It’s an exciting year for short term rentals in Ottawa! With tourism increasing at an unprecedented rate we’re seeing more and more people from around the globe flock to the city to see and experience everything it has to offer. In 2018, Ottawa cemented itself as one of the Canada’s top metropolitan cities for short term rentals in terms of earnings potential. The high rental demand, minimal growth in number of hotel rooms, and weak Canadian currency relative to the U.S dollar, Euro, and British Pound have combined to create a market that will benefit those who have an effective Ottawa Airbnb price optimization strategy.
Despite the favourable conditions, very few Ottawa hosts are able to achieve their property’s earning potential. The main reasons for this include a lack of market knowledge, time, understanding of property optimization and booking platforms being used (e.g. Airbnb, Expedia, Booking.com etc). This is actually a good thing! While most hosts sell their calendar at low rates, the opportunity to achieve premium bookings by effectively managing pricing, availability settings, and rule sets is very real.
This post will give some insight into an effective Ottawa Airbnb price optimization strategy for your listings. Given it’s already February, there’s no better time than now to make sure you set yourself up for a year of high short term rental income. Of course, how you set up your property and market it is going to have as big of an effect on your success, so make sure you invest in getting that part right.
So lets take a look at 2019 from an Airbnb price optimization point of view!
Winterlude has arrived and February is a great month to implement Airbnb’s newly launched rule sets feature. Rule sets, which require an install (contact us for a free instruction guide), allow you to have different pricing rules (e.g. multi day discounts, early bird) for various days, months, or seasons. This is a great tool, and it overcomes some major flaws in the original approach including having the same discounting rules apply across all seasons. We recommend using a tiered multi day discounting rule set (e.g. 3 days / 5% off, 5 days / 8% off, 7 days / 12% off) to get occupancy in those lower demand February weekdays as you march your way out of low season.
March brings the first sign of light at the end of the winter tunnel for many short term rental hosts. As for the rest of March, up until about mid-February we recommend keeping it at a three night minimum with multi day discounts that are less than the ones set for winter. A lot of families come to the city for their kids March break and given the overall demand is still not as high as later in the spring the best strategy is to capture the as much as the longer term bookings as to keep occupancy strong and minimize turnover costs. Once we get into the second half of February change your March availability settings to a two night minimum to fill in vacancy gaps as much possible. We also recommend a one night minimum during weekdays (Monday to Thursday) once March has started to keep occupancy rates over ninety percent.
In April, we want to leverage the high weekend demand and bundle in the weekdays (using our multi day discounting rule sets) to get strong back to back bookings from people staying four nights or more. What you don’t want to do in April is sell every Friday and Saturday night in advance and then be forced to lower your weekday prices more than you would have had you bundled those days in with the weekend. The best way to do this is to have your weekend rates about 15% higher than the market rate. That way as we get closer to April and weekend inventory starts to disappear all the guests looking for longer bookings which include weekend days will have less selection to choose from, increasing the probability you get the reservations you want. If you do end up selling your weekends (with a three night minimum) above market rate, then it compensates you for having to discount your weekdays.
Tulip Festival has arrived and the summer is almost here! May is when we start seeing demand pick up across the board. We want to keep our three day minimum but remove multi day discounting, outside of perhaps a small discount to factor in your turnover (cleaning) costs. In May, there is strong demand for both weekdays and weekends and the market starts to really favour the supply side. Similar to March / April lower the minimum night requirement as we get closer to vacancy.
The last two weekends we have consecutive long weekends for Canada (Victoria Day) and then the U.S. (Memorial Day). It’s important to note that the U.S. holiday brings in more demand than the Canadian one and should be priced accordingly. These holidays occur on a Monday, so make sure your weekend rates last into the early week for these dates.
Another thing to note is that it’s more important for bigger properties downtown to use their advanced booking window for May and the following few months than smaller properties downtown. A lot of the high margin bigger bookings for the late spring / summer happen in advance (definitely not all of them though) so you want to try to capture the early wave. As we move into high demand season, smaller properties should feel comfortable holding tight on high prices even if their calendars are completely open past the next week or two. There is so much demand in the summer that for hosts with one bedrooms and studios, watching competing properties get sold should be a source of excitement and not anxiousness. Ultimately, when supply is low and demand is high the accommodations provider holds the pricing power.
Airbnb Price Optimization for High Season
June is when the dreams really do start to come true for short term rental hosts with a winning formula. A continuous sequence of back to back conferences in June means hosts can make a nice chunk of change if they hold their prices high while the hotel rooms and short term rentals get sold out. June is a popular month for business conferences because the weather is good and a lot of people with children take their vacations in July and August (hence the need to schedule before).
If we go on the convention centre’s events calendar, any dates with conferences that are international in nature tend to eat up all the hotel rooms. We recommend a four night minimum for this event starting from the 23rd of the month. Do not be afraid to “overprice” these dates as you can always lower them later without needing to discount last minute.
