Setting the right price for your service accommodation property is not a one-time decision. Pricing can and should change weekly, even daily, based on demand, local events, competitor activity, and seasonal patterns. Static pricing costs thousands in missed revenue every year.
Dynamic pricing is the practice of adjusting nightly rates in real time based on demand signals. It is standard practice among professional operators and is one of the defining characteristics of a professional service accommodation business, as recognised by Airbnb itself.
The Case for Dynamic Pricing
A property in Portsmouth that charges GBP 120 per night year-round is leaving significant money on the table. During Victorious Festival weekend in August, the same property could command GBP 250 per night. On a quiet Tuesday in February, it might need to drop to GBP 80 to attract a booking.
Total revenue over the year matters more than the average nightly rate. A well-executed dynamic pricing strategy might mean lower rates on quiet nights, but significantly higher rates during peak periods, generating substantially more total revenue than fixed pricing.
Understanding Demand Drivers
To price effectively, you need to understand what drives demand in your area. For the South Coast, key demand drivers include:
– Events: Portsmouth Pride, Victorious Festival, Southsea Food Festival, boat shows, and university events
– Seasonality: Summer coastal tourism drives peak demand from June to September
– Weekday variation: Business travellers Monday to Thursday, leisure travellers Thursday to Monday
– Holidays: School holidays, bank holidays, and Christmas periods
– Local attractions: Historic Dockyard, Spinnaker Tower, Portsmouth FC matches, Isle of Wight ferry connections
A good dynamic pricing system accounts for all of these and adjusts rates accordingly.
How Dynamic Pricing Software Works
Dynamic pricing tools such as PriceLabs and AirDNA analyse millions of data points to recommend optimal rates. They consider:
– Your historical booking data and occupancy patterns
– Competitor pricing for similar properties in your area
– Local event calendars and seasonal trends
– Booking lead time (how far in advance guests typically book)
– Day of week and length of stay patterns
The software adjusts your rates on Airbnb and Booking.com automatically, ensuring your pricing reflects current market conditions without requiring manual intervention.
A Practical Pricing Framework
Even without software, can apply a structured approach to pricing.
Base rate: The minimum rate you charge on a quiet night. For a well-appointed one-bedroom flat in Portsmouth, this might be GBP 80 to GBP 100 per night. For a three-bedroom house near the seafront, GBP 120 to GBP 150.
Mid-tier rate: Your standard rate for regular periods. The same one-bedroom flat at GBP 120, the three-bedroom house at GBP 180.
Premium rate: Applied during high-demand periods. A weekend during a festival or event could see rates of GBP 200 for the flat and GBP 300 for the house.
Peak rate: Applied during exceptional demand. Championship matches, major concerts, or bank holiday weekends could command GBP 250 for the flat and GBP 400 for the house.
Review these rates weekly. If bookings are slow for the coming month, drop your mid-tier rate. If you are getting multiple booking requests for a specific week, test higher rates.
Seasonality on the South Coast
The South Coast has distinct seasonal patterns that directly affect pricing.
Summer (June to September): Peak season for coastal properties. Portsmouth Southsea, Isle of Wight, and Bournemouth see their highest demand. Premium and peak rates should apply for most of this period.
Autumn (October to November): Demand drops as the weather turns. Mid-tier and base rates dominate, with premium rates for half-term and Bonfire Night events.
Winter (December to February): Lowest demand for leisure, but Christmas and New