Price increases

[Kathryn599]

Hi.

Is anyone thinking of increasing their prices with the new energy price caps coming in?

If so how much more are you thinking of?

[Debra300]

@Huma0, @Gordon0,

I've read quite a few comments from non-US residents about how Americans consumed excessive  and wasted resources, and can't dispute it, because I wasn't there.  However, we have experienced hosting guests various parts of the world, and the most conscious guests were those who were sailors, regardless of nationality.  They all had a keen awareness about using conserving, because they all had limited resources aboard their sailboats.  Also, we have observed that British and Europeans waste energy just as much as Americans/Canadians.  We've frequently seen their window and/or balcony door open while they are running the AC, and heard bath/shower water going down the drain for several minutes.  I think that it's a sense of indifference, because they think any additional costs will be at our expense.  I have reminded guests that they will be charged for excess energy usage, and the exchange has been something like this: guest - "Oh, I better watch how I am using the AC.", me - "So, it was okay to leave it running all day and with the window open when you thought that I was paying for it?", guest - "Yeah, it was."

[Huma0]

@Debra300 

I suspect what you say is true. It's less about nationality than about whether someone is paying or it themselves.

However, I have noticed that in general, my guests from the US are less likely to respond to prompts to try to be more environmentally conscious, whether that's energy use or recycling or whatever. 

At the same time, I have also noticed that certain European nationalities are similar in this respect, whereas some others are not.

Of course, I am vastly generalising here, but there are cultural differences when it comes to these things and that is largely due to cultural differences, but also very much to do with how governments and media represent these things.

I have had guests from other nationalities than the US simply tell me that, no, the do not recycle because that is not the norm where they come from.

[Sybe]

@Huma0 I understand that, although I wouldn't say it's carelessness. Yes, we grew up learning about climate change in school (at a time where climate change still wasn't seen as an urgent threat by the majority), but we also grew up with things like single-use plastics. 

We also know that individuals are responsible for a significantly minor percentage of what's actually causing global warming. Even if everyone on Earth would stop everything that has a negative effect on our climate, it wouldn't nearly be enough to stop the accelerating rate.

[Huma0]

@Sybe 

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@Sybe wrote:

We also know that individuals are responsible for a significantly minor percentage of what's actually causing global warming. 

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By that do you mean individuals as opposed to industry, farming, transport etc.?

[Sybe]

@Huma0 Yes, I meant people and their use on a daily basis. Things that you as an individual can directly change in your daily habits, like taking public transport or mindful grocery shopping. 🙂

[Huma0]

@Sybe 

I just wrote an essay in response to that and then got logged out and lost it! (I hear you breathing a sigh of relief...)

Mmm, maybe I'll try again later. 🙂

In the meantime, I think you point about it not being carelessness is interesting. In some cases, sure, a guest might pump up the heating and leave the windows open because they do not think that wasted energy is going to make a difference. 

On the other hand, I don't think that people intentionally leave a tap running, consciously thinking, "I'm not going to turn off the tap. What difference does it make?" That's just carelessness. And guests who are careless about these sorts of things are also careless about others that have nothing to do with wastefulness, such as leaving the front door open or the kitchen messy.

However, the carelessness with resources can also stem from not having environmental issues more front of mind. So, it's a bit chicken and egg really.

[Sybe]

@Huma0 I think that will always be a case of chicken and egg but regardless of that, we should all continue to do everything we can to help our planet however small the effect may be. Every little helps!

I believe many of you can be proud of what you're already doing as well. Take the Festival of Sustainability as example! 😉

[Tony-And-Una0]

I've added £10 to my cleaning free as a stop gap solution until I can understand better the impact on my energy bills.

This will also help cover the increased costs of laundry.

But inevitably, prices will have to increase.

[Helen3]

Hi @Tony-And-Una0  I have a budget spreadsheet and put in the energy increases into my fixed costs to see what sort of price increases I needed to make.

[Tony-And-Una0]

Please keep us posted.

[Gillian166]

@Kathryn599 YES. energy costs are rising here too, not sure why when we aren't relying on Russia. My last energy bill for our small cottage was $500/quarter, and i just paid the latest one yesterday, $900/quarter. In my budget I had energy at $5/day but it's actually $9.52/day. Firewood has also gone up 30%. So yes, I have bumped up my prices 10%. I am so glad we still have wood burning heaters, because the few times the power went out during winter our guests were able to stay warm.  SO relieved we are exiting winter! I'm looking at the nth hemisphere with concern for the coming cold months, I hope covid has fizzled down to nothing more than a standard flu by then because you've all been through enough already. 