Depending on the property, June can be a very lucrative month on the hotel platforms (Booking.com, Expedia, etc.) because of all the business traffic. Just be extremely careful if you are new to them as they are much more complex than Airbnb and during these prime dates you don’t want to make amateur mistakes on these platforms and learn the hard way. As a general rule for people who choose to manage everything themselves (not our clients), use to winter to learn the hotel platforms as you have the least to lose.
Canada Day and summer in full swing. The fun continues for short term rental hosts in July as the vacation travel season enters its peak. Ottawa has become a leading destination for tourists coming from around the world and for most there’s no better time than the summer. Our recommended strategies are very similar for June, except we would say the advanced bookings are slightly less important in July. A lot of tourists plan for their trips much later than conference goers and unlike most companies there’s no limit to how much price insensitive customers will spend if the supply is limited and the property suits them for their summer vacation.
Similar to every other month past March, use a three night minimum for your advanced booking window and then adjust to fill gaps as time moves closer. For people who are very advanced, we recommend using rule sets to set your summer calendars up for three day weekend bookings starting Thursday and Friday. What we want to avoid is check ins on Saturdays. A Saturday check in forces us to discount Fridays because the demand is not as strong for people who want to check out Saturday (i.e. have Friday night be their last night). It also allows the guest, who is booking at a three night minimum, to lower their average nightly rate because their third night will be Monday, which is priced lower than the weekend (outside of holidays). This last point doesn’t apply to people who do one night minimum on Fridays, which we advise against due to the increased likelihood of irresponsible guests bookings.
August long weekend is without a doubt the most important weekend of the year and a hosts revenue can vary quite significantly depending on how they price it. Using our advanced booking window, we’re going to set up a four night minimum from Aug 2nd to 7th. With such incredible demand, we want to avoid renting our units out for two or three day reservations when we can command astronomical rates for at least four or five nights. Not only will you make more money, but you’ll almost eliminate your risk of irresponsible guests. It’s a winning formula.
The best booking you can position yourself for is someone who is coming into town for ten days at the beginning of August. In the past, we would price the Thursday through the Monday of August long weekend very high and the days before and after would be slightly under priced so that the average nightly rate for a longer booking goes down while still keeping the peak days at incredible prices. The challenge with this strategy is that there is a high likelihood that someone takes those before and after days, prior to your big booking coming in. Now with multi day rule sets, we can keep prices through the first ten days of August very high and provide discounts for a week long stay without needing to under price individual days. This can sound very complicated, and so for Toronto hosts who are not our clients feel free to contact us and we’ll provide a free consultation on how to set up your property’s August long weekend.
Outside of the first third of the month, the August strategy is very similar to July. August has historically been a slightly better month so feel free to increase your prices by 10 percent relative to July.
For anyone who was a host in September 2016, last year was a bit of a disappointment. September was an incredible month in 2016, with numbers rivaling August. The rest of September doesn’t rival August or July, but still brings in good demand at high rates.
October 2017 was a record breaking month with extremely high demand through the first twenty days of the month. It’s hard to say whether that will repeated this year. However, with the travel industry growing so quickly in Ottawa anything is possible and we recommend watching the market inventory closely in order to identify what demand looks like.
Airbnb Price Optimization for Low Season
In general, we recommend using your advanced booking window to sell November dates early as much as possible. Ideally most of the days would be booked by the end of September with week long bookings that are made at modest but respectable rates. Your pricing rules must be set up to encourage these longer bookings but still allow people to book weekends at a premium as weekend demand is still strong in November.
The first fifteen days of December are some of the lowest demand days of the year, and similar to November you want to sell them out in advance. This is the time of year where a risk adverse approach will pay off. Again, set your pricing rules up to allow people to book at a premium but reward them with good discounts for bookings of 5 days or longer. What you don’t want to happen is walking into December empty or with short term bookings (1-2 days) that result in hard to fill gaps all over the calendar.
The second half of December is a completely different game altogether for Ottawa Airbnb price optimization. The holidays are an interesting time because while demand is not nearly as strong as the peak season (May – October), there is a seizable number of price insensitive travelers still booking. Therefore the opportunity for big reservations exist but unlike the summer you can’t wait for everyone to sell out and then sell at a premium. This is especially the case with properties two bedrooms or smaller. As early as September you should aim for a ten night holiday booking a good rate. If you truly have a unique property that can accommodate a large family, it’s worth overpricing the holiday season up until the end of the summer just in case you get lucky. After that, move the rates back to a reasonable price with your discounting rules set up to ensure people are booking for at least a week or paying a premium.
There will be a huge surge of demand coming through for New Years Eve about a week before the night. While you can make a lot with a one night minimum, you could lose just as much or more with the wrong guest. We never do one night minimum on New Years and recommend keeping it to at least a two night minimum (ideally three) and sell it in advance.
So there you have it. The short term rental market is booming in Ottawa and there is so much opportunity with the number of overnight travelers increasing quickly every year. We understand that some of what we’ve written may sound complicated or confusing, so feel free to reach out and we can answer any questions you have about Ottawa Airbnb Price Optimization.