Home » Holiday lets » Discounting Unrented Weeks. Smart Way to Maximise Occupancy? Or Invitation For Bad Tenants?

We asked Kevin Riedel,

Discounting unrented weeks. Smart way to maximise occupancy? Or invitation for bad tenants?

Here’s Kevin’s take on this – It happens to everyone. Despite your best marketing efforts, you get a week during a peak time that just won’t sell.  As the date gets closer, you have to decide what to do. To reduce or not to reduce, that is the question. Yeah, I just got a little Shakespeare on you. Let’s carry on now…


First, let’s consider reducing your rate.


Time in a vacation rental is 100% perishable.

Think about that for a second…
If a day in a vacation property doesn’t sell, it’s gone forever.
Vacation home owners don’t have the luxury of tangible products like retailers. If a product sits in a store for too long, a retailer can gradually drop a price until the product sells. Someone will eventually snap it up. Even expired fruit can be eaten the next day.
Cut off the mould, and you’re good to go. Well, maybe not.
But you get the point. So when vacation home owners have holes in their calendars during peak seasons, many choose to lower rates in order to keep occupancy maximized. This usually happens at the last minute – three to four weeks out from the rental date.  Most owners offer discounts in the 10-20% range. And renters love these last minute deals. Even if a renter saves just $200 on a rental, that’s $200 more to spend in the vacation fun fund (say that five time fast).

All in all, lowering rates to help sell unrented weeks is good business sense.


Or is it?


There are many owners who refuse to lower rates, no matter what the circumstance.
I’ve talked to some owners who say lowering rates attracts lower quality renters who are careless and disrespectful to the homes. These owners say it’s not worth it to take a hit on rental income just to get someone in the door who will be rough on the property.
Think about it… You’ll be getting less income AND a renter who abuses your home.

Who wants that?


What about your repeat renters?


Another interesting angle I’ve heard is that some homeowners don’t want to be unfair to their valued regulars. To illustrate… imagine you have a repeat renter who rents for $3,000 per week in peak season, how would your repeat renter feel if he/she found out you rented the very next week (still in peak season) to someone else for $2,500? Not good.
Your repeat renters are the last people you want to anger.


What do you think?


What do you think
So what’s your stance on last-minute rentals?
Lower your rates to get the sale? Or hold your ground and get what your property is truly worth?
Please share your thoughts and experiences in the comment section below.

 


 Kevin and I would love to hear your views. Please use the comments section below to share your thoughts.

12 thoughts on “Discounting Unrented Weeks. Smart Way to Maximise Occupancy? Or Invitation For Bad Tenants?

  1. In High Season we NEVER discount. We have 13 apartments in total and, as we have a flexible changeover day, there are often ‘holes’ in the calendar. But we use the time to do repairs, clean thoroughly etc, which if you have a full calendar, doesn’t get done till the end of the season. That way the apartments don’t get ‘tacky’ by September.
    I also agree with the point about our repeat guests, and with the ‘abusive’ guests comment. There are always people who just don’t care what damage they do!

    1. Alan Egan says:

      Thanks for that Felicity, it’s good to see all of these various takes on the situation.

  2. During peak season, I do not discount unless the arrival is less than a week out AND we won’t be using the days ourselves. For off season, I will discount a little if arrival is two weeks out.

    Generally, we don’t normally have a lot of last minute guests since we usually host groups of 8-16 people, and it is difficult to have large groups able to coordinate in a very short period of time.

    As for any comments about why one guest might get a better rate to fill a hole, I look at it as the first one received the benefit of choosing the exact dates they wanted. The discounted time is the “leftover” stay during a less desirable period of dates.

    Great subject, Kevin and Alan!

    1. Alan Egan says:

      Thanks for your imput Tyann and thanks for your positive feedback.
      best of luck

  3. Joe says:

    I’m in this situation right now. I have 3 weeks open in between very full times at the beginning & end of the high season. I have discounts published all over the internet. I don’t think I’d discount it like this again. It hasn’t got me any good inquiries or bookings.
    I gave a group of 3-4 people 2 of those weeks for half price, and let them do a cash deal, and now they are trying to weasel out of it. I think they’ll pay, and be respectful of the property, but he has wasted a lot of my time, which I could have used to get creative & specific marketing it at the last minute. I figured the alternative for the first half of March at short notice would be spring breakers, and I’d rather close (or rent it cheap) and go travel than take a risk with those kids.

    1. Alan Egan says:

      It’s always tricky Joe. I hope it works out well for you

  4. Maria Rekrut says:

    Good article and great food for thought Alan and Kevin.

    I’m going to try the 2 websites you’ve suggested and I’ll let you know what happens.

  5. RJ Carey says:

    My theory is a bird in the hand is worth to in the bush. Some income is better than none. As long as you use good judgement and screen the people and their situations then you will have a good experience. Also when I offer people deals I give them the contingency that they have to pay the full rental fee upon booking.

    1. Alan Egan says:

      I’m on your bus RJ. I think this business is all about yearly income not weekly rates.

      Also when I offer people deals I give them the contingency that they have to pay the full rental fee upon booking.

      I like that idea

  6. Mike Pratt says:

    I’m a property manager with 3 vacation rental homes. I advertise and price very aggressively to try and fill my reservation calendars at full price well in advance. As I get close to unreserved dates I drastically discount them. The combination helps me post great monthly, seasonal and annual numbers. As for bad renters, I put a hefty hold on a major credit card for the security deposit. Last minute renters do tend to be a little bit messier but the extra money adds up at the end of the year.
    Great topic, nice website.

    1. Alan Egan says:

      Thanks for your comments Mike, it’s always good to hear how others operate. Glad you like the website, that makes all the work worthwhile.

  7. We generally do not discount during peak season unless we have a cancellation which tends to be in the last 4-5 weeks before arrival. When that happens we discount 20-30% immediately to try to fill the vacancy. This is always hard with only a month to find a replacement guest. It is hard because Cairns is a long way from our customers who are in Brisbane,Sydney,Melbourne etc. Holiday home bookings are very much driven by the cost and availability of flights to Cairns and flights at the last minute are usually expensive. I think it is well worth emailing previous customers who have paid peak season prices before and offer them a 25% discount with the reason offered that there has been a last minute cancellation.

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