@Emiel1  likewise i am considering closing down next year for August. We had a good month but factoring in the energy prices, and how unpleasant it is to live/work in the cold drizzle, we are looking at different options for next year if the energy situation isn't resolved by then. 

[Amanda660]

I normally drop our winter prices but I’ve left them at peak summer rates.  

[Branka-and-Silvia0]

@Amanda660  me too. But there are so many clueless hosts in my area with crazy low prices and without any profit so I know we will stay empty. And that's better than working for 1$ as @Richard531  suggested, we are not so desperate.

[Richard531]

@Gordon0 @Kathryn599 @Huma0 @Amanda660 @Gillian166 

The point I was trying to make earlier is that I'm trying to talk about 2 distinctly different subjects.  1) Operating expenses and 2) The prices of a similar listings in your market. 

Each of us have vastly different operating expenses.  Some have mortgages, some own their properties outright.  Some pay for $5M insurance, some pay for no insurance at all and trust AirCover.  Some listings are not properly insulated and cost a lot more to operate than ones that are.  Some listings are on one side of a tax border and are subject to higher fees/bureaucracy than a listing across the street.  And so on. . .

My point is: none of the above matters TO YOUR CUSTOMERS when looking for a place to stay.  All they care about is 1) does it appear interesting in pictures/copywrite, 2) does it have good ratings, 3) how low can I get the price.

So if you have a home with a big mortgage, it's poorly insulated, it has higher taxes than a listing across the street?  You can then make the decision to price it a lot higher (in order to cover your expenses).  However, the guest that sees the same listing a block away for cheaper will never choose you.  I know this first hand because this is how we bury our competition when we enter new markets.  I want you guys to succeed!

I'm simplifying the heck out of this thing but I hope I'm making my point.  Creating a compelling listing, getting good ratings, staying full, staying competitive with price, and knowing your competition is all that matters.  Discussing energy costs is just noise.  If you react to a surge in any type of cost (it doesn't need to just be energy), you're going to get outplayed by the hosts that hold on, take a reduction in margins, and then clobber you guys by gaining market share/volume.

The only exception might be if you're the only game in town (@Gillian166 comes to mind).  In which case, you decide what you want your margin to be and you price accordingly to hold the line on said margin and people in your area have no choice and will book you no matter what.  I sure wish I was in that kind or market!  

But if you're in a larger/more dynamic market with lots of customer options and lots of competition, and I assume most of us are, you don't want to get outmaneuvered by said competition just because you saw your power bill doubled last month.  If you're making $100/day on your place, that's a few days stay of that month to cover that increase.  It amounts to almost nothing, then.  YOU NEED THOSE DAYS.  And if you jack up your price, you might lose that booking!  And if you lose a booking, that's where you really suffer.  

Now, like I said earlier, if everyone is raising their prices, then no problem!  Raise away (this is what inflation means).  But if some people are holding the line, they're going to be the ones that get the bookings.  And that person should be you!  

[Huma0]

@Richard531 

I'm not going to argue with you logic. It makes total sense for hosts like you. What I mean by that is that you host 10 x entire home listings. 

As you said, we all have differing operating costs, but we also have different offerings and different levels of profit and different reasons for doing this. I have three private rooms in my own home. I rent out rooms here to help cover my costs and enable me to live in a house that I love. Otherwise, I probably wouldn't be doing it. Not because I don't like it, but because I do pretty much everything myself and that's a lot of hours I could be doing something else.

I do not make anywhere near $100 a day. Like I said, it's not as much about making a profit as covering costs. That's my motivation. So, with the rates I currently charge, which are geared at long term, solo travellers, these energy increases are not 'next to nothing'. I absolutely hate doing budgets and accounting, which is why I have an accountant, but I guess I'll just have to sit down and figure out whether I am going to break even or maybe even make a loss.

If it's the latter, it makes absolutely no sense whatsoever to continue hosting at these rates because it defeats the whole purpose of me hosting! And this energy crisis is not a one season blip. The professional advice when prices went up back in October was not to take out a fixed price contract (which is what I would normally do to guard myself against other increases). What a mistake that was! I guess those experts were not anticipating the war in Ukraine nor that the government would focus on protecting energy suppliers (who, by the way, having been reporting record profits) rather than the public. 

There are many, many small time hosts in the same position as me, hence why this topic is currently being discussed so much on the CC. It's not a knee-jerk reaction to think about putting prices up. We have to think about it, because we can't afford to just ride it out. Of course, you are right that if our competitors do not do the same, we price ourselves out of the market, but that's just a rock and a hard place. I don't think that these hosts would be blocking their calendars for the colder months because they are not making a high enough profit, but because they simply cannot afford to fund other people's holidays.