By now, I trust most of you have realized that inflation has been on fire for several months now, and as of this morning, June's Consumer Price Index (CPI) exposes that it's gotten even higher, at 9.1%. There now appears to be mixed concensus among experts about how much longer this inflationary period will be.
High Prices Probably Here To Stay
If history teaches us anything about economies, it's that inflation really doesn't ever reverse: these new high prices are very likely here to stay. The Federal Reserve's monetary policy and interest rate hikes can really only hope to slow the prices from rising much further.
Assuming the Fed's efforts prevail, then prices will simply "stabilize", which is a bit of a euphemism for "remain at that high level."
How Does It Impact The Vacation Rental Industry?
Bookerville has certainly watched vacation rental rates rise by considerable amounts the past couple of years, but it looks segmented and mostly it has not caught up with other categories. This might sound like unpleasant news for property managers at first blush, but the silver lining is that it likely means there is more room to raise rates higher.
If you haven't raised your rates at all, or only by small percentages over the past year or two, you are probably leaving significant money on the table, so to speak.
Should I Raise My Vacation Rental Rates?
Bookerville highly encourages property managers to watch these trends closely, now more than ever. Be diligent about this: watch what your competitors are doing, both at the local and national levels. If your rates have not risen by as much as surrounding or comparable properties, it's probably time to catch up.
Remember: if everyone else is rasing their rates and you are not, then you are effectively losing income. Why should you and/or your owners earn less than the new going rates? Explore the trends, discover what other businesses are doing, and experiment with raising your rates.
Bookerville also encourages property managers to look into price manager services like PriceLabs, Beyond Pricing, Amadeus, and AirDNA to name a few. And although most of these services are expensive, they all assert that they pay for themselves very quickly, then subsequently start raising your revenue substantially thereafter. Some even offer warranties to back this up. Now more than ever, especially because of the unprecendented high inflation we are currently experiencing, looking into a price manager might be a great way to make sure you are maximizing your revenue.
Bookerville also has an API
that is ready to be used by any price manager, and PriceLabs has already integrated with it. So this can be completely automated with your Bookerville account, and the updated rates will also automatically flow to any listing sites you are using if you are using one of our Channel Manager
Penny (Dime?) For Your Thoughts...
Moreso than perhaps most of our other posts, we are keenly interested in hearing your feedback on this topic. Feel free to chime in with your own observations, predictions, experiences.
John Amato, July 18, 2022:
kblair2010, July 20, 2022:
We have raised our rates significantly here in Hawaii.
, June 24, 2023: