Value, Pricing, and Marketing Your Short-term Rental
Kate Stoermer 
Your unique value proposition, how to understand price, and align with consumer expectations in your short-term rental business
Navigating the world of short-term rentals involves understanding not just the price but the value behind it. If you’ve followed our previous discussions (see HERE) you’d remember our talk about the 'Journey to the Book Now Button,' and the conscious and subconscious decisions that guests make. First came the aspects of fit, safety, and trust. Now, we're diving deeper into the intriguing concept of value, the second decision point our potential guests are assessing on their journey to the book now button.
Defining Value in Short-Term Rentals
Value isn't just about the price. It encompasses both tangible and intangible benefits a guest derives relative to what they pay. Think beyond just the property; it's about location, amenities, cleanliness, ease of booking, communication with the host, and the overall experience. This intangible aspect, as I've often emphasized, is pivotal in your rental business marketing.
What Really Determines Price?
Price is a marketing and sales tool reflecting the point where the market, offer, and customer are in agreement as the value of your offer (being your property and all the intrinsic components that go with it).. But what factors actually drive price?
A recent Portuguese study (Cervera, Yabar, & Curiel, 16 Nov 2022) revealed:
Size/capacity influences 72% of the price.
Equipment accounts for 18%.
Socio-demographic features of the area play a 11% role.
So the majority of the price influences are driven by factors that are present at the time of purchase - location and size. Equipment like pools and hot tubs are pricey additions and operationally challenging, so the return on investment should be carefully considered.
I would be remiss to not point out, however, that revenue is the product of price AND occupancy. Larger properties might command higher prices but often have lower occupancy rates, especially outside of peak group travel times. So depending on the market, if you are evaluating acquisitions this is a key concept to keep in mind. If you are an Industrialist (a short-term rental investor focused on cash-flow), then small properties with higher occupancy may be better for your specific goals while Chairman may appreciate the higher ROI of a larger property (learn more about Investor Personas HERE)
Matching Expectations with Price
Value is a blend of tangible and intangible factors. While price is a tool, value is a broader concept. To truly resonate with your audience, you must understand their expectations and budget.
Ever noticed how some online platforms use dollar signs to denote price ranges? This gives a quick idea about the expected cost and experience. Every market has distinct budget thresholds. If your property's price and offerings aren't in sync, guests might feel shortchanged.
If you need some help in this department, my Listing Optimization Course walks you through this work - you can check it out HERE.
The Art of Pricing for Value
As potential guests navigate their way to booking, they weigh your amenities against the prevailing market rates. What's essential for one might be a luxury for another. Using the example of a King bed, while some see it as a must-have, others might consider it a bonus.
If your property isn’t priced right for your market, you're at a disadvantage. Underpricing can also be detrimental, leading guests to wonder, "Why is it so cheap?" while over pricing will lead to disappointed guests.
The Allure of Rarity
Properties with unique features can command higher prices and enjoy better occupancy. A private pool, special architecture, or even dual suites can give you an edge. But rarity isn't restricted to tangible attributes. Policies, exclusive amenities, and specialized services can also elevate your property's appeal. A future post will delve into strategies to cultivate this sense of rarity, but for now, understand its power in boosting perceived value.
Competing solely on price is a losing game. To truly stand out, differentiate your property and offer genuine value.
Be Data-Driven.
A designer told me that if someone is going into the Orlando STR market, they advise them that it will be $20K per room in decor and amenities in order to really be competitive. The first STR to really theme out every inch of decor had huge success; now its almost expected in that market because everyone followed suit. What was once rare and therefore could command higher prices is now not rare; its a standard needed to hit the mid-range budget tier. Understaniding our comps isn't based on bedrooms; its based on the value proposition. You can't get that strictly from a data clearinghouse like Pricelabs, AirDNA or DataRabbu. You have to put the time in yourself.
I have a property in a market that when we came into the market literally had 6 properties that offered both walkable beach access AND a private pool. That alone put us in the upscale budget tier. That number has doubled; so while it remains that we are still able to be “rare” we aren’t as rare and so we emphasize private pool AND (fill in the blank) to remain rare.
Things change, strategies that work get copied and become less rare; monitor the data overtime and adjust strategies as needed.
Crafting the Value Narrative for Short-term Rentals
Understanding value is one thing, but communicating it effectively to potential guests elevates your short-term rental game. Here's how you can craft a compelling narrative that accentuates the unique value proposition of your property:
Storytelling Over Listing: Instead of merely listing features, tell a story. Narrate what a day in your property might look like for a guest. From the morning sun filtering through the curtains, the convenience of the nearby café, to the serene evenings on the patio – make them visualize and feel the experience.
High-Quality Visuals: Invest in professional photography. Pictures can convey value instantly, showcasing the property in its best light. Consider virtual tours or video walkthroughs for an immersive experience.
Guest Testimonials: Positive reviews and stories from past guests can be more convincing than any description - we talk about this in my post about the first decision point, but it remains helpful here as well. Highlight reviews that touch on unique value points of your property, be it the convenient location, outstanding amenities, or the warmth of your hospitality.
Localized Insights: Share local tips and insights that only a resident would know – the best coffee shop, a hidden trail, or the neighborhood’s history. This not only conveys the value of an authentic experience but also positions you as a caring and knowledgeable host.
Transparent Breakdown: If there are aspects of your property or location that contribute significantly to the price, don't shy away from explaining them. Whether it's high-end appliances, historical significance, or proximity to landmarks, let potential guests know the reasons behind the pricing.
Special Offers and Packages: Introduce packages that encapsulate experiences, like a "Romantic Weekend Getaway" that might include a bottle of wine on arrival, or a "Family Adventure" with tickets to a nearby attraction. This shifts the focus from price to the overall value of the experience.
Continuous Engagement: Use platforms like social media to consistently communicate value. Share updates, seasonal attractions, or even stories of guests (with their permission) who had memorable stays.
Remember, value is both perceived and experienced. Your goal is to ensure that potential guests perceive it right from the start, and then genuinely experience it when they stay. This cycle not only drives bookings but fosters loyalty and referrals.
Wrapping Up
So in navigating the second decision-point in our potential guests journey to the “book now” button, its important to
Align to our budget tier in what we offer
Keep the price point within the budget tier
Communicate value in our listing - and deliver it
Cultivate rare
Stay on top of our market data and adjust accordingly
Looking for some help? My Listing Optimization Course offers a step by step through the work to define your market, submarket, and niche - and develop your messaging and listing to really highlight your unique value. This course is only 2.5 hours of video and a step-by-step outlined in a workbook. So if you are looking for some added support implementing these strategies, learn more about the course - or Sign Up, HERE.
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Need some help? I offer 20 minute calls - no strings, to help you answer your trickiest questions. Some folks go on to work with me - sure (hey, I have to make a living) but some folks just need 20 minutes and I'm happy to connect and learn from you, with you, and help you too. Book a time HERE.
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Hey Boss! I'm Kate, owner/founder of The CEO Host. If you are interested in taking a leap into short-term rentals - or have some questions about your existing business, my goal - passion, and career, is to help YOU succeed. I've coached hundreds of folks getting started or looking to optimize, analyzed more deals (and duds) than I could count, completed thousands of hours of education and training, attended conferences... So don't be shy. A good CEO knows to bring in expert help - and that's what I'm here for! Lets HOP ON A CALL and chat!