3 Airbnb Revenue Management Mistakes to Avoid in 2025 (Ep 633)

Jasper Ribbers (00:01.326)
What's up everybody, welcome back to Get Paid for Your Pad. Today I am going to share with you the three biggest mistake that we see shorter rental operators make when it comes to revenue management. The three mistakes that you definitely want to avoid in 2025 if you want to maximize your revenue, if you want to get a better result than last year, even though the market is not going to be much stronger.

At least that's what it looks like right now. Then I recommend listen to this podcast and implement those three things that you're to learn. Also at the end of this podcast, I will share a resource for you to learn something for free. We are doing a free training that I will announce at the end of this podcast that you can sign up for free. So a little bit of context.

We have been doing revenue management for shorter rental operators for larger operators, anybody who does over a million dollars top line in revenue per year. We manage 30 portfolios right now across three different continents. We're in lots of different countries, but mostly Canada, US, and Europe and Australia. But we've learned a lot in the last year, because when you're on board with 30 different companies,

that all have anywhere from 10 up to 150 listings, you start noticing the most common things that we have to fix when we onboard a new portfolio. And so I made a list of the three most common mistakes that we see. And I'm going to explain how to fix those mistakes because these mistakes can be quite costly. So the first mistake is not being compa…

competitive enough during the low season. So a lot of markets we are in the low season right now. As I've mentioned in previous podcasts, the travel trends are returning kind of back to normal almost where more people travel during the holidays in the summer and fewer people travel during the low season. And so there's a good chance that if you look back at January that you're going to see that your markets probably did not do very well compared to last year.

Jasper Ribbers (02:17.326)
Maybe it's flat. Maybe it's down 10%. We see some being down like 20-30 % compared to last year in January. And we do see weakness going into February for most markets and March as well. Obviously, there's markets where January, February, and March is not the low season. It might actually be your high season. But what I'm going to talk about right now is during the low season, you have to be very competitive to get a good result.

And so you cannot wait till last minute to drop your prices because there's not enough last minute demand to fill up your units. And so you have to try and fill up your units ahead of time. So how do we do this? Well, step one is you got to set a goal for each of your units and to understand like what is actually a good result. What does a good result look like? All so you should look at the markets and see like what does an average

one bedroom do in January? What does an average two bedroom do in January? What's the range, right? What's the top of the market, the top 20 % of the market? Obviously that's where you want to be. What are those units doing? And then look at your own performance from last year too, and combine those data points to really understand like what is a good result, right? So if you have a unit that last year, let's say you did a thousand dollars in February, and you look at the market, it's a one bedroom and the market average is like,

let's say like six or 700. Okay, if that's the case, then you should be shooting for, you know, 12 or 1300. All right, that's a good result, given those data points. And so if you look at your calendar and if you go on your listing and you try to book February for the entire month and your pricing is at like 2000 or 2500 or 3000 dollars, then you are shooting for an unrealistic result.

and your pricing is too high and you're probably going to get, you know, maybe you book one or two weekends and you know, you're to end up with a couple hundred dollars on the books. Alternatively, you could, a couple months before your low season, you could look and say, all right, well, if 1200 or 1300 dollars is a good result, let's set the pricing up to reflect that. So let's set up a length of stay discount for the entire month to bring our pricing to that.

Jasper Ribbers (04:41.901)
that level right if somebody is going to book it for a month you know the pricing has to be pretty competitive right whether that's 1200 1300 maybe you could shoot for 1500 but you can't be shooting for the moon and the low season is not the time to be greedy into trying to get the highest price right so um so that's that's really important when it comes to low season um one thing that's really important to note is that you know sometimes our operators will ask us you know what like is it even worth

doing this, right? Isn't even worth making like $1,200, $1,300 for a unit if we're making like 10, 20, 30K per month in the summer. And so one thing I think that you have to keep in mind is the low season, it's not about necessarily the money that you make during the low season. Okay, so we'll look at some data here because I'm going to share an example. And this is from a portfolio in

Wisconsin. So Wisconsin is a very seasonal market, right? The summer, people pay a lot of money in July and August, especially if you have a house that's on the lake. People pay a ton of money. But in the slow season, it's really hard to fit up those units. especially if these are larger homes, then you might wonder, is it even worth it renting it out during the low season? Of course, there's alternatives. You could get a long-term or medium-term person in there.

