Airbnb / Short Term Rental Revenue Management Strategies: Beyond the Basics

  • Posted on

If you're running an Airbnb or managing short-term rentals, you know that revenue management is crucial to your success. We'll explore some advanced strategies that can help you optimize your earnings. From capitalizing on early bookers to filling every date on your calendar, these techniques will boost your revenue and ensure a steady flow of bookings.


  1. Capitalize on Early Bookers - Larger groups tend to be more organized, willing to pay higher prices, and book further in advance. To attract these valuable guests, consider setting higher minimum nights and prices for your larger spaces. This strategy helps weed out the smaller bookings and allows you to capture more lucrative ones. Avoid pricing yourself too high, as it may deter potential guests, or too low, which can lead to missed revenue opportunities.
  2. Fill Every Date, No Matter What - Every vacant date represents a lost earning potential. To avoid this, be willing to adjust your prices strategically. Determine the lowest price you would accept to fill an open date and consider cutting it in half for last-minute bookings. While it may seem like a significant discount, earning something is better than nothing. By adopting this approach, you'll optimize your occupancy rate and maximize revenue throughout the year.
  3. Start Low, End High - It’s important to set your initial prices lower than you're comfortable with. This strategy helps improve your ranking on platforms like Airbnb and VRBO, increasing your visibility to potential guests. Over time, gradually increase your prices until you find the sweet spot that balances bookings and revenue. Starting with high prices and lowering them later can signal unpopularity to the platforms and result in fewer views and bookings.
  4. Sacrifice Dates - You may encounter periods of low booking activity. During these times, consider employing an aggressive price-slashing strategy to fill those dates. By intentionally reducing your prices, you can boost your listing's popularity and signal to Airbnb's algorithm that you're an affordable option. While you don't want to offer free stays, strategically offering discounts on predicted slow days can help improve your search ranking and attract more bookings.
  5. Bulk Price Gaps - Consider offering a discount and increasing minimum-night requirements to fill those unoccupied date gaps between bookings. For example, if you have a Monday through Wednesday gap and typically charge $100 per night with a 2-night minimum, you could lower the rate to $80 per night with a 3-night minimum. By doing so, you make your listing appear more affordable and secure bookings for all three nights, ultimately increasing your revenue.
  6. Occupancy Almost Always Beats Average Daily Rate (ADR) - While many hosts assume that higher prices result in more revenue, it's often not the case. In fact, maximizing occupancy can be more profitable. Instead of pricing each date at a premium, find the optimal price point that attracts bookings while maintaining high occupancy. Once you've secured as many bookings as possible, be prepared to slash prices aggressively to fill the remaining dates. Although this may lower your ADR, your overall revenue will increase significantly.

Let's Consider an Example for #6:

Scenario A: You set your prices at $350 per night and book 6 nights for the month.

ADR = $350

Occupancy = 20%

Earnings = $2100

Scenario B: You book those same 6 nights at $350, but you strategically lower the price for the remaining weekend to $250 for 2 nights. Additionally, you offer a last-minute weekday discount at $80 per night, resulting in 8 weekdays booked.

ADR = $202

Occupancy = 60%

Earnings = $3240


In Scenario B, you not only booked every weekend but also secured bookings for two weekdays each week. Although your ADR may appear much lower, your occupancy rate significantly increased, leading to a 50% growth in revenue. Instead of just covering your bills, you're now making a profit and maximizing your earning potential.


By implementing these advanced revenue management strategies, you can optimize your Airbnb or short-term rental business. Remember, it's essential to find the right balance between pricing and occupancy. Experiment with different approaches, monitor your results, and make adjustments accordingly. With careful planning and a proactive mindset, you can achieve long-term success in this competitive industry.