Price vs. season – when to raise your rental rate?
Many apartment owners offer their properties for rent as an additional source of income. However, before you publish a rental listing, it is worth considering and applying an appropriate pricing policy. There are seasons when the expected nightly rate can be higher and there will still be plenty of people eager to book. On the other hand, consistently keeping prices high means that in the off-season the apartment may sit empty for many weeks. When is it worth raising the price?
Why is pricing policy so important?
Most of us probably know how important a role pricing policy plays in commerce. All sorts of tricks are used: a product costing PLN 19.99 instead of PLN 20 seems much cheaper because it starts with a “one.” Seasonal markdowns, “3 for 2” promotions or fluid price fluctuations always serve the same purpose: maximizing profit. This rule applies not only to global brands and retail corporations, but also to small-scale services and private rentals. Implementing the right pricing policy brings many benefits, the most important of which are:
- The opportunity to increase sales and, consequently, generate higher revenue.
- Acquiring new customers who until now hesitated to use the services.
- Attracting seasonal customers who will only use the service under specific conditions.
- Adopting a specific strategy that will help increase market share.
- Shaping a specific brand image, e.g. as affordable for everyone.
Pricing analysis and policy are examined and described through various economic models. The most popular of them is the price elasticity of demand model, which helps determine the optimal price under the influence of various factors. Let's stop here – this is not a lecture on the basics of economics, but a blog about rental management. Owners of rental apartments are not going to start enrolling en masse in economics degrees to increase their profit by 5 to 8%. This does not mean, however, that pricing policy becomes a marginal issue. Observing the market and adjusting prices fluidly allows you to maximize your rental income.
What affects the price of short-term apartment rentals?
Rising prices, as well as falling ones, are shaped by a number of diverse, sometimes random factors. It is impossible to compare the situation of hosts renting out apartments in Zakopane, Poznań and Otwock, because local conditions can have an impact of varying intensity. While winter is an absolutely critical factor for short-term rental in Zakopane, in Otwock (home to a comprehensive public healthcare facility) what will matter is how many patients are currently in the hospital. This does not mean, however, that it is impossible to identify criteria that determine a high or low apartment rental price.
The most important aspect is, of course, location understood holistically. An apartment located in tourist areas and in big cities will be considerably more expensive than one in an ordinary, unattractive small town. Going further – renting a unit in the city center will cost more than a property on the outskirts. Good public transportation links, proximity to bus and train stations, or convenient access to the airport also command a higher price. A location near historic sites or attractions is yet another criterion that can push the rental price up by as much as 30 – 40%.
Another important issue is the unit itself – its size, furnishings, interior design and amenities. People are willing to pay more for an attractive, cozy interior and useful extras: a coffee machine, touring bikes or a Netflix subscription. On the other hand, there is a large group of tourists who treat a rented apartment simply as a base for sleeping. They do not care that much about comfort. They prefer to keep more cash in their wallets for the rest of their vacation and travels, so they do not look for comfort, but they also expect a correspondingly lower price. It is therefore worth comparing your apartment with local offers and finding the sweet spot when it comes to rates.
When everything tells you to raise your rental rate…
You cannot change the apartment's location or the character of the city or area. This does not mean, however, that your rental offer should have a fixed price all year round. It often turns out that during the vacation period, on long weekends or during sporting events, the apartment is booked months in advance. After the season, on the other hand – especially in the mountains and on the Polish seaside – there will be no crowds, and the apartment itself will generate losses. That is why you should look at the calendar and follow local life so that the price is higher at the right time. As it turns out, inflation is not the only reason why the cost of accommodation may rise. Check out our list of the most important factors that will almost always be a good reason to raise your prices!
Peak vacation season – summer and winter school breaks
A fairly obvious case in which accommodation prices rise everywhere. June, July, August, September as well as January and February mean harvest time for businesses in the tourism industry. The first four months are closely tied to the vacation season, from which seaside resorts benefit. The last two, in turn, are tied to winter school breaks and winter resorts. Both periods are especially valuable for Poland's perennially attractive cities: Warsaw, Kraków, Wrocław and Gdańsk. The influx of tourists in this season means that short-term rental apartment prices are often 28 to 35% higher than in a regular season.
