How to price your property post COVID 19

with Anurag Verma of Pricelabs

Welcome to Boostly Podcast Season 8 Episode 28. This is a recap of my interview with Anurag Verma of Pricelabs and we talked about how to price your property post COVID-19.

Here’s the audio for this episode:

Timestamp

02:25 About PriceLabs
07:15 The change in bookings
12:50 Tips from Anurag
24:20 Pricelabs data
28:00 Get Pricelabs reports for free
29:45 Upgrade in Pricelab and get more amazing features
34:20 Syncing with PMS
38:40 Quickfire questions

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Transcript from the Episode

Anurag Verma is one of the co-founders at Pricelabs, based out of Chicago. , Pricelabs is pricing and dynamic pricing, software or solution. They started about five years back. They felt like there is a need to build tools that are similar, that are used by airlines or larger organizations, but are not always available to individuals or smaller, smaller organizations that can’t hire like five data scientists.

They serve about 3000 property managers and hosts around the world. And this is a mix of different types of managers and hosts. They have property managers which manage upwards of 1500 listings of properties. They have a lot of hosts who manage just one and then it’s anywhere in between.

Some of them also have guest houses. The major chunk is property managers who have between five to 100 properties.

The change in bookings

Pricelabs have two data sources in some ways. One is people who are users, they directly get a look at their booking trends. They aggregate them and see if there are broad trends that can be used. And then second is by looking at different OTAs. And trying to figure out what kind of activity is happening on different OTAs. The first part is going to be reservation data. Pricelabs saw two big trends.

What we used to see before COVID is people were booking a ton of stays that are a little farther out. So people would want to book early because whatever the dates get booked off, or you don’t have anything or good options left anymore, and things like that.

And then there was obviously going to be some folks who find out that they need a place to stay last minute. So they will book these last-minute stays.

The big change, the obvious big change is that the volume of bookings has just dropped off. Like it used to be a lot higher. It’s dropped off 80 to 90% around the world. But the interesting part is a lot of the bookings that have dropped off are these really far out bookings where like, people are just not booking for six months out of four months out anymore. The bookings that you might see are probably people who are changing their stay dates. They weren’t planning on coming in April end or maybe May or June and now they’re like, hey, like can we move this to October?

The bookings that are made last minute are still coming in. Like it’s not completely evaporated. It might be those essential workers, right like people who need a place to stay starting tonight or starting tomorrow.

The second big thing Pricelabs is seeing. In US and UK, they saw that after the full impact of COVID started coming out, there was an uptick in the longer bookings. So it seemed like weekly, or monthly bookings, the number almost doubled. That’s beginning to come back now. So so it was really taking out in late March.

Tips from Anurag

Usually, before COVID, Pricelabs would see a lot of people have weekly discounts of about 10 to 20%, depending on their risk tolerance, and monthly discounts of somewhere between 20 to 30%. And the thought when doing such things was as a short term rental operators, depending on the season, you would expect out of the month, maybe 20-25 days to be booked. And there are going to be days that go on booked for a variety of reasons right? Now, if you get a monthly stay, then it’s guaranteeing you 30 book days, so it’s a good thing.

Versus as if you only took short term bookings, maybe you were going to have five unbooked days. So maybe there was some merit to giving a 15% discount to say, Hey, I’ll get about the same amount of money. And I’ll have fewer operational headaches in some ways.

Go a little more aggressive on those discounts. You’re given the situation it’s going to be very hard to have 20-25 book days on your calendar, it’s probably going to be much, much lesser maybe 10 or 15. If you’re doing great in that case, giving a monthly discount and trying to attract some of these longer stays, is not just financially a good call, but also probably from an operational perspective, you don’t want to go in five times a month or your you don’t want to send your cleaners five times a month to do a cleaning when you can get about the same amount and have only one paying off customer.

Also, if you can get longer bookings right now, try and get those, it just reduces your risk. It gives you some cushion of trying to make it through this situation.

The second one there is coming from where you’re just not seeing people book too many far outstays. What Pricelabs is telling all their users is and what they have done in their system is on a rolling two months basis still situation improves, they are going discounting the prices. But they are not doing it beyond two months, like at this point.

It’s better off to just hold your prices there and only adjust prices in the last month, two months.

Anurag also talked about flexible cancellation policy. A lot of OTAs are going to force it upon you anyway. So even in your direct bookings right now, people are not sure if even if they book if they will be able to travel.

It kind of makes sense to book things, given how much supply is out there, given nobody else’s traveling, if somebody is booking, they will probably have a choice of places that do offer free cancellations.

It’s risky to offer that. But then the choice is between not having a booking versus having something that might really materialize. If, if things don’t improve, and they have to cancel anyway, then it doesn’t really matter. In the end, the cancellation will end up happening anyway.

The last one is just fewer restrictions, like at this point, on a rolling two-month basis, you can go ahead and produce your minimum stay, if you can, again, what we are saying here is you want to attract longer bookings. But given that people are only booking for the next week or so even if you do get a short booking, it’s some money. And then that booking will get over soon. So hopefully your calendar will be wide open for a long booking again.

See if you can shuffle bookings around if you have more than one listings, to consolidate them on on one property, and then have the other one open up for longer phase and things like that.

When Anurag talked about flexible cancellation policies, he did not mean fully refundable. If it’s your direct booking, you can make this as you want, right? You can have it where if people can’t travel anymore, you can still change the dates, maybe next year or something like that.

Last-minute discounts are kind of also saying that that right now there is a lot of supply. So last-minute discounts become important. But as you come out of it, you don’t want to change your final prices as much. But you still want to be able to monitor how your markets are doing.

