Maximizing Your Airbnb Profits - A Deep Dive into Pricing Strategy

At Roav Retreats, we know there’s more to running a successful vacation rental than having a nice property. A big part of what makes a rental thrive is how you set your prices. Getting pricing right can be tricky, but it makes a huge difference. Let’s look at three levels of pricing—beginner, intermediate, and advanced—and explain why our advanced pricing strategy helps us earn more money and capture more bookings for our owners.

Beginner: Fixed Pricing

When you’re new to hosting, the easiest way to set prices is to pick a nightly rate for the weekdays, a higher nightly rate for the weekends, and stick with it. Basically a "set it and forget it" strategy. You look at what similar rentals in your area charge, choose a flat rate, and keep it the same throughout the year.

While this is quick and easy, it’s not the best way to earn the most money. You’re likely missing out on chances to charge more during busy seasons or special events. On the flip side, your flat rate might be too high to attract guests during slow times. It’s a good starting point, but it has limits. We’ve seen multi-million dollar homes using this beginner strategy, meaning they’re leaving tens of thousands of dollars on the table every year.

Intermediate: Using Pricing Tools

The next step up is using pricing software like Pricelabs or Wheelhouse. These tools are great because they automatically adjust your rates based on things like:

• How many people are searching for rentals in your area.

• What your competitors are charging.

• Seasonal trends and local events.

With these tools, you can set some basic rules (like minimum and maximum rates), and the software will take care of the rest. This approach is much better than fixed pricing because your rates can go up or down depending on demand. However, these automated pricing adjustments are never perfect, so some tweaking is still needed.

Advanced: The Roav Retreats Way

In the fast-paced and highly competitive short-term rental market, staying ahead requires strategic, data-driven decision-making to maximize our listing’s revenue. This is where our revenue manager, working in coalition with tools like PriceLabs, becomes the linchpin for our success. While PriceLabs provides robust data, our revenue manager transforms this data into actionable insights that give our properties a competitive edge. Here’s a closer look at what our Revenue Manager oversees:

Booking Pickup Analysis

This tracks how quickly bookings are coming in for your property. By analyzing booking pickup trends, we can identify patterns that signal a need to adjust prices, either to capture demand or to increase revenue during peak times.

Market Penetration Index

Our Revenue Manager monitors the Market Penetration Index (MPI) of all the listings in our portfolio. The MPI is a metric used in revenue management to evaluate how well our listings are performing in capturing bookings compared to our competitors in a specific area. 

MPI = (Our Listings Occupancy / Market Occupancy) x 100

• An MPI of 100 means you are performing at the market average.

• An MPI above 100 indicates you are outperforming the market.

• An MPI below 100 means you are underperforming relative to competitors.Historical Revenue

At Roav Retreats our average MPI hovers around 195, meaning we are nearly doubling our market's average occupancy rate. 

KPI Analysis: 

Our Revenue Manager keeps a pulse on our main Key Performance Indicators (KPIs) and adjusts our rates, min-stay settings, base rates, and/or special discounts which helps us continue improving month over month and year over year. Here's a look at some of our KPIs:

1. Revenue 

This represents the total income generated from all bookings within a specified period. It includes the nightly rates, cleaning fees, and any additional charges paid by guests.

2. Average Length of Stay

Measured in days, this shows us the average number of nights guests are booking.

3. Number of Bookings

This reflects the total number of reservations made across all listings.

4. Average Booking Window

This represents the average number of days between when a guest books a stay and the start date of the reservation.

5. Occupancy (%)

This measures the percentage of booked nights compared to the total available nights.

6. RevPAR 

Short for Revenue Per Available Room, this is calculated by dividing the total revenue by the total number of available nights.

7. ADR

The Average Daily Rate is the average income earned per occupied night.

Why This Strategy Works

Since 2020, the number of listings on Airbnb has grown by over 4 million, creating significantly increased competition for bookings. Having a dedicated Revenue Manager ensures we capture demand even as the supply of listings continues to expand. In short,

• We Earn More Per Night

• We Keep Our Properties Full

Why Choose Roav Retreats?

At Roav Retreats, we don’t settle for average results—we aim to exceed expectations. Our advanced pricing strategy is one of the ways we make that happen. Whether it’s the peak or slow season , our thoughtful pricing approach ensures we stay ahead of the competition and deliver great results for our homeowners.

If you want to make the most of your vacation rental, let us help. With our expertise, we’ll turn your property into a top-performing listing, no matter what location, size, or quality of your home.

Ready to take your rental to the next level? Contact us today and see how smart pricing can unlock your property’s full potential!