STR Revenue management. For many short-term rental owners, the term sounds intimidating. But what if mastering it could unlock a 30% increase in bookings in just 90 days? What if understanding this one element of your business could mean the difference between scraping by and thriving?
Revenue management isn’t just for large hotel chains or tech-savvy data analysts. It’s a practical, actionable approach that any property owner or manager can adopt to improve profitability, occupancy rates, and guest satisfaction. Whether you own a single unit or manage a portfolio of 30, this guide is your ticket to untapped revenue.
This blog will explain what revenue management really means, why it’s crucial for your business, and the seven secrets you can use today to increase your earnings. Plus, we’ll simplify the process so it feels less like rocket science and more like practical, routine steps for success.
What is Revenue Management in Short-Term Rentals?
STR revenue management is the strategic process of setting the right price for your rental property at the right time to maximize your revenue. It’s not about total occupancy; it’s about getting the highest revenue possible for each night of availability.
Unlike static pricing (think one flat rate all year round), revenue management uses data, market conditions, and guest behavior patterns to optimize rates. You know that spike in rates during peak tourist seasons? That’s revenue management in action.
The key is understanding the supply and demand for rentals in your market, and making adjustments to outperform other listings while maximizing your income.
Why is Revenue Management Important?
The STR industry has evolved. Gone are the days when simply listing your property on Airbnb guaranteed a flood of bookings. Today, successful hosts and managers use revenue management to stay competitive and meet their business goals. Here’s why it matters:
- Optimize Profitability: It’s not just about filling nights; it’s about earning the most for each booking.
- Improve Occupancy Rates: Smart pricing helps you avoid empty nights without undervaluing your property.
- Adapt to Market Trends: Market conditions, seasonality, competitor actions, and guest demand fluctuate constantly. Revenue management keeps you agile.
- Scale Your Business: Solid revenue management builds cash flow, which can fund property improvements, marketing, or new acquisitions.
Now that you understand the power of revenue management, here are seven secrets to master it.
7 STR Revenue Management Secrets to Maximize Your Earnings
1. Use Dynamic Pricing Tools
If you’re still manually setting your rates or using Airbnb’s Smart Pricing, stop. Dynamic pricing tools like PriceLabs, Wheelhouse, or Beyond Pricing are non-negotiable for STR success. These tools analyze real-time data, including local demand, occupancy trends, and competitor pricing, to recommend optimal rates daily.
Tip: Treat these tools like your race car. They’re powerful, but you still need to “drive.” Adjust their settings and algorithms to align with your unique goals and market.
2. Don’t Fully Automate – Make Manual Adjustments
Think you can set it and forget it? Think again. While pricing tools are invaluable, they can’t account for everything. You’ll need to manually adjust rates based on:
- Upcoming events or holidays in your area
- Last-minute vacancies
- Calendar alignment with “orphan nights” (1-2 day gaps between bookings)
Checking and tweaking your pricing strategy daily and weekly ensures you tap into every revenue opportunity.
Pro Tip: Use data dashboards within pricing tools to easily track performance and make informed adjustments. They’re faster and more reliable than guessing.
3. Create Guest Segments
Not every guest is the same, and your pricing should reflect that. Revenue management works best when you tailor rates for different types of guests:
- Weekend vs. Midweek Travelers: Higher weekend pricing captures leisure travelers, while midweek discounts attract business professionals.
- Short Stays vs. Long Stays: To reduce turnover costs, offer discounts for guests booking several nights in a row.
- Groups: Premium listings with extra amenities can justify higher rates for families or event-goers.
Segmentation ensures you optimize each audience’s willingness to pay, leading to higher revenue across the board.
4. Optimize for Length of Stay
Never underestimate the value of encouraging longer stays. A three-night booking is often more profitable (and less hassle) than three separate one-night bookings. Adjust your nightly rates to reflect this:
- Add a premium for single-night stays.
- Offer discounts for weekly or monthly rentals.
- Avoid orphan nights by setting automated minimum stay rules around existing bookings.
For example, if a guest books 3 nights, filling the 2-night gap before their reservation could be a great opportunity to implement custom length-of-stay pricing.
5. Monitor Your Occupancy, Not Just Revenue
Focusing solely on occupancy often leads you to lower prices unnecessarily. Instead, pay attention to your revenue per available night (RevPAR). High occupancy at low prices doesn’t always mean higher earnings.
Example: Would you prefer:
- 20 nights at $175 per night?
- Or 30 nights at $100 per night?
The first scenario yields $3,500 with less work and wear on your property, while the second only brings $3,000.
The sweet spot is usually 70%-85% occupancy, depending on your market.
6. Benchmark Competitor Pricing—but Stand Out
Competitor analysis is crucial, but don’t fall into the trap of matching their prices exactly. Use local benchmarking to compare your pricing and adjust your rates if necessary. But remember, your property isn’t just a “space”—it’s an experience.
Guests will pay more for unique destinations, unmatched amenities, or superior hospitality. Make sure your Airbnb listing conveys the value you’re offering, like stunning views, a great location, or a luxury hot tub.
7. Account for Your Cleaning Fees
Cleaning fees aren’t just an extra cost for guests; they’re part of how travelers perceive your value. High cleaning fees can discourage bookings for short stays (especially one-nighters), while lower fees could increase perceived value.
Strategy:
- Keep cleaning fees reasonable.
- Incorporate part of the cleaning cost into your nightly rate for transparency.
- Adjust the fee to align with your average stay length.
A smart cleaning fee structure can help you compete effectively while maintaining profitability.
Plan Your Next Move to Maximize Your STR Revenue
STR Revenue management doesn’t have to be daunting. Start small by integrating a reputable dynamic pricing tool and spending a few minutes each day reviewing your performance. Combine these tools with strategic principles like market segmentation, length-of-stay rules, and monitoring RevPAR instead of occupancy alone.
By mastering the techniques above, you can drive consistent profitability, scale your STR business, and stand out from competitors.
Want extra help implementing these strategies? Optimize your STR revenue now by connecting with one of our experts. Contact us today to get started!
