How to Maximize Revenue on Peak Demand Dates

Identifying Peak Demand Dates

If you're not focusing on maximizing revenue on your peak demand dates, then you're leaving a lot of money on the table. So keep listening to learn the strategies, how to maximize your revenue on your highest value dates.

Welcome back to Get Paid for Your Pad. It is Monday. We are talking about revenue management on this episode of Rev Up, as we do every single Monday. And today I'm going to cover a very important topic, which is how to price peak demand dates.

If you've been listening to the podcast, then you know that our revenue management strategy is very much focused on pacing. And we generally divide the season or the year into different seasons. Like we have the low season, we have the high season, we have a shoulder season, but then we also have peak demand dates. And those require a special focus because that's typically where most operators are leaving the most money on the table, is not optimizing their revenue strategy for their peak demand dates.

So we're going to cover everything in this podcast episode. So I think if you listen to this and you implement everything that we share here, you're going to be able to make some nice money.

Now, first, before we dive into it, let's talk about what are peak demand dates? How do you identify those? If you don't know when your highest value dates are, then obviously you can't maximize the revenue.

So typically peak demand dates are Christmas, Thanksgiving, events, of course. These could be recurring events or these could be one-off events, long weekends like Labor Day weekends, Memorial Day weekends, Valentine's Day. Those could be very high demand dates depending on what market you're in. There could be other things happening in your market. These type of holidays plus any events are typically your most valuable dates.

Why Peak Dates Require Special Attention

And these dates require special attention for many reasons. Number one is the booking window for these dates tend to be very long, especially if you have some special events. Like people sometimes book a year in advance.

So let's say there's a big concert that happens every year in your market. Then people typically start booking very far in advance, sometimes even a year in advance, right? People who go to the concerts or the event, the festival, whatever it is, they go every year. They typically book literally the moment that they are leaving the festival. They might try and book for next year already, right?

Typically people will travel in groups for these type of events. And so you really need to have your pricing dialed in a year in advance. And this is something that I think a lot of operators forget to do. They're very focused on the upcoming event when it's like a month out, a couple months out. But then when the event is over, most operators have a 12-month rolling calendar. So dates are available about a year in advance.

And so when the event is over, literally the calendar will open up for the next year. And so if you forget to dial in your pricing for the year, for the coming year, then people will take advantage. People will always be looking to get a deal. People know that they're typically going to be paying a much higher ADR. And so they're always looking to pick off the underpriced units.

And so this is really, really important. I guess that would be my first tip is make sure that your pricing is dialed in at least a year in advance.

The 12-Month Calendar Rule

If you have a lot of events in your market, you want to be careful opening up your calendar for more than 12 months. Because if you open up your calendar for 18 months, people might actually book 18 months in advance. You have so many more price points to focus on and to pay attention to.

And also 18 months in advance, that's a long time. I mean, the world is changing pretty fast these days with AI especially. So I feel like it's getting harder to kind of predict what's going to happen. I wouldn't have my calendar open for 18 months or even longer if you're in a market that has a lot of high value events. Because it's just harder to manage and you just don't really know what the world is going to look like in a year.

So having your calendars 12 months open is a really good idea. And then put it in your calendar to update the pricing for next year. That's a good practice to have.

Why Pricing Tools Struggle With Peak Dates

Now, obviously, if you are using a pricing tool, if it's a recurring event, then the pricing tools should know that this event is happening every year and the prices should be already elevated even a year in advance. It's very good practice to double check that because typically pricing tools don't know as well how to price high value dates than other dates throughout the year.

That's just because there's more volatility. People are very price insensitive, especially if it's like a festival or if it's like a sports event. Think of like college football. People are very, very passionate about that, right? And people are typically not very price sensitive when it comes to these type of events.

And so the range of ADR that people might be willing to pay is much larger than your typical weekend or your typical weekday. So it's just harder to predict what people will be willing to pay.

It's really important to have some safeguards in place and make sure that you don't miss any of those dates and that you don't get bookings for an advance at a very low ADR.

The 90% Problem

And I will say that 90% of the times that we onboard a new portfolio for one of our clients, and we're currently at around 75 clients. So we've got quite a bit of data to look at. I would say 90% of the portfolios that we onboard, we look at pricing in the next 12 months. And there's usually a few dates where we already have some bookings at a way too low ADR.

