After deciding to rent (or let) your vacation home, you must set your rates. There is no set formula or tried-and-true method to determine your rates when you rent by owner (i.e. manage your own vacation home without the use of a property manager). However, your rates will directly affect the number of inquiries and bookings that you receive from prospective guests. The key is not to price your vacation rental too high or too low relative to the other homes in your market.
To start the process of setting your rental rates, compare your home to the current short-term rentals in your area. Check the pricing of similar properties (i.e. condos, cabins, etc.) on major vacation rental portal sites, paying specific attention to which amenities the vacation homes offer and their proximity to tourist attractions. What are the typical weekly or nightly rates for similar properties? How does your home stack up? Also, measure your pricing against that of hotels and property management companies in your area.
Next, you need to determine your peak, shoulder, and off seasons. Most destinations have at least 12 peak or prime weeks. The peak seasons for most markets revolve around school calendars, so be sure to check the calendars for the areas within driving distance to get idea of what your peak season should be.
During the busiest months, many owners require a minimum stay of one week. During the shoulder or off season, attract weekend guests by lowering your minimum stay to 3 nights. Check your area’s short-term rental regulations if there is a mandated minimum stay.
Your rates need to be clear and organized. Many renters want to be able to determine the total cost for a specific week or increment of time. In markets primarily priced in weeks, many owners choose a nightly rate that is 1/5th to 1/6th of their weekly rate. And in markets primary priced by the night, owners often multiply the nightly rate by 5- or 6 to determine their weekly rate. Off-season monthly rates are generally the same as one peak week (i.e. if you rent for $1500 per week during the peak season, you’d charge $1500 per month during the off-season).
The key to pricing your vacation rental correctly is to constantly evolve with the changing market conditions and to make sure that your rates are fair and consistent compared to the other properties in your region.