But if you are doing SDR during your low season, then you have to realize that every booking that you get has indirect value. That person that you're hosting in January for like 400 bucks for a couple of days at a very low ADR, that person might come back in the summer and book your home at $10,000. Or this person might tell somebody else about your home.

Also, the booking itself gives you momentum in the search results on Airbnb, because Airbnb displays units that get booked the most. And so if your unit is getting booked in January, now somebody searches for July, your listing is more likely to show up because you're getting bookings in January. Your listing is more active. It's converting. The worst case scenario is for your listing to sit idle for like three months and then come.

Jasper Ribbers (07:06.898)
Memorial Day is typically the weekend where it kicks off the high season. I guess it might just be still shoulder season, at least typically in those markets, Memorial Day is kind of like when things kick off. If your unit's been sitting empty since Christmas, that's not going to…

bode well for your position in the search results. So when people then search for May or June or July or August, Airbnb is not going show you listing as much if you haven't been getting any bookings. And so it's not just about the money that you make during the low season. It's also very important to keep your units active. There are some other benefits to that as well. I mean, for example, think about your cleaners. Cleaners probably don't like it if there's no work for like four months during the winter.

They might look for other opportunities. So it's also good for your cleaners to just keep them keep them occupied and you know have have more work for them during the during the off season. The off season is also you know a good time to understand that a booking is also a review. Well not always but hopefully you get a five-star review right. So that's another thing like if you have if you don't have a lot of bookings and then in May like

or in April or something, somebody wants to book for the summer, they look at your listing and the last review was from November, that's gonna make the guest feel like there might be something wrong with your listing. mean, if it even shows up, but even then, somebody might be skeptical of like, why is this unit being unbooked for like six months or four months or whatever that is, right? So there's a lot of value in getting these bookings, even though the…

the total revenue itself is pretty small compared to your high season, right? Now I'm gonna share my screen and we're gonna look at an example. So this is a live example from one of our portfolios. I'm not gonna mention the exact location and the name of the company. is to protect the privacy, but I will say that it's in Wisconsin. And so what you see here is the performance from January 2025. This is part of the, this report is called

Jasper Ribbers (09:29.512)
the leaderboard, you can find it in price slaps under portfolio analytics. And then there's on the right side, there's where it says custom reports, you click on leaderboard. This is a very useful report that we use quite a lot. And so let's take a look at this, right? We'll see there's a bunch of, we have a couple new units here at the bottom that we didn't have last year, so there's no data on that. In fact, I think, yeah, I think there's like three new units that you can see here. And if you wanna watch this, like it's going YouTube.

We have all our podcasts on YouTube where you can actually see, but I'll do my best to make this as interesting as possible for those who are listening. But essentially like we have 13, 12 units here. Nine were active last year. There's three new ones. So we have that out that we can compare it to last year for those nine units. And what we see on the right here is that there was only last year in January, we only had four units that had any revenue at all, which is not uncommon for that market because it's just, January is just like, you

20, 25 % of currency in the market. like, yeah, a lot of the units, if you're not priced competitively, a lot of units might just sit empty for the whole month, which is the case here. But you can see that like the four units that did have revenue last year, you can see that we crushed that revenue pretty hard. You know, these four units, the top performing four units that we're looking at here did between five and 8K. And last year, three of those units did less than 2K. One unit did

Just over 4k now if we calculate it just those four units our revenue is actually 325 percent higher than last year now the total amounts are not that impressive impressive of course right those those top performing four units, know total revenue in that one is is around Maybe like 30k or so and last year was like 8k. Alright, so

That's $22,000, which is not a huge amount given that this portfolio in the summer will do several hundred thousand dollars. So relatively to the total revenue in the year, that extra 20K might not sound very impressive, but hey, that's an extra 20K, but it's not just an extra 20K. Look at the occupancy here. We have one unit that had lower occupancy. All the other units have way higher occupancy.

Jasper Ribbers (11:51.689)
A couple units have like, you know, 32, 38 versus zero last year, 38 versus six, 61 versus 10, 32 versus six. So it's not just that we're making an extra 20K. It's also that all those people that have come through our doors in January, it will help improve visibility on the search, in the search results. And those people might come back, they might tell other people, et cetera, et cetera. We have extra reviews. You know, I've already touched on the value.

