Should you cut your rental prices?
Due to Coronavirus, I suspect that most of my users will be considering cutting prices of rentals to get customers back on board, but I think that that's a mistake.
The pricing structure of most rentals, both multiroom properties like hotels, bed and breakfasts or whole building rentals like apartments and villas is based around your ongoing costs. While it will be tempting to cut prices to stimulate rentals in the short-term, in the longer term that will come back to haunt you.
The affects of Covid-19 will be with us for several years to come. We all have creditors we have to satisfy to keep our families fed, clothed and housed, and cutting rates now will make that much harder unless you were operating at a high profit margin before Coronavirus hit. Whenever prices are cut, customers become used to the "new normal" prices and will not look kindly when prices are raised again in the future. This will put you in a very difficult position, six months or a year into the future.
Instead, I believe that the smart thing to do right now is to offer extra value to your bookings. For example, offer a substantial discount voucher if they choose to rebook in a year's time, or transfers from the airport in well-sanitised transport. If you offer a four bedroom property, don't be tempted to try to undercut the three bedroom property down the road. If you are a three star hotel, don't compete with the two star hotel around the corner.
Another thing you should be doing, right now, is getting in touch with past customers and assuring them that you're still in business. Let them know what your plans are for the future. How you're adjusting your cleaning strategy for example. Business travellers will be the first out of the gates when travel starts up again in ernest, once they show the wider world that travel is safe then pent-up leisure guests, locked down for months on end, will be itching to spread their wings. Make sure that you're focussing your efforts on attracting these people first.
Cutting rates now will have far reaching effects. It's a knee jerk, instinctive reaction to a sudden loss of sales (I know, I've been there myself) but I firmly believe that cutting your prices now will hurt yourself a lot more in the future. My advice is to hold your nerve, find other ways to enrich your guest's stays. Visitors will come back, in time, make sure you're there to welcome them.
"This too, shall pass."
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