So one of the things, that Pricelabs have put out one is just publicly available, you can just go on Pricelabs’ landing page, and you can look at data for four different countries. And if you’re in the US in different states, just to see what kind of trends are we seeing in terms of new bookings coming in? What’s the lead time what’s the length of stay.

But the second more useful thing that Pricelabs is trying to put out is not live yet, but they are hoping tomorrow or day after it will be live. So and it’s a free resource where you can order up to five extremely localized reports. So you can go in and put in your address your city, your country and give a radius. And it will ask you after that, like is this the area you want to look at and it will show you how many listings are there and things like that. And it takes five to 10 minutes, but then you’ll be able to track.

This page will keep refreshing every day, so that for the next 60 days, for example. So you’ll be able to come in and see is this beginning to come back up. If bookings are happening, the green line here is bookings. And you’ll see that pretty much nobody is booking right now. But as bookings when the recovery starts happening, you’ll be able to see what dates are people actually booking for to be able to then say, okay, are my prices correct or set fine for those dates, at least now that people are back to booking the stays.

Pricelabs data

The data that you’re going to see here is, is worldwide, which means like it’s pretty much going to cover every corner on the earth, It’s by looking at different OTAs.

It’s showing you data that’s useful, but also allowing you to interpret it based on what you know about the area to see signs of recovery. And then you can also track prices. So here, there is no estimation do just, you can look at different types of units and see how are other people reacting to prices?

To be able to understand, hey, is my strategy in tune? Maybe it’s not following the same strategy. But if you have a reason to do that, then great. But if you haven’t thought about your pricing, and you’re seeing that, Hey, everybody seems to be putting in the last-minute discounts, but I’m still up high, then that might mean okay, it’s worth trying to tweak your prices a little bit.

So it gives you a sense of how your market is laid out. And how and you can try not find out how your pricing is compared to this. So if it looks like your prices are all way below the median way below even the red line, that means you’re priced in the bottom 25th percentile, which is not to say that it’s the wrong thing, because each unit is different. Maybe Maybe your one bedroom is really small. And if you price it like like the blue line, you’ll never get booked because it’s so small. On the other hand, maybe your one bedroom is a penthouse, in which case, it’s okay, if it is above the green line.

Get Pricelabs reports for free

Every new Pricelabs account will have five credits where you can put in five addresses. You’ll get a sense of how many listings exist in that area that will track. From that day, for the next 60 days, we’ll keep updating these so you’re not generating more reports. Essentially, you get a dashboard for the next 60 days to come back and check how things change, things improving and things like that.

Upgrade in Pricelab and get more amazing features

Pricelabs’ regular dynamic pricing service has a one month trial, you don’t need to really put in anything. You can come in, you can import either your Airbnb listings, or we integrate with about 35 different property management systems.

You might recognize some of these names here. But once you do that, all your listings from that account will show up here. That doesn’t mean that we are updating your rates. All that means is now you can go in and say hey, I want to see price recommendations for this property. And the price recommendations are a mix of two things. One is with Pricelabs algorithms, which are based on the data they see in the market, and on your listing and it’s reservations. But equally importantly, it’s also based on inputs that you provide to Pricelabs because they can’t possibly know every single thing about how you perform or how you operate. So two people in the same area might have very different needs, on how their prices or how their pricing strategy should look like.

So for that reason, Pricelabs has a lot of these customization options to say, hey, on my property, I want last-minute discounts to look a certain way. Pricelabs also has occupancy-based adjustments, and it has a setting called Coronavirus. It looks at your property. And it says we are going to monitor your property on a rolling basis. If the next 15 days are not booked at all, we are going to give a deep discount.

But as bookings start coming in, Pricelabs is not going to keep the prices low, it will automatically bump those up. Similarly 31 to 60 days out, it says hey, if the calendar is completely empty, reduce the rates and see if you can get a booking. But once you start getting bookings, take those discounts away, because it looks like this might be a sign of recovery where you don’t want to keep those low rates forever, in some ways. And if people are beginning to book, then the rates automatically come back to normal.

Syncing with PMS

Once you’ve done all of this stuff for you, right here, you’re essentially reviewing your rates, you’re, you’re saying, hey, my rates look fine here. But you might come in here and say for these dates, I need to make an adjustment. So you can say I want to make a minimum stay of three and apply a 15% change and things like that. So you do all of these adjustments, fine-tune, you look at the recommendation, see if they make sense. And if everything looks fine, then you can go in and say hey I I want to Go in and start updating my rates. So once you turn the sink on, we best pretty much go into the PMS every day and update those rates. If you make a change to your strategy or certain dates, you can also click sync now. And that means we will update those rates within five to 10 minutes. So you don’t have to like wait overnight, if you made a change.

The important thing to note there is Pricelabs send this to the PMS and then the PMS in most PMS as you can apply channel markups or commission rates, so that those get applied on top and then this gets sent to different otas. And then a lot of people thought that direct booking websites, they don’t apply any commission so that they have the best rate on their direct booking website and things like that.

So in terms of which PMS is it’s a fairly long list. But if you go to Pricelabs’ homepage, you can see all the integrations right there. It’s about 30 of them, But they add two to three every month, more or less.

Quickfire questions

If you could be isolated or on lockdown with one celebrity or famous figure. It could be alive or dead, who would that be?

Tom Hanks.

If there is one movie or TV series that you’ve had a chance to catch up on now, but we’re on lockdown. What would that be? And have you got any recommendations for anybody watching?

Llama Llama

What is the one thing that you missed doing before the lockdown?

Sleep.

What is your best purchase over the last 6 months under $100?

A book called 21 Lesson for the 21st Century

Do you have a Favourite podcast or YouTube channel?

Wait Wait Don’t Tell Me

One piece of advice to increase direct bookings?

Have a good website. Market.

Know more about Anurag on his Linkedin.

Before you leave

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