Right? So that's the first mistake to avoid this. What you need to do is you need to look at your low season ahead of time and make sure that you are using either seasonal profiles or you can use account overrides to bring the pricing down to where it should be. whatever the lowest, know, whatever the pretty much what the minimum price is that you want for that month, that's where we should be priced. We should not try to get like a

shoot for the moon with the ADR there. So that's the first mistake that I want to cover. The second one is kind of the opposite. Typically when we own more the portfolio, the pricing is too flat and so the low season, they're priced too high and the high season, they're priced too low. And I think the reason that a lot of people price low in high season is because it's kind of nice to get a lot of occupancy on the books already. Let's talk about

a portfolio and we'll share some numbers again. But let's talk about a portfolio in Washington state. So kind of a similar market like high season is June through August. September is pretty good, May is pretty good. then October to April is kind of not a lot, except for maybe spring break and Christmas and whatnot. But in these markets,

You know, the summer is extremely important. That's where you make almost all your money. And so it's a little nerve wracking when you're pacing behind, right? Whether you're pacing behind the market or pacing behind last year. So what we see a lot of operators do is they price themselves too low for the summer and then they get booked very far in advance, which is nice because that gives a little peace of mind. But you know, you're probably leaving a lot of money on the table if you're booking up too fast.

Jasper Ribbers (14:16.584)
All right, you wanna roughly book up in line with the markets. And when I say the markets, is you gotta take into account your unit size. So if you're a five bedroom, you're gonna compare it to the five bedrooms in the market. Which PriceLabs has a pretty easy tool to do that actually. I'll see if I can share that maybe, maybe not on this podcast, but maybe on the next one. Anyway, I'm gonna share this portfolio right here. This is, again, I'm not gonna…

shared details of the market and units and everything. But you'll be able to see the numbers here. So here I selected, this is again the leaderboard I selected the summer. And what you can see here is that this client was pricing too low for the summer last year. And so they got booked up very fast, but at too low prices. And so you can see that here because look at these units.

here for example again if you were if you want to watch and look at YouTube but here's a particular unit that last year we booked a total of $75,000 in July August okay so that's a lot of money it sounds like a lot of money and last year today we we already had 71.5 thousand on the books so between now and in July which is another

February, March, April, May, it's another June, like five months, right? Five months between now and July, or is it six months? No, five months. All right, so in those five months, this client only booked an additional like $4,000 or like less than 10 % was booked in February through June. But if you look at the market, the market's only about 20, 25 % occupied at this point. And so they were pacing way ahead of the market.

which is it's nice because you can you know you also know how much you're gonna make in advance so it's like it helps with planning it helps if you know cash flow probably if you're getting direct booking so there are some advantages of being booked early but but the thing is like you're gonna be booked out at way too low prices if you're booked up that much because that's how it goes like people the first people that start booking for the summer

Jasper Ribbers (16:38.183)
they're going to book the best deals. So if you're in the price, they're going to book you first. So we look at this example here, we can see that we now have $26,000 on the books versus $7,500 last year. So if you don't know all these data points that I've been showing and sharing, then you would think like you might freak out. And actually, it's funny because some of our owners are concerned about that. They're like, we only have $26,000 on the books.

And last year we had 71 and a half. Like we're way behind. We're going to have a bad result. But we look at the market data and it's like, wow, the summer is looking actually like stronger than the last year. But if we look at our Coupons C, you can see that we're only booked 22 and a half percent. And we have 26k already. we could probably multiply that by almost four, right? If we multiply 22 % times four is 88.

So it's not unrealistic to think that we might hit $100,000 with this unit for July and August. I think that's a pretty reasonable estimate to hit that $100,000. That's a big increase, right? Last year we did 75. We can do 100. That's a 33 % increase, right? That's a pretty strong result, right? So we're actually pacing. I'd say we're pacing to make $100,000, but…

If you don't look at the market data, the pacing and everything, then you might freak out and say, hey, we don't have enough revenue in the books. So one good useful report that I created in Pricelapse that you can use to keep track of this stuff is ADR reports. So I'll probably do another podcast on how to create these reports, but

for this podcast, I'm just gonna show you why it's so useful. Here we have a listing here, let's go Beach House, and you can see the ADR that were booked at, right? So January all the way through December. And you can see also the ADR that we could book that same time last year and a final ADR that we could book that last year, right? So January, obviously those numbers are the same because January is already over, right? So same time last year, it's the same as final last year.

