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438. Hosting Hotline: What Is the Best Pricing Strategy When You First List Your Airbnb?
Introduction and Welcome
Sarah Karakaian: [00:00:00] [00:01:00] Welcome back to another great episode. My name is Sarah Karkaian.
Annette Grant: I’m Annette Grant and together we are Thanks for Visiting
Sarah Karakaian: and this is the Hosting Hotline. If you want to get your hosting question answered here on the Hosting Hotline, all you have to do is go to hostinghotline. com, ask your question, and we’ll answer it here on the episode.
Listener Question from Jimmy
Sarah Karakaian: Today we have a question from Jimmy.
Hosting Hotline Caller: Hi, Sarah and Annette. This is Jimmy. I have the Coral Wave Vacation Rental down in Fort Lauderdale. I started my vacation rental business back in December of 2024. So, I’m new to this and I started through a management company where they suggested I started with the low prices just so I could get the reviews in and then later on increase the prices.
So, I wanted to get your input on that strategy. And I wanted to get your input on the episode that I heard today in your podcast about the [00:02:00] midterm rentals. What are your pros and cons, basically, of the midterm rental? What are your ideas?
Discussing Low Pricing Strategy
Sarah Karakaian: Both these questions could be full on episodes, but we’re going to do our best to get Jimmy some quick answers.
Annette Grant: Congrats, first of all, Jimmy. So I do want to preface this. We do not know who your management company is. I don’t want you using this. Um, and this is for everybody that has someone else managing your properties. You know, we don’t know what that relationship is. We don’t know what the contract says between you and said host.
So we just want to be very clear that. We’re going to offer up our suggestions, but they might have theirs for, especially if they know your specific market and they have a plan for you, but I want to dig in that, when you say the term low rates just to get people in, I am scared of that. And what does low mean?
Um, a lot of times, not a lot of times when you are a new host, anyways, Airbnb is boosting you on the algorithm. So as long as you are [00:03:00] priced fairly, for the value that you’re bringing, like your average daily rate is there. I don’t see,
not only value
Sarah Karakaian: that you’re bringing, like There is a market demand, so why leave money on the table?
Annette Grant: That is, that is concerning to me, I’m gonna say it. If they can back that up of why lower, and what is, again, we need to understand what low rates mean. Um, I just also, I will have you heed caution here. I don’t want you to think, Jimmy, that you lower rates, it increases demand. Because I don’t want this manager using this, we need to lower rates.
As a default way to make you more money, it is not going to bring you more money. Um, and that is for every, that’s for every host out there, whether you, um, you do your pricing or you have a management company, lowering rates does not create demand in your market. So just be, beware.
Sarah Karakaian: And knowing what your market is getting will give you insight into, are you leaving money on the table?
For example, we’re in January right now. And I was like, I just [00:04:00] needed to talk to the revenue manager, Colleen. And I was like, let’s just look at the market, how our properties compared. I was trying to leave her alone because I do trust her. And, uh, with where the market was, with the rest of the market got, we were right in line with it.
I like to beat it, but we were right in line with it. So that’s if, if, if we were getting our fair share of the market, especially in our, the slowest month of the year for us, I’m going to consider that a win.
Annette Grant: Well, I’m a little, I, I also want to come back to this because it’s, Jimmy Let Us Know He’s from Florida. I would think this would be peak season for you right now. So I am concerned also if you’re doing low rates during your peak season. Um, I hope you’re not, um, you’re not leaving a lot of money on the table. And also you should ask your Manager, how many, if they went ahead and did this. How many we’re going to be at the lower rate?
When does this transition? And show me the proof of where this has worked with other, with other homes. So, I just want you to be aware, everyone, you are all CEOs of [00:05:00] your property. So, you’ve got to know, got to know those numbers. Be in the loop. And we definitely want to make sure, um, because the more money you make, normally the more money your property manager makes.
So, want to make sure that everyone’s getting their fair share.
Midterm Rental Strategy Insights
Sarah Karakaian: Talk about the midterm rental strategy real quick. Jimmy is, uh, it’s, it’s a big question that you’ve asked. Um, a lot of people do midterm rentals, a lot of them because they have to, because they cannot do short term rentals in their, in their community.
A lot of people use it as a strategy in terms of being able to pivot quick. So maybe there is a high, I will even say this just because your short term rental market uh, demand is low does not mean that your midterm rental demand is high at that point either. But if the, if the MTR and the STR strategy happen to be on different times of the year, Jimmy, you can pivot from one strategy to another, although it is tough going from midterm back to short term, because if you rely on [00:06:00] OTAs for your leads, it is going to take some time to get this OTAs to serve your property up again, because you haven’t been available for a long time.
Annette Grant: Um, but also does your, is your property manager, it might not be something that they do. That’s true too. So you need to go to them. That might not be part of their strategy. They might not, um, participate in any sort of midterm rental. So again, this is where you need to go back and understand your contract and what your property manager offers.
Final Thoughts and Advice
Annette Grant: The other really one thing that I want to get in here on all of this, going back to the low rates, the biggest thing that every new host should be concerned about is getting those five star reviews, making sure that you’re providing what the guest is is thinking that they’re getting, you know, I, that’s where I would be paying attention
more so than undervaluing.
It’s making sure your property manager see what those guests are saying, see what they’re saying about cleanliness, see what they’re saying about responsiveness, see how you are making sure that your guest is taken care of. So I would really make sure to, to focus on how your [00:07:00] guest is being taken care of.
Sarah Karakaian: I want to share on the midterm rental topic that I think there’s a lot of chatter out there about how midterm rentals somehow solve the issue of short term rentals being too hard. Obviously, midterm solves the issue if you’re not allowed to do short term rental stays, but midterm rentals are no easier than short term rentals.
Midterm rentals, you need to build relationships with insurance companies, with local employer relationships. You need to release your property over and over again, which If you do it so that you don’t get yourself a tenant who isn’t going to pay or afford to stay and where you have a situation where you’ve got a squatter, and I know that’s something we all want to avoid, taking time to find the right midterm renter and put them in place is very important.
I know a lot of us, me included, went like, Oh my God, can I just get them in there? But no, I like, I got to stick to my system to make sure that they, because even then you get a bad apple. And, uh, so it’s not the easy button. So midterm rentals are not the easy button. [00:08:00] I believe that there are some houses that just speak to you, that their location, their setup, they’re just, that’s a great midterm rental.
And there’s other properties that are like, wow, this is a banger short term rental. The location, what it offers guests. So if you’re not beholden to one strategy or the other because of regulations, there’s a lot of things to consider, but both considerations are going to require work and attention.
Jimmy, great questions. Welcome to our world. We’re so, uh, we hope you continue to tune into these episodes and help you as you move forward.
Conclusion and Sign-Off
Sarah Karakaian: And with that, I am Sarah Karakaian.
Annette Grant: I’m Annette Grant and together we are, Thanks for visiting. Talk to you next time. [00:09:00]
