As a short-term rental host, you’re constantly bombarded with promotional offers from online travel agencies (OTAs) like Airbnb, VRBO, and Booking.com. Early bird discounts, last-minute deals, mobile-only rates – the list goes on. But do these promos actually lead to more bookings and higher revenue? Or are they just a flashy distraction from your core pricing strategy?
To answer these questions, we dove deep into the data from hosts across the globe. What we found might surprise you.
The Truth About OTA Promotions
In some cases, offering promotions may lead to an uptick in visibility. However, the increased visibility rarely compensated for the revenue lost due to the discounted rates.
For example, let’s say you normally rent your property for $100 per night. If you offer a 20% discount through an OTA promo, you’ll need to book 25% more nights just to break even. That’s a significant increase in bookings, and it’s not always guaranteed.
The Smart Way to Offer Discounts
So, does this mean you should avoid OTA promotions altogether? Not necessarily. There’s a savvy way to participate in these promos without sacrificing your bottom line.
The key is to use your property management system (PMS) to mark up your base prices behind the scenes. This way, you can offer the discounted rate on the OTA platform while still maintaining your desired price point.
For instance, if you want to offer a 20% discount on Airbnb, you’d first increase your base price by 25% in your PMS. Then, when you apply the Airbnb discount, you’ll effectively be offering your original rate. Guests see an attractive deal, but you’re not actually losing any revenue.
Avoiding Costly Mistakes
If you decide to leverage OTA promotions, there’s one crucial caveat to keep in mind. If you’re using a dynamic pricing tool like Wheelhouse or Beyond Pricing in conjunction with OTA promos, you risk accidentally giving guests double discounts.
To prevent this, make sure your pricing tool and PMS are always in sync. Regularly audit your setup to ensure you’re not unintentionally offering the same discount twice. Even a small oversight can quickly eat into your profits.
The Bottom Line
Ultimately, the effectiveness of OTA promotions varies widely depending on your specific market, property type, and target audience. What works for one host may not work for another.
Before jumping on the promo bandwagon, take the time to analyze your own booking data. Look for patterns and trends that can help inform your strategy. If you do decide to offer OTA discounts, be sure to use your PMS wisely to protect your profit margins.
By taking a data-driven approach and being strategic with your pricing, you can navigate the complex world of OTA promotions with confidence.
Corzly manages short-term rental properties across 50+ cities. If you’d like to understand how your current setup compares to what’s working in your market today, we’re happy to take a look. Contact us here.