It's an easy mistake to make to forget to really focus on pricing a year in advance. I mean, most operators look a couple months out. If that, they don't really look a year ahead.

Setting the Right Price Point

Now, there's a couple of things that you want to do when you look at these peak demand dates. Number one is obviously the price itself. As I mentioned, pricing tools, they typically don't set the prices correctly for these type of dates. It's also harder to know what the perfect price is, of course. But a year in advance, there's not a lot of demand yet that hit the market.

The pricing tool will look at how many bookings are coming in and they'll raise the price depending on most pricing tools called the demand factor. But that could be pretty far off. Like sometimes the prices are completely unrealistic and sometimes they're way too low.

So on peak demand dates, you typically want to really look at like what's the highest ADR that you've ever gotten for this particular event. If it's a recurring event, if it's a one-off event, it's very difficult. Which is kind of what we're experiencing with the World Cup, right? That we talked about a couple of times on this podcast where initially we thought that the demand was going to be pretty insane. And as time went by, it turned out that demand was actually a little lower than pretty much everybody anticipated.

So one-off events are very difficult. But if you have a recurring event, then you can look at what was the highest price that people booked at last year. Especially if you have a large portfolio, then you have a lot of data points. You can look at two years ago, three years ago, as much data that you have.

The highest price point that you've ever gotten, that's kind of like a good starting point. Maybe start a little bit higher than that to see like, hey, can we get even a higher price? But you don't want to go too far above that because then you're really pricing yourself out of the market.

Capturing Year-Ahead Bookings

And the people that book a year in advance, those are people that generally will be willing to pay a high price. They just want to lock something in. Capturing that demand that happens at the end of the event, it's very juicy demand to capture. So if you're way overpriced a year in advance, you're going to miss out on that first wave of bookings.

Now going back to the World Cup, when the schedule was initially announced, there was that first wave of bookings that came in at pretty high prices. We saw a two-bedroom apartment getting booked at $1,700, which right now, there's no way that we can get that price.

So the people that book very far in advance are typically price insensitive. They just want to lock something in. Hopefully, they're not going to cancel and book something cheaper as you get closer to the date. Some people, they just don't care. They have a lot of money. They just want to lock it in, not worry about it. They're traveling with a group. A lot of those bookings, they actually tend to stick.

So that's why it's so important to make sure that your prices are really dialed in a year in advance. And you really want to look at unit by unit for these types of dates. Extra time spent, it typically will pay off.

Setting Minimum Price Safeguards

You kind of also want to not just focus on live prices. You also want to adjust your minimum prices. What you don't want is that as you get closer to the event, you don't want your last-minute pricing discounts to kick in and push the price down too far.

If you expect the market to almost book out, then that means you're still going to be able to get a pretty high price point even last minute. So you don't want your prices to be pushed down as much as you would on other dates.

So don't just focus on the price that's live in your calendar. Also, make sure that you have a safeguard in place when it comes to the minimum price. Typically, the minimum price would be twice as high as normal, maybe three times as high as normal. I've seen events where we could still get four or five times the normal price even last minute because the market just completely books out.

Understanding Market Book-Out Dynamics

And I think that's one thing that's really important to study is, are you expecting the market to completely book out? Or is it going to be like a 85%, 90%, 95% type of deal? Because there's a big difference.

Because if the market books out completely, then it's typically worth holding the prices really high even last minute, just because there's nothing available last minute. And there's always going to be people looking. There's always going to be people that make a last minute decision that they want to go.

And so, you know, making sure that you understand, is this market going to book out completely? Are you going to be able to, what they call like the last man standing strategy?

Obviously, it's a bit risky. Sometimes you miss the ball on that, right? I mean, I've seen events that were booked out completely in the past. And so you're expecting for it to book out completely. And so you keep your prices very high. But then it turns out that this year, the demand is not as strong as it was last year. And maybe now the market only books up 80%, 85%. And that means inventory is going to be sitting empty.

And so I've seen a couple of those examples where the demand was just not there as expected. As a result, we had to like discount some units pretty aggressively last minute. As a result, those units obviously didn't capture like the same premium ADR.

Managing Owner Expectations and Risk

And that sometimes also leads to challenges when you have, when you're managing for owners, right? That's something to pay attention to as well. Because you're as on the portfolio level, still might be a really good strategy to hold the prices very high until the very end.

