How do we fill your property’s revenue through dynamic pricing?

img jessica s. | November 25, 2022

Hi partners! Allow me to introduce myself. My name is Jessica, a Business Analyst and Revenue Management Specialist at Bukit Vista. I’ve done analysis and optimization over 100 times, bringing in 100+ millions of additional revenue value through dynamic pricing. Other than that, I studied at César Ritz Colleges Switzerland & Washington State University in hospitality business management.

Some of you may know me already, as I often communicate with partners about your property’s pricing and performance. I am writing this blog for all of you, as an introduction to what the Dynamic Pricing team does daily. Through my blogs, I would love to answer all your key questions and provide a better understanding.

What is Dynamic Pricing Management?

Dynamic pricing is a strategy where businesses adjust the prices of their offerings to account for changing demand, which use flexible instead the fixed price. The goal is to get the right price, at the right time.
 

Why do we use a dynamic pricing strategy? 

  1. Optimized Revenue: Dynamic pricing allows the company to adjust rental rates in real time based on various factors such as demand, seasonality, local events, and market trends. This optimization leads to higher revenues by charging higher prices during periods of high demand and adjusting prices during low-demand periods to attract more guests.

  2. Competitive Edge: Dynamic pricing enables the company to stay competitive by adjusting its rates to match or outperform competitors’ pricing. This helps attract more bookings and maintain a steady stream of occupancy.

  3. Maximized Occupancy: By offering lower prices during off-peak times, the company can increase occupancy rates and minimize the number of vacant properties. This maximizes the overall revenue potential of the rental portfolio.

  4. Real-Time Adaptability: Dynamic pricing allows the company to adapt quickly to changing market conditions, such as sudden spikes in demand due to special events or unforeseen circumstances. This agility helps capture additional revenue opportunities.

  5. Data-Driven Insights: Implementing a dynamic pricing strategy involves analyzing data from various sources, such as historical booking patterns, competitor rates, and local events. This process provides valuable insights that can inform pricing decisions and marketing strategies.

How do we analyze your property in order to decide the best pricing strategy?

The Revenue Management team at Bukit Vista monitors your property performance frequently and utilizes dynamic pricing as a strategy to have your property occupied. Each property is assigned to a pricing specialist and follows an inspection schedule on a weekly basis. Have you ever wondered how we analyze your property and arrive at specific pricing strategies to improve your property’s performance? Let’s find out more!

1. Set lower price for the first month of launching

Lowering price with ‘New Property Discount’ can capture guests’ attention to make a stable booking pace and collected many reviews.

The discount range is approximately 20% – 30% from the intended price at that time. The price will be gradually increased as booking performance improves.

2. Adjust price with flexibility

Flexible price (adjust lower or higher than 40% from the base price) to have an occupancy rate of more than 60% each month.
last minute

3. Lower price on nearly expired dates

Lower price on nearly expired dates (last minute discount) and unsold gap nights up to 25% compared to regular price.
increase price

4. Increasing prices when the booking pace is too fast

The booking pace of a property indicates its demand in the market. When the property’s occupancy rate approaches 50% for the next month, it’s advisable to raise prices.

This is because the property is considered high demand and has the potential for higher pricing.
length of stay

5. Adjust price according to length of stay

Lowering rates up to 30% than daily rates can help sell off gap nights. We can also implement standard inclusions for long-term stays, such as linen replacement schedules, electricity usage limits that can help control expenses.
bukit vista handle

6. Leave the rest of it to Bukit Vista

Let Bukit Vista manage all inquiries received from your side to convert them into bookings.

All the different kinds of data we use to analyze your property and make strategical pricing decisions

Revenue
Money generated from room sales, calculated on a monthly basis. This is what we aim to optimize for each property.
Occupancy
How much of the property’s available rooms were sold during a period of time. We measure this monthly and in percentage amount.
Availability
How much more nights is still open and can be booked in the current calendar. Ideally, we want a property that is flexible on availability.
ADR
The Average Daily Rate is the average rental revenue earned for an occupied room per day. The ADR measures the success of the property’s operating performance.
Booking Window
The time between a customer booking a room and that customer checking in at the property for their stay.
Runway
The number of calendar days left between the current date and the next targeted date, for example a gap night that would like to be optimized.
RevPAR
Revenue generated per available room is an indication of the property’s revenue generating performance.
Competitors’ pricing
one property could be in higher demand compared to others, and as revenue management specialists, we must stay aware of other competitors’ pricing strategy.
Length of Stay
Most common duration of stay booked by guests. This helps us decide if we want to opt for a length of stay discount strategy, if we see that a certain LoS is booked more frequently than others.
Booking pace
The rate at which reservations are made, which is measured daily. And the gap between one booking received to another. The higher the rank of a property in OTAs, the higher the booking pace should be.
Review & Ratings
Collected from guests who rate and leave messages on their stay experience. A higher review score means higher hospitality from the property, which then prompts us to raise prices in order to match its value, and vice versa.
Owners block & Maintenance
Manual blocks on the calendar can lower booking pace performance, necessitating a readjustment of prices.

What are the pricing strategies we could settle on

In Dynamic Pricing, there are different pricing strategies we could adopt. Most of the time, we like to do pricing experiments to test out certain strategies and monitor the success rates. One of the most extreme strategies would be changes in the base price, which could either go higher or lower depending on your property’s performance. There are also gap nights and nearly expired dates, which most likely will trigger a price drop to attract last-minute bookers. In more stable times, we could also just play around with the discount setting and adjust things like weekly, monthly, length of stay, early bird, and last-minute discounts.
 

How partners can contribute towards our successes?

In order to achieve greater success, the support of our partners is also crucial to the Revenue Management team. We need your help to:
  • Keep your calendar open to increase availability
  • Trust Bukit Vista to optimize your property through dynamic pricing
  • Enhance our team’s visibility toward your property’s operational cost to understand our price boundaries better

Previous property performance

  • Property X
    One of our guesthouse properties located in Canggu, previously only allocated 5 rooms for Bukit Vista to manage, up to August 2022. Early in September, they decided to pause the partnership due to some internal ownership issues. When they chose to resume back in early October and gave us a full 10-room allocation, they knew they made the best decision because their booking pace went up quickly and their revenue doubled in that month itself.
  • Property Y
    One of our long-term partner property in Padang-Padang, have been performing really well until now. This guesthouse with 6 unique rooms can generate a consistent 8K dollars a month, for 4 months consecutively. Despite an off-season in November, their performance is still well above market standards.
  • Property Z
    This is revenue from a 3-bedroom villa in Ungasan. Their performance has been going up steadily since July up to now. Their nightly rates are also increasing as we monitor better performance in this property over time. This is a result of the owner fully trusting Bukit Vista to manage their property.
I hope you’ve found this article useful and gives you a better idea of what we do in dynamic pricing. As existing partners, if you have any questions related to your property, feel free to reach out. For newcomers, if you have a stunning property and are interested in our property management services, feel free to contact a representative of our Bukit Vista team. We provide free consultation and revenue projections.
See you in the next post!

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