our 501(c)[3] corporation.  Wildlife rehabilitation since 1987.   I am pretty sure we are the only Airbnb in the U.S. that the revenue goes back into a small, grassroots non-profit.  Maybe, but I don't know of any.  

[Delphine348]

Hello @Mady10 ,

What a beautiful gesture! In so many years, your action must have change things!

What particular projects have you achieved?

I know one French host in the North of France that use all the money earned with Airbnb to build tiny houses for the homeless. He also offers low rates for the private rooms to give access to students or people in need.

Congratulations!

[Mady10]

Thank you for your kind words @Delphine348 .  In answer to your question, I would have to write a short novel, so I won't bore you with that.  However, we receive over 3000 songbirds, game birds, waterfowl and birds of prey annually along with over 500 mammals.  We are the only organized wildlife rehabilitation in the State of Idaho, USA.  There are a few other at-home rehabilitators around the state. We are licensed by the Idaho Department of Fish & Game and the U.S. Fish & Wildlife Service (USFWS).   Our website is:

www.idahowildliferescue.org

Or you can google:

Animals In Distress Ass'n.  Boise, Idaho

So Delphine, besides the gentleman from France who uses his Airbnb revenue to build tiny homes for the homeless (fantastic idea, good for him!) do you know of any other Airbnb's anywhere.  I would be most interested and have never tried reaching out to Airbnb about it as I find it a difficult 'thing' at best.

I appreciate your reaching out.  Happy life and let's hope this world gets happy again.   Especially in this country.   Yikes!

Regards,

Mady Rothchild

Boise, Idaho U.S.A. 

[Delphine348]

Thank you @Mady10 for your explanation, I will have a look at your website to learn more and spare you the short novel!

I don't know about anyone else using the Airbnb revenue for charity work or environnemental project. I think it could be useful to know about it and inspire others.

We have learn about how Susan Bailey, HAB alumni member, helped the people they sheltered with Airbnb.org and I loved the way she and her family decided to go further in helping.

[Delphine348]

Hello @Daniel1651  and @Pall0 

Thank you for your great advices on this hot topic.  I confess I am not enough familiar with the pricing tools yet ! I am hosting since March 2020,  and have a lot to learn in that matter still !

I have one cottage in the countryside of Fontainebleau (garden connected with our home), high demand for Parisians week end and family gathering. The house has 5 bedrooms, 5 bathrooms, 3 kitchens, 3 living room, and his 4 stars classified. It takes time to clean up thoroughly between 2 stays! 

It is my main activity, I take care of the laundry and have the help of a house keeper for the cleaning and else.  I don’t have any laundry service efficient enough in my area, so I am stuck with this work and I don’t take reservation in between weekends . I also do check in and check out as I really want to welcome all my guests ( I am miserable when I take a break and ask my mother to cover for me !)

Being also community leader for Seine et Marne and HAB member with you, working as lawyer for my husband Consulting company, my days and nights are filled with various tasks ! 

When I started, I worked a lot more on the STR legal environment and sustainability than on the pricing of the listing. Those are my main skills and I share them in the French CC mostly.

I only studied the similar properties in my area (like you write, occupancy and prices), and set my price a little under them,  while accepting the promotion for the first 3 bookings.

Like that, I knew that my listing would be displayed on top of the search results and it worked smoothly : I started 1st March and had immediate booking.

Then it’s another story, Covid 19 lockdown in France for 1 and a half month...(had guests from Paris staying the whole period ). 

After that extraordinary start, I took the time to study all the house expenses, fournitures renewal forecast, linen renewal  and taxes  and created an Excel sheet with those.  I tried to include all expenses related to my activity.

Divided by 12 months,  I obtained the monthly minimum revenue to cover the cost (including maintenance) - that is my minimum expectation.

I didn’t know for sure about expected occupancy, I was lucky enough to have steady reservations due to the high demand in my area.

I actualise the figures when some factors raise or fall (this year, energy of course) and I forecast the occupancy after 3 years of activity now.

I use the smart pricing tool since the beginning , I set the minimum price to fit my expectation.  Suggested price seems to ignore the type of my listing and is far too low considering equipment and comfort it offers. Smart pricing then works only on high demands period, and I am fine with it.

I also set weekly, 2 weeks, 3 weeks and monthly reduction. It works for holidays period. I take care of my photos, I add equipment, mainly in the kitchen areas, and check the similar properties around from time to time also to recommend them if my listing isn’t available. 

I would love to learn more about the pricing tools because we have the Olympic games coming in 2024 and Fontainebleau is a training site and we will have a raise in demand.

I am fan of videos tutorials when I seek to learn, or at least tutorials with screenshots. 

[Daniel1651]

Hello dear @Delphine348 ,
We definitely must visit your cottage in the countryside of Fontainebleau.

Seems to be amazing! And if you -or your mother- are waiting for me there, much better. I love being personally greeted by hosts when I travel and stay as a guest 😍

Completely true that when you start it is advisable to do it with a lower price than the market (and therefore it is very useful to use the 20% promotion for the first 3 reservations if you are a new host).

I love what you say in the Excel sheet. I also use it a lot to really know and better predict my expenses. This is something that we are also learning and improving over time.

Regarding the suggested prices, as you say, in many cases they do not seem to contemplate particular characteristics and features of your home, and of course, the type of personal treatment that you can provide to your guests. That is why I say that in these cases, they can serve to have an orientation of how the market is, even if we do not apply them directly.

We will keep in touch. It is important to me to know that you are already thinking about price planning for the 2024 Olympics!

Good planning always helps! 👏

By the way, how far in advance do you have your calendar open?

[Till-and-Jutta0]

In the past I was always hesitating to use the smart pricing tool. One reason was, that the proposed rates sometimes were ridiculous low.

But, seeing a lack of bookings the first months of this year, I tried it again. And set a minimum rate with which I can still live. And now it seems to work!

And I love to work with promotions! The only sad thing about lower rates is that some guests still seem to be unhappy with the costs. Is it the general economic situation – or is it that low rates attract guests who still want to make a bargain?

Thanks for all the hints, @Daniel1651 !

[Daniel1651]

Good last question, dear @Till-and-Jutta0 

Personally, I think that the current economic situation is affecting and guests are looking for better prices all the time.

At the same time, that's right. Sometimes seems that at lower prices, lower satisfaction 😩

Best, 

Daniel.-