Like most property managers, you have likely spent years building your brand and providing an excellent guest experience. The result of which means that you’ve established a base of loyal, repeat guests over the years.
Repeat guests play an important part in any short-term rental agency’s business. They’re dependable, they maintain occupancy, and they can even generate referrals.
However, focusing too much on repeat guests may be a double-edged sword with several hidden costs for your agency and, ultimately, your owners. With the right tactics and attention, you can avoid these pitfalls while continuing to provide the best experience for these guests.
Here are some factors to consider when evaluating your repeat guest strategy and making pricing decisions:
Opportunity Cost
Repeat guests that book far in advance might limit your potential to book those nights at a future higher price, especially if these guests are booking during high season. Offering a discounted rate, the same rate, or a limited surcharge to repeat guests means leaving money on the table for you and your owners.
At Beyond, we aim to optimise your revenue management strategy for repeat guests. We automatically consider important market factors to ensure your properties get booked at the most accurate price. This means prices year over year will change based on demand in the market. Property managers using Beyond can ensure guests who book far in advance pay a fair market rate for the convenience to lock in their dates early.
Inflation
The cost to run a property management agency can increase each year, namely driven by rising cleaning costs, maintenance, and other vendors needed to operate your business. Keeping prices stagnant year over year already leaves you at a disadvantage due to unavoidable inflation. Simply put: by offering the same rate to your repeat guests every year, your business could be absorbing the hidden cost of inflation.
Changing Market Demand
Over the past year, travel restrictions abroad caused an unprecedented surge in domestic travel to the UK. Stronger demand creates new guests, and in turn, opportunities to convert those new guests into repeat guests - potentially paying higher than your typical clientele!
How to Manage Repeat Guests
While it can seem like a big shift in strategy, let’s explore some ways to effectively manage your repeat business while still pricing at the market:
Set a timeframe of when repeat guests need to book by in order to take advantage of a repeat guest rate:
- For example, guests must book two weeks from their departure date.
Set different premiums for different seasons:
- High season repeat guest rates should see an increase of 10-20% year over year.
- Low to mid-season repeat guest rates should see an increase of 5-10% year over year.
Using the deposit or right-to-reserve method:
- Guests can reserve the right to book certain days by putting down a deposit but the dates must be booked by a set date in the future.
- For example, a guest has 2 weeks to put down a deposit on next year’s reservation. They have the right to fully book those days within the next three months before those dates are made available to the public. After the 3 month mark, the dates are made available to the public but the deposit still applies to the reservation if booked by the repeat guest. In this scenario, you can make the deposit refundable if cancelled before 3 months.
Lastly, we recommend only encouraging repeat bookings for low or mid-season where the impact of a repeat guest rate is reduced. By encouraging your repeat guests to return in low and mid-season, you can capitalize on the increased demand and higher prices that the busy season brings.
Best Practices
Property managers who find a lot of success with these strategies know that good communication is important and have their guest relations team proactively reach out to known or potential repeat guests to explain these policies. This way, the shift to dynamic pricing is upfront, not perceived as a surprise, and goes a long way to continue cultivating relationships with your guests.
For insights into your market trends and potential pricing opportunities, you can sign up for a free trial of Beyond today.
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