AirDNA is announcing the launch of Airbnb Pricing Copilot, a new approach to short-term rental pricing that puts the power back in the hands of property managers. Unlike other pricing tools that put your revenue management on autopilot, Pricing Copilot provides real time gauges and dashboards that allow anyone to price like a pro.
How I used one simple dashboard to become the top earning Airbnb listing
I wrote, “The Airbnb Expert’s Playbook” two years ago and have been using the simple pricing strategies provided there along with a secret analytical weapon to outperform every Airbnb listings in my city. The tool I reveal below is what I’ve been using to assess the competition, understand daily travel demand, and set the perfect prices everyday.
AirDNA Pricing Copilot
Step into the cockpit of your new pricing information center. AirDNA has developed dashboards for the data driven Airbnb host that wants to confidently control their revenue management. With daily updates on the performance of two million vacation rentals available worldwide, AirDNA Pricing Copilot provides unprecedented insights into the daily supply and demand of vacation rentals in over 5,000 cities worldwide.
Give it a Test Drive!
Interact with the below dashboard for the popular Waterfront Communities in Toronto Canada. Use the filters for property size, price and location to see how the current supply and demand of vacation rentals fluctuate over time.
The Airbnb Pricing Dilemma
The same fundamental dilemma has challenged the lodging industry for centuries; what daily rate will maximize a property’s annual revenue? Price too high and you lose occupancy. Price too low and you leave easy money on the table. This seemingly simple predicament has stumped even the brightest statisticians for years.
Pricing short-term rentals are surprisingly complex. Unlike other travel related products like airfare or rental cars, that are offering virtually identical products, there are no two identical rental properties. All rentals are unique due to their location, size, decor, reviews & amenities. Because of the uniqueness of each vacation rental property, one-size fits all pricing schemes fail to properly maximize rental revenue.
In addition to property variability, the short-term rental industry these days is hugely fragmented. There are a million of Airbnb hosts and property managers across the world that all have varying degrees of sophistication around their pricing strategies. Because there are so many independent operators, the market overall doesn’t behave rationally. This makes creating an automated pricing tool that works well for everyone nearly impossible.
Why Other Airbnb Dynamic Pricing Tools Fail
There is no doubt that a great pricing strategy can generate an additional 30% of revenue for a typical short-term rental. Adjusting nightly prices to reflect seasonal travel demand has been standard practice in the lodging industry for decades.
So why has¬†nobody been able to perfect dynamic pricing in this age of big data? ¬†¬†
Almost every day I speak to a different property manager from around the world that is shocked by how inaccurate Airbnb Pricing tips and other automated revenue management tools are.¬†Below we walk through the shortcomings of these pricing algorithms and show you how to become your own pricing rockstar.
Airbnb Pricing Tips wants you to earn less per booking
Much like Uber loses money on every ride it provides in competitive markets,¬†Airbnb¬†wants you to make less money. Airbnb is competing against hotels and other vacation rental platforms in every city and wants your rental to be a low-cost alternative. This may sound counterintuitive because if an Airbnb host¬†makes more money, then Airbnb itself makes more and everyone is happy… right? Think again.
Like most Silicon Valley companies, Airbnb places more value in user acquisition and retention than making a quick buck. By keeping prices low they can lure more people away from hotels. In addition, people that pay less and have lower expectations are typically happier overall customers. Happier customers = repeat customers.
Pricing power is driven by listing quality, not size or location
The real value of a short-term rental property is in the¬†quality of the overall listing and the experience of the previous guest. Travelers are much more willing to pay premiums these days for confidence in the overall experience. Nothing is more complex to analyze than the effectiveness of an Airbnb listing and it’s ability to convert browsers into buyers. Using a number of bedrooms and locations to approximate competitive properties is a good start. But knowing the intricacies of your properties overall appeal still takes good, old-fashioned, human intervention.
Airbnb Pricing Copilot puts the power back in your hands. Use your intimate knowledge of the local market along with our statistical dashboard to outsmart the competition.
Proximity to Major Events
Properties that are easily walkable to major sporting, music or business events get booked at much higher than properties just a few blocks further away. ¬†Major events such as SXSW, Fashion Week, or the Mardi Gras can provide the host with 20% or more of their entire years’ income. ¬†Get pricing correct for these dates is critical! ¬†No automated pricing tool takes into account exactly how close your place is to major attractions.
Airbnb Pricing Copilot allows you to draw boundaries real-time to isolate the most relevant competitors for major events.
No one knows the true value of your property
Zillow has there Zestimate and other real-estate sites such as Trulia, and Redfin has their own property valuation algorithms. These are often inaccurate because they don’t take into account property renovations, or more importantly for vacation rentals, property decor, and service levels. Most dynamic pricing tool requires that you set a “base nightly rate” and then fluctuate your price around that anchor. How do you know what the base nightly rate should be? What if your price anchor is off the deep end?
Airbnb Pricing Copilot allows you stay informed of the new competition to see exactly how your properties stack up against current supply.