Owning a holiday home to let out is a dream for many across the country, and has understandably become...
What rental rates you use for your holiday let can make or break it.
You could have the most attractive cottage in a prime location. It could have all the mod cons, as well as tasteful fixtures and fittings, but this may not matter if the price isn’t right.
The subject of holiday let pricing can be a minefield. So to help, we have created a handy guide featuring a Q&A with one of our experts. Read on for help and advice, as well as some handy tips.
It is important to take into account a number of factors when deciding on the rental rates for your holiday let. Consider the where, what and when.
Andrea manages our Revenue Management Team. She has taken some time out to answer our questions on how to price a holiday cottage.
The price is always an important factor for a potential customer. Price the property too high and you risk losing a booking. However, the same can be said for pricing too low, as it may lead potential customers to question the standard of your property.
From our point of view, people are looking up to two years in advance for their ideal holiday cottage. This means we have to make sure we price a property at the right rate, to ensure we maximise the opportunity of selling as much of a property’s availability as the Owner wants us to.
I would say to make sure you think about the following:
At Sykes we closely watch the holiday market and use a tool called “Income Maximisation” to manage our Property Owner’s Prices.
It is an advanced Revenue Management system, designed by leading pricing and revenue management specialists. In basic terms, by opting into Income Maximisation our Property Owners give us the discretion to vary their agreed prices up to a certain percentage. We will increase or decrease prices dependent on how well similar properties in the area are selling.
It’s a great system that really benefits our Owners, and one that no other company in the market is currently using.
The thought process behind Income Maximisation was twofold:
It essentially takes the hassle of constantly monitoring and updating pricing from our Owners, as we will do it for them instead.
If one of our Owners decides to opt in to Income Maximisation there are three options for them to choose from:
This is our most popular option and the one that we would generally recommend.
Owners opted into Super Income Maximisation would give myself and the Revenue Management team at Sykes the discretion to vary the agreed prices upwards (without limit) or downwards (limited to a 20% discount). We wouldn’t lower prices lower than 10% in low season.
Full Income Maximisation means that our Owners would give us the discretion to vary the agreed prices upwards (without limit) or downwards (limited to a 10% discount).
This option allows us to increase a property’s current prices by 25% where demand allows. We wouldn’t lower prices, however we may contact the Property Owner with other pricing initiatives.
The honest answer is because it makes our Owners more money. We are forecasting that over 2019, our Owners on the Super Income Maximisation option will earn 12% more revenue than those on Partial Income Maximisation.
It may be better to explain through an example. We will use the fictitious Rose Cottage as our case study here:
The Owner of Rose Cottage in the Peak District has decided to opt into Super Income Maximisation.
In May, there is a one-off event nearby and demand has increased for properties in the area. We will then move the agreed price for Rose Cottage upwards for that week and promote the price change.
In Mid-September, Rose Cottage has a week that has not been booked yet. Demand is low and there have been storms forecasted throughout September in the Peaks. We would then decrease the price for this week to attract potential guests.
*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.
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