We are now a matter of days away from the long-awaited Easter holidays but here at Hostmaker the work never stops. Whilst our hosts pack their bags ahead of exciting trips abroad, we are meticulous in making sure that they have been set up with the optimum pricing strategies for their homes.
In truth, planning for this holiday is something that started a while ago – around the time we were setting up the office with Christmas decorations in fact. Given that Easter never falls on the same date, it creates an interesting challenge when it comes to pricing. We always view challenges as opportunities and we feel that this one is a particularly exciting one to be exploited. For starters, it is worth noting that Easter occurs relatively late in April this year. This means two things: firstly, the weather is likely to be better; secondly, people will look to combine it with the May bank holiday (notably observed all over Europe, not just in the UK) due to its proximity to that date. These two factors compound to generate significantly higher demand than the same period last year.
Let us share some internal data with you to highlight this point… but note that is looking forward data so the best is yet to come as guests tend to book within two weeks of travel. New hosts, it is not too late for you! With 80% occupancy already a month before, we forecast to reach at least 95% occupancy at these very attractive rates.
Notice the pattern in all four cities? Tourists from all over the world flock to big cities over bank holidays and that trend is clearly being borne out here. Additionally, school holidays tend to fall the week before and after Easter and most parents consequently take those days off to enjoy time with them. This elongation of the holiday period explains why you do not see a sudden spike in Average Daily Rate (ADR) and occupancy, but rather a gentle slope.
Wait a second, why do we talk about ADR and occupancy all the time? It’s worth taking a step back to explain these terms as each is a different side of the same coin. Above all, as a host you care about total income and at Hostmaker, we do too. If you set a very high price per night (ADR), your home is significantly less likely to get fully occupied and thus your income will suffer as a consequence. But if you achieve 100% occupancy all year round you are definitely underpricing your property and losing out on potential income. So that is why both metrics are important to us as our goal is to maximise your total earnings, not just your nightly rate.
Our Pricing team spends a large portion of their day analysing vast quantities of market data in detail, ensuring that no trend goes unnoticed. Whilst our thought process certainly goes deeper than most, major bank holidays and popular events are clearly quite easy to plan for and price up. But when something unexpected or more subtle is happening we are able to spot that instantaneously through an uptick in demand for current prices and immediately increase the rate in the rest of our homes. This is when managing a large portfolio makes these things easier. It is like having insider information, but legal.
Accordingly, every month our Pricing team puts together a high level strategy looking four months ahead across all of our cities. Local analysts are then tasked with tailoring that strategy to each of the properties we manage based on historical performance, expert localised knowledge and neighbourhood-specific factors. At least once a week thereafter price levels are re-assessed with reference to the difference between actual and expected occupancy rates. It is here where our Pricing team ruthlessly outperforms amateurs and other competitors and can leverage off real time data to exploit market opportunities and maximise income.
From our experience in taking over existing profiles and monitoring neighbourhood competitors, there are two main types of amateur hosts on Airbnb: those who maintain an excessive price point that barely get occupied other than during peak demand periods; and those who achieve an occupancy rate close to 100% throughout the year at a knock-down price due to an inordinately low ADR. In both cases by striking the ideal ADR-occupancy balance, we are regularly able to deliver 10-50% higher income, even after our management fees. You would be surprised with the number of properties that have a flat price all year round! Our listing optimisation expertise – which includes use of our own professional photographers and a deep understanding of the Airbnb algorithm – helps our properties to surge up the search rankings and stand out of the crowd.