Arts events
Most people are familiar with events such as the Open’er Festival in Gdynia or the Pol’and’Rock Festival in Kostrzyn nad Odrą. Apartment owners should also keep track of the arts events calendar, because the price of rental apartments can rise several times over on festival days! The relationship is quite obvious – you can expect that some people will be looking for accommodation. Instead of using campgrounds or tent sites, they will want to spend the night in comfortable conditions. At the same time, they are looking for a cheaper alternative to a hotel, so owners of nearby rental apartments can count on above-average profits.
Sporting events
Concerts and cultural events are not the only reasons for organizing occasional trips lasting a few days. More and more people are also choosing short-term rentals for sporting events, and not necessarily ones on the scale of the World Cup, the Olympic Games or similar. Unique events such as the Radom Air Show, the Barbórka Rally in Słomczyn near Warsaw or the Tour de Pologne are very popular. You don't need to own an apartment in Spain to charge a higher price to fans who want to watch El Clásico live. Local sporting events also have potential – they are a good opportunity to make a profit, too!
Price and the period before the start of the academic year
Just over a decade ago, most students would first choose a cheap place in a dorm instead of a private room rental. Today, however, small groups of newly arrived freshmen prefer to chip in for an apartment and live there for the coming period. The savvier ones start looking as early as April, when older students finishing their studies hand in their notices to landlords. Still, there are plenty of latecomers who have to accept not only a smaller selection but also higher rental prices. And although this point mainly concerns longer-term rentals, nothing prevents you from renting out a short-term unit for a few months as an exception.
Holidays and public days off
Every year we have at least one so-called long weekend, and it usually happens at the beginning of May. Since the May long weekend usually brings the first truly warm days above 15 degrees Celsius, many people decide to travel. Holidays and public days off – especially those falling on a Friday or Monday – are your allies. Although these are short weekend stays, they are an opportunity to raise the rental price by several dozen or even several hundred zlotys. This is a level of higher costs that a significant share of tourists expect in advance and therefore accept.
Designation of an investment zone
This issue is quite often ignored, because at first glance newly created jobs have no bearing on the tourism industry. Let's remember, however, that rental apartments are not aimed solely at tourists. They are also an opportunity to attract business customers, as long as you can prepare the apartment for worker accommodation. If you don't want to rent the property permanently to future employees, you can always target your offer at business travelers and people on work trips. Even people coming for a job interview can make up a significant share of customers renting an apartment for a short period.
Reduced competitor activity
This is a rather unexpected and unusual factor, which does not mean such cases never happen. The disappearance of several listings among competitors offering short-term rentals means that the local market needs to be saturated. Less competition does not yet mean an oligopoly, but it realistically increases the chance that part of the traffic will be redirected to the remaining providers. And that, in turn, means you don't have to take any additional action for new customers to find you. So why not take the opportunity and raise your rental price slightly for customers, but noticeably for you?
Summary: price is all about the calendar and the season!
Does a lack of regular price updates mean the end of your business or losing ground to the competition? Absolutely not. But why not increase your average rental income if all it takes is paying attention to the calendar? You can conveniently make any price increases or reductions with Bookable. In the past, people running rentals had to advertise themselves, keep a calendar of available dates and handle administrative matters manually. Today, you can do everything from a single convenient, intuitive tool in the form of an app. The software was created with private individuals in mind who own one or several rental properties. With it, you can create an attractive and fully functional website presenting the offer of your apartment or house. The integrated calendar lets you accept bookings around the clock, and the payment gateway allows the advance payment or the full amount to be settled before the stay begins. Bookable makes it possible to stay in touch with past, current and future guests. The property owner can freely modify the offer, adding new attributes (e.g. a newly installed amenity) or changing the price. See how many benefits you can get with our app and book a demo, after which you will get access to a free trial!