However, even if a couple units are not booked, the additional ADR that you'll capture on the other units typically outweighs having a couple empty units, right? That's thinking from a portfolio perspective.

If you're managing for individual owners, like imagine you have 50 units and each unit has an individual owner. And there's like the biggest event in the market. And let's say you're booking 48 units at a really high price, but two units remain unbooked. You kept the prices really high until the last minute.

Now the 48 units that booked at a really high ADR, extra money that you made by keeping the prices so high, that money is probably going to outweigh those two empty units on a portfolio level. So for you as an operator, you know, this might actually be the ideal strategy. You may have played it really well.

However, those two owners that have their units empty, they're going to be very unhappy. And you might lose those clients because they might be like, hey, what is going on? Like our unit is empty at the highest demand event in our market, right? It doesn't make sense. Or if you drop the price a lot on the last day or something, you still book them at a very low price.

The Owner Compensation Strategy

That's something that you have to keep in mind as well. There's different ways to manage that. One way could be to just compensate those owners. You could just be transparent with the owners and say like, hey, listen, we're going to be shooting for the moon here. We're going to try and get your place booked at a really high ADR. But that also means that we're going to have to take a little bit of risk.

And so if your units remains unbooked or it books at a low ADR, we're going to compensate you, right? We're going to guarantee a certain price. Let's say that you're booking most unit at $1,000 a night. And there's a couple of units that unbooked. You could tell those owners like, hey, you know what? We're going to pay you out as if those units booked at $500 or $600, a guaranteed minimum.

That way the owners are still going to make their money. You know, the additional money that you're making on the other units might actually outweigh the loss that you are making on those couple units that didn't book.

Strategic Risk Tolerance

That brings me to another consideration is when it comes to these peak demand dates, you have to decide how much risk do you want to take. Obviously, for these dates, you can be 100% booked. You can be fully occupied, right? It's not going to be hard. But in order to maximize revenue, there's a certain amount of risk that you have to take.

If you put your prices way to low, then you're guaranteed that every unit will book up. But you're also guaranteed that you're going to be missing out on revenue, right?

So you also have to make a decision of like, hey, how much risk are we willing to take? Looking at the World Cup that's coming up, we have, as I mentioned, we have 75 clients. We probably have 15 or 20 that have units in World Cup cities.

Some of our clients are much more eager to book up all the units further in advance and just drive higher occupancy and make sure that all the units are booked at an acceptable rate, maybe miss out on some really high rates as a result. And some of our clients, they want to take more risk. They have more of an approach of like, hey, let's keep the rates high. We're willing to take the risk. If it doesn't pan out, it doesn't pan out. But if it does pan out, we want to have that really big payoff, right?

So that's kind of like a strategic choice that you have to make. And again, if you're an owner operator or you're doing the rental arbitrage model, then obviously all the revenue flows to you. So you can make that decision for yourself. But if you're managing for owners, you have to keep their interest in mind as well.

Pacing Strategy for Peak Dates

Now, another thing I wanted to discuss is pacing, right? Because obviously pacing is really important. And again, if you listen to this podcast a lot, you'll hear us talk about pacing quite a lot because it's a big part of our strategy.

For peak demand dates, you typically don't want to be pacing ahead of the market. So you typically don't want to have more occupancy on the books than the market. The reason for that is that there's always going to be hosts that are underpriced.

For these type of dates, there's more hosts that are underpriced than overpriced typically. The mom and pop hosts, the unprofessional hosts, they're not using a pricing tool. They might just have fixed pricing. I see that when I look at competitor calendars for these dates, I often see operators that have a fixed price for every single day. And they might raise it a little bit, but oftentimes not nearly enough.

So there's always like 10, 20% of units in the markets that are just underpriced. And people are going to picking off those units first. You don't necessarily have to participate in that part of the booking window, right? Because you don't want to underprice your units.

What you often see is that, you know, the market's 10%, 15%, 20% booked, and we don't have any bookings yet. Normally, that will be a concern, especially in the shoulder season and the low season. But typically, you want to be pacing a little bit behind on those dates.

The Last Man Standing Strategy

I've seen extreme examples where for certain dates, we just know that not only is the market going to book out completely, people are willing to pay extreme prices. Even last minute, if there's something available, somebody will take it.

