Yield management is crucial for vacation rentals - it is one of the few remaining levers that have an impact on a vacation rental company's bottom line. And today, it is a lever that is damn hard to use- which is why it is also an opportunity to for each company to differenciate, and for our whole industry to improve.
Let's start with a quick reminder of the stakes.
Pricing is an essential lever for any company - this McKinsey article https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-power-of-pricing shows a price increase of 1% often typically increases profits by 8%.
That importance is even higher in vacation rentals, because our inventory is perishable - holes in grids are direct losses.
And pricing is one of the few powerful levers left for short term rental companies. The growth of OTA's, who represent 70% of bookings in Europe and 50% in the U.S. has reduced the degrees of freedom in marketing. Increased competition and the spread of operational know-how mean most players get good reviews. Inventory growth- adding- properties- is still a powerful lever, but regulations slow it or limit it in many destinations. So when you look at your vacation rental company's Profit and Loss account, yield management is one of the most powerful actionable levers.