One of the trickiest aspects of running a short-term rental or vacation rental business is finding effective ways to entice guests to choose your property over countless others. With so many options available, making your property stand out can be a significant challenge. To address this, many hosts have turned to offering various types of discounts to attract potential guests.
Discounts can take several forms, including referral discounts, longer-term stay discounts, and direct booking discounts. Referral discounts reward guests who recommend your property to friends or family, creating a word-of-mouth marketing strategy that can drive new bookings. Longer-term stay discounts incentivize guests to book extended stays by offering reduced rates for longer periods, which can increase occupancy and provide more stable revenue. Direct booking discounts encourage guests to book directly through your own website or platform, bypassing third-party booking fees and improving your overall profit margins.
The question remains: should you offer discounts to your guests, and if so, what type of discount best suits your business model? Offering discounts can be an effective way to attract more bookings, especially during periods of low demand or in competitive markets. However, it’s important to balance the need for discounts with maintaining the perceived value of your property. Consider factors such as your target audience, peak seasons, and overall pricing strategy when deciding which discounts to offer.
Experimenting with different types of discounts and analyzing their impact on your booking rates can help you determine the most effective approach for your specific situation. By strategically implementing discounts, you can enhance the appeal of your property and drive more bookings, ultimately setting yourself apart in a crowded marketplace.
Referral discounts
One of the most effective strategies for attracting new guests to your rental is by offering referral discounts. Essentially, the money you spend on these discounts is offset by the new bookings you wouldn’t have secured otherwise. Additionally, when a previous guest refers someone to your property, it means they’ve had a positive experience and are enthusiastic about recommending your rental. This word-of-mouth endorsement can be a powerful tool in drawing new guests who are more likely to trust the recommendation of someone they know.
To further optimize this referral strategy and minimize costs, consider offering a credit or discount to the referring guest for future bookings instead of a cash discount. This approach not only rewards the guest who made the referral but also encourages repeat business. For example, you might offer a 10% discount on their next stay or a credit that can be applied to future reservations. This strategy not only reduces immediate cash outlay but also fosters guest loyalty, making it more likely that they will return to your property and potentially refer more friends.
By leveraging referral discounts, you can effectively grow your guest base with minimal effort. This approach relies on the positive experiences of past guests to generate new bookings, reducing the need for extensive marketing efforts. It’s a cost-effective way to enhance your rental’s visibility and attract new guests while also encouraging repeat visits from satisfied customers.
Long-term stay discounts
With the pandemic shifting the way businesses operate, longer-term stays have become more normalized in the short term rental industry. Like referral discounts, this method also ensures that the money you’re technically ‘losing’ is near minimal as you’re able to secure a higher occupancy rate. By giving guests a reduced rate for booking for an extended term, you guarantee that your property will stay booked. This discount method requires no extra work besides calculating how much of a discount you’re willing to give out. If you’re trying to determine the rate, figure out your previous occupancy rate before the pandemic and the amount of money you made. As you’re increasing the occupancy rate give a reduction but ensure that you’re not dipping below the pre-pandemic rate.
Direct booking
Probably the most common discount is the direct booking strategy. Online travel agencies such as Airbnb and VRBO offer great visibility when advertising your property. However, with that visibility comes fees that these OTAs take when guests book with you. If you have a website, by offering a direct booking discount, guests may be more inclined to book with you as they’ll be paying less. The best part? You’ll also be making more as you won’t be sacrificing as much to the OTAs.
