Raising Your Rates: When and How Much?


    when to raise vacation rentals ratesThe beauty of renting your vacation home is that you call the shots. No one is going to tell you where to set your rates but letting the market determine your rental's price point is a savvy place to start. Remember, your rates don’t have to stand the test of time, a tweak here and there can do you a world of good in order to stay competitive in your market. HomeAway now offers a great new tool that can help you with this. It's called MarketMaker(™)  You can learn how to use it here.

    If you feel that the rental demand or property improvements to your second home warrant a price increase, then go for it and raise your rates. Just be smart about when you raise your rates and how much you raise them.


    When is the best time to increase your rates?

    You should post about a year or two worth of rates on your listing at all times, so start thinking about next year’s rates 12-18 months in advance. Don’t worry if you feel behind. As long as you have your updated rates posted before travelers start inquiring about those dates, you’re in good shape. Otherwise, waiting could mean losing possible revenue on a far-in-advance booking. At minimum, you'll want to evaluate and raise your rates before January, which is the start of the busy booking months for many vacation rental owners.

    How much should you raise your rates?

    Many owners increase their rates 10% to 20% each year, which seems to be protocol for the industry. But before go down this path make sure to compare your rates with other properties in your area (rent-by-owner AND through management companies) to make sure you are competitively priced. If, for example, you added granite countertops to your condo, but otherwise your unit is exactly the same as all the others in your complex, a small increase might be warranted, but don’t get too carried away.

    Also, don't forget to evaluate all your expenses before quoting new rates. After all, you don’t want your bottom line to suffer just because your community is raising parking fees.
    Expenses to consider include:
    • Cleaning fees
    • Charges for amenities: golf, workout facilities, parking fees, ferry charges, firewood
    • Local and state sales tax

     

    Regardless of how or where you advertise your vacation home, you should have some sort of rate disclaimer such as:  "Until confirmed, rates are subject to change without notice." However, keep in mind that it is unprofessional to change a rate after a booking has been confirmed.

    The choice to keep your rental rates the same or increase them for the New Year is ultimately in your hands. Just remember not to sell yourself short - if you leave your rates as is, be sure to call attention to this “special” in your listing by promoting rentals at last year’s rates.

    Setting rates (and raising them) is all about trial and error. If you find that you book up immediately, it might be a sign that you could have charged more. Conversely, if you’re not booking up as quickly as you’d like, you might be wondering if your rate increases are to blame. Remember: you can always run a special if the results aren’t what you’d hoped.
    *Last Updated April 11, 2018

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