For example, if you have a drive-to market, like a small vacation rental market near a large city, and it's like New Year's, right? And there's only so many units available, and everyone wants to go to that area for New Year's. It's just a matter of like, can people afford it or not? So if there's something available, people will generally book it. And so the risk of not getting booked is almost completely zero in that type of situation.

In those scenarios, we've seen scenarios where 70, 80% of the market was already booked, and we still have most of our units unoccupied because we're just holding the rate so high, and eventually people start booking it. They start paying it because there's nothing else available, right?

So that's really that last man standing strategy. When it works, it's fantastic. Not only are you making a lot of money, but also your owners are going to be impressed because you're going to be booking a lot higher than the market in these scenarios, right?

But again, there is a risk because just because it booked out last year and it booked out two years ago, it doesn't necessarily mean it's going to book out this year.

Why Peak Dates Are Complex

As you can tell, there's a lot of nuance. There's risk involved. It's very difficult to really give a one-size-fits-all type of strategy just because every event is different and every market is different. So this is just the type of dates that you should be focusing a lot of your time on. It's worth it.

Again, most dates throughout the year probably have a booking window of a couple months. These peak demand dates often have a booking window of a year. So like you kind of have to, the whole year, you have to monitor it.

But for these peak demand dates, that's very different. You really have to focus on it the whole year. And that's why it requires a lot of focus and attention. That's why most of the clients that we work with, you know, these type of dates is usually where we can squeeze out a lot of additional revenue because it requires that focus. It requires a very specific strategy.

Comparing Low Season to Peak Season Strategy

Like going back to low season, it's pretty simple what the strategy is for low season. Just offer very competitive rates, very far in advance. Just offer your very best rate. If the market's only going to be occupied 25, 30% or so, any booking is a win. So just price your units at whatever you're comfortable with pricing in that. Don't worry about ADR. Just drive as much occupancy as possible because the indirect value of those bookings, so the additional visibility that you get on the OTAs, just getting the reviews flowing and getting the people through your doors, just maintaining momentum is way more valuable than when you're getting like an extra $5 or $10 a night.

Low season is pretty straightforward. There's not really that much more to it. And you can just set it up and leave it. You don't really have to monitor it too much.

But peak demand dates really require a lot of focus, a lot of attention.

Detailed Competitive Monitoring

Sometimes we've had examples where we would literally create an Excel spreadsheet with every single other house in the area and literally every day keep track on like which of the houses go booked, what price did it get booked at. So you can get really nitty gritty.

If you think about events like Coachella and where people are paying just insane amount of monies for like larger homes, it could be the difference between making an additional $5 or $10,000 on a single house if you're really paying attention to it. So it's really worth your time.

Using Seasonal Profiles for Recurring Events

Lastly, I wanted to talk a little bit about how do you set up your pricing for event dates? One thing that's really convenient to use for recurring yearly events is adding seasonal profiles, at least if you're using PriceLabs.

If you use a seasonal profile, then what that means is that it's going to copy over to the next year. So, for example, Thanksgiving this year is November 25th on a Wednesday through the 28th. Those are probably going to be the highest value dates. That's going to be the same next year. It just shifts by one day.

So then you can set up your pricing strategy in the seasonal profile. You can set up your minimum stay settings, your minimum prices, your base price adjustments, your check-in, your checkout price adjustments. PriceLabs now has pricing profiles where you can even adjust occupancy-based factors. And so there's a lot that you can set up on the seasonal profile.

And then after the event, you can just shift the date by one day typically. And then it's already set up for next year. So it saves a lot of time versus having to do that all directly on the calendar as overrides.

So that's just one tip that I wanted to share before we wrap this up. If you're using PriceLabs, definitely look at seasonal profiles because that's just the easiest way to manage these peak date events.

Closing

So with that said, I hope you enjoyed this episode. We'll be back next Monday with another episode of Rev Up. And lastly, if you're interested in working with us on your revenue management or you want to know how much upside there is on your portfolio, you can go to freewyldfoundry.com/get-started. And we will create a free revenue report for you. We'll walk you through the opportunities that you have to improve. And if we think it's a win-win for us to work together, we only work with select portfolios. We want to make sure that it's a win-win for both parties to work together.

So with that said, thank you for listening. We'll see you next time.