What is the best recipe for increasing rental income?
What is the best recipe for increasing rental income?
If top chefs are reluctant to share their recipes, we’ll let you in on our secret recipe, which includes 4 ingredients exclusive to Reserver.ca. Thanks to it, all our partners see their rental income increase significantly. You’ll find that it’s a good mix of technology and marketing.
Ingredient #1: A dynamic pricing system
Airlines were the first to adopt dynamic pricing. As such, their rates vary depending on several factors, including: occupancy rate, time of year, day of the week, departure/arrival time, number of days prior to departure and length of stay.
Since we have been using the dynamic pricing system, our partners have seen a 25-40% increase in revenue.
In 2019, we personally acquired several cottages. Of these, one had generated a maximum income of $41,000 over the past 10 years. Thanks to the dynamic pricing system, and the other ingredients in our secret recipe, this cottage brought in $135,000 in gross revenue… in the midst of a pandemic.
Our pricing system is based on data science and uses 7 factors to determine prices. Among other things, we note the seasonality, the day of the week, the special events (Christmas, school break, festival, sports competition…), the duration of the rental, the quality of the cottage, the occupancy rate of the surrounding cottages and the number of days between the reservation date and the rental date.
The sweet spot is what we aim for for all our partners, i.e. maximum income for the lowest possible occupancy rate. By maximizing the efficiency of your cottage, you can also enjoy it more often.
Beyond emotions
Thanks to technology and the science of numbers, emotions can be put aside when it comes to pricing.
Some people underestimate the attraction potential and true value of their cottage. In contrast, other landlords overestimate the rental price because they determine it based on the sentimental value they place on it. Unfortunately, the magical moments spent with family and friends and the love put into renovating your home are worthless… to your next guests.
With the dynamic pricing system, the price is calculated objectively and scientifically. Much more effective than feelings or “guesswork”!
Concrete examples
- Let’s say it’s a Thursday, in low season, and someone decides to rent a cottage from Monday to Friday of the following week. This person will pay much less for the same cottage than someone who books it months in advance, when the occupancy rate is high.
- Chalets located near a ski resort have a very particular rental profile. Since demand is high from December to March, prices increase during this period.
- Has your property had a high occupancy rate for several months? It means that the rate is too low: it’s time to raise your price.
Ingredient #2: Maximum visibility
Remember this: the more your cottage is seen, the more likely you are to rent it at a better price. This is why we multiply the distribution channels to increase the visibility of the cottages that the renters entrust to us.
Of course, your cottage will appear on the Reserver.ca website, but it will also be on several rental platforms (online travel agencies) and on social networks. And you can’t imagine the power of a good Facebook ad!
Ingredient #3: The triple wow effect
When renting a cottage with Reserver.ca, people don’t just want to rent a cottage, they want to live an experience. That’s why we do everything we can to create a triple wow effect.
- Wow #1: A cottage with an irresistible design, staging and lifestyle that you can’t help but fall in love with when you see the pictures.
- Wow #2: Expectations immediately surpassed as soon as you set foot in the cottage.
- Wow #3: The little things that make all the difference: A welcome gift, a call to make sure visitors have arrived and that everything is to their liking…
Be assured that people are willing to pay more to experience the triple wow effect. And they will reward you with multiple stars and positive reviews.
Ingredient #4: Feedback momentum
What is the second thing people do after looking at the photos? They read the comments. The more positive comments your cottage gets thanks to the triple wow effect, the more credibility and attractiveness it will gain.
Here is the proof. Reserver.ca owns two log cabins. These are identical and are located opposite each other. So what makes a cottage’s occupancy rate so much higher than its twin? We bought the most popular one a year before the other. This one is therefore one step ahead of the recent positive reviews on the various rental platforms. It is more attractive, therefore is rented more often.
What about the negative comments? There is no escaping it: some customers are “unsatisfiable”. But since their negative comments will be drowned in a pool of positive comments, they will not affect the choice of tenants. Plus, if you accept the criticism, apologize and mention that you’ve done everything you can to make sure it doesn’t happen again, people will see how important the customer experience is to you.
With these four ingredients, you have the recipe to increase your income by 25-40%.
Think hiring a rental manager will lower your income? Think again. Let’s say the company takes 20% of the rental costs, but allows you to increase your revenue by 40%. Do the math: you’ll still be a winner… plus you’ll have a lot less responsibility.
Want to know more about Reserver.ca’s unique winning recipe? Request a business case here. We will be happy to answer all your questions. After all, choosing a rental manager is an important decision that cannot be taken lightly. It’s worth taking the time to make an informed choice.