Jasper Ribbers (19:05.414)
Okay, so what we can see here is that January, we booked actually a little bit lower than last year, which makes sense because January is low season, so we are much more aggressive. And February is kind of the same ADR. Then if look at the summer, like for this particular unit, our average ADR so far that we booked at for let's take August is $861.80. Last year today,

It was 583 and last year finals 579. So that means that we're booking almost $300 higher than last year. And that's why our occupancy obviously is lower right now than last year. What I just showed with the revenue on the books, but you could, this, this, this report just tells you like for unit by unit, like, are we booking at a good ADR? Right? Cause that's really important to, keep track of. Cause if you're booking at a lower ADR and same time last year, then you know that you have

problem, you need to raise those prices. So this is a very useful report. Again, I'll dive deeper into reporting in on another podcast. But the third mistake that I want to want to cover, and I'll just put up the example that we're to use for this right here. Alright, so here we are looking at a market in the Midwest of the United States. And this is a

town that has a big university. The mistake that we see almost every single host that we onboard for the revenue management, we see that this mistake is there. And the mistake is that not having prices set up correctly for peak demand dates for a year out in advance. Okay, so little context around this. Those high demand dates, so think of big events.

Think of Christmas, think of New Year, whatever the dates are in your market that draw like crazy demands, where the market books up almost 100%. People often book for next year right after the event. So in this example that we're gonna talk about, this is like, this is graduation, right? So this town has a university and they have graduation in May.

Jasper Ribbers (21:31.908)
So you can see here like May 8, 9 and 10. Those are very high demand dates. Okay. Now what people do is right after graduation, they book for next year. And oftentimes pricing is not set up correctly yet because there are not a lot of people have booked. And so the pricing algorithm isn't picking up that demand. All right. And so we can see here that we have three units that are booked. They're all three bedrooms. So they're all the same, pretty much the same.

But what we can see here is that one got booked at $975, is, that's per night, right? So this is a $3,000 booking essentially here for May 8, 9, and 10, okay? That's just rounded, thousand bucks a night. The other two units got booked at $399, and the other one got booked at $379, all right? So.

So that's the $800 booking versus the $3,000 booking. Or let's say, well, we have one two-night booking and one is a three-night booking. So $400 versus $1,000, that's two and a half hex. Now, we're not happy with those bookings, but those bookings were already on the books when we started managing this revenue. But the reason that they're so low, those ADRs, is because they got booked way in advance. So this person booked this booking that I'm looking at here.

got booked at $3.99, it got booked May 23rd, 2024. So that was probably like one or two weeks after last year's graduation, right? The other one got booked in July, so in July the prices were still too low. And so even like two months after the event, the prices were still way too low. And again, that's because the algorithm doesn't always pick up that demand that you know is gonna be there, but because not a lot of people have booked yet, it might not be.

the pricing algorithm might not accurately have those prices. So that's a lot of revenue that we're missing. And so that's a big mistake. So what you need to do is for those peak dates, make sure that your pricing is set up for next year before the event happens. So in this case, we want to have our pricing for May, 2026. That should be set up at the latest, early May, right? Well, we already have it set up.

Jasper Ribbers (23:56.867)
This operator has the calendar open for 12 months, so people can't book it for next year. But if you look on the screen here, I'm going to go forward to May, 2026. So May, 2026, we can see these same dates here. And so what you can see here is that our units are all priced at $12.99. Now, why did we price them at $12.99?

Jasper Ribbers (24:28.617)
because the highest value of booking that we got this year was $1,000 for that free bedroom. Now, we did put a date override. So we put a 50 % premium on those dates to protect the dates, right? Because we don't know how Pricelapse is going to price it. Now, in this example, you can see that Pricelapse is actually doing a great job because they already have a 456 % increase.

on those dates because they know there's going to be a ton of demand for those dates. And so we're actually priced pretty well at $1,158. But I've seen instances where that pricing is not correctly set up. And you could see it from the bookings that we already have. we have to protect ourselves. So I like to data overrides on those peak dates for the next couple of years just to protect ourselves.

It doesn't hurt. No one's going to book it anyway at this point because it's not even available. But we want to make sure that pricing, those dates are protected. Now, the other thing that I do is I'm actually using a maximum price here. This is really the only time that I would use a maximum price because in general, I don't think you really want maximum pricing because why not allow people to pay higher if the pricing algorithm is saying that we can get a really high price and we could try that.

But in this case, because I put that override, I don't know exactly when the pricing algorithm is going to line up the prices to where they should be. I don't know when that's going to happen. So what I do is I set big overrides for all those future dates. But then I cap it. I cap it at a rate where I would be excited to get booked at. But it's not crazy. It's not completely out of whack. If I didn't put that max, like,

we'd be priced at like $2,100 right now. And that's like, wait, that's just like, you know, I think that's kind of unrealistic. I think then we're kind of pricing ourselves out of the market, which is why I put that maximum in there. So we get booked, if this now opens up, you know, let's say the client decides to open up the Canada for like a year and for 18 months instead of 12 months, we get booked at 1299. Great. That's a record 80 hard. That's like 30 % higher than we got this year.

Jasper Ribbers (26:50.281)
So that's a great price. And obviously you want to look at the market and make sure that auto units are not getting booked at like 2K or 3K. But in this case, that price is kind of like the top of the market, but it's not crazy, right? It's not like three times higher than what everybody else is at. So for those peak dates, what I suggest is just look at like what's the highest price you've ever got booked at.

for those dates, look at the markets, comparable units, what's kind of like that highest price point, and then set your prices at the high end of that range. Because then if you get booked there, it's amazing, but there's a real chance that you could get booked at that rate. In fact, we actually have one of these units actually got booked at…

$1,800 for a college football game in September, which is an amazing price. think that's like, you know, it's a lot higher than that unit was ever booked at. But it's not a crazy price. you know, if you look at the market, like for those college football games, like there has been, you do see data points where people have booked those units for like those type of prices. So

Hope this makes sense. Again, like this is, this can cost you a lot of money if you're not prepared. Obviously you can cancel the booking, which, you know, sometimes you may want to consider that, but, you know, I think it's much better to be prepared and just book, set your prices up correctly so we can get booked at a price that we are excited about and we don't have to cancel. Canceling your bookings, you know, obviously it's a bad experience for the guest.

Also, might be penalties involved. So it's something that we really want to try and avoid at all costs. So with that said, those are the three most common mistakes. So I highly recommend going to your portfolio right now or in the next couple of days. Make sure you're competitively priced for the low season. Make sure you're not pacing too far ahead for the summer. And so that you're not going to get sold out to low prices.

Jasper Ribbers (29:05.385)
and then also check your peak dates into the future. It's best to protect yourself with some manual overrides. And then you can use that maximum price functionality to kind of make sure you're not like trying to shoot for the moon. Lastly, as promised, I'm gonna try and give like some type of free resource every time I do a podcast. We have a lot of free resources at freewildfoundry.com. Okay, so that's freewild.

Foundry.com Free wild is spelled with a Y and If you want to know more about free wilds our company our short rental company You can also check it out check it out on Instagram stay free wilds We got we recently did some cool renovations We created like a park with lots of cool amenities like stargazing that's and we've really been crushing it with that. So Just a quick tip men invest in investing in the manatees. I think I mentioned it a few times on previous podcast, but that's

One way that you can really increase your revenue. But anyway, freewildfoundry.com and then you go to workshop. So freewildfoundry.com slash workshop. If you type that in, you'll see a page and you leave your email, you can name your email and then you can save your seat. This workshop will be a live workshop.

It will be held on February 7th at 3 p.m. Eastern time. So February 7th 3 p.m. Eastern time. Okay, so that's a that's what is that first day? Yeah, I Think it's first day. Isn't it? No, it's Friday Friday Friday February 7th at 3 p.m. Eastern time. So that's 12 p.m. Pacific noon Pacific so in five days

in six hours at this time, at the time of recording. The training is called Unlock Your Shirt and Rental Portfolios, Full Profit Potential, See What's Working Across 1000 Listings for Top 1 % Operators. So we'll share more tips on how you can maximize your revenue. As always, we'll have some free resources that we give out as well. So so grab your seat, freewildfoundry.com slash workshop. Sign up, join us. You know, free education is always good.

Jasper Ribbers (31:28.627)
Go ahead and sign up. And if you have any revenue management questions, feel free to reach out. can email us. Best email to get a hold of me is jasper at freewild.com. And I appreciate your questions because it gives me also content for the podcast. And so with that said, I hope you enjoyed this podcast. Go ahead and implement what you learned. Sign up for our workshop. And with that said, have a great week.

And we will see you next time. Again, we're going to be doing a podcast every Monday and Friday, and you will be able to see those on YouTube, but also on all the other channels, Spotify, whatnot, like Apple Podcasts. Leave us a review if you enjoyed the podcast, if you get value from it. Give us a like, thumbs up, comments are all welcome. So that's it for today. I appreciate you all, and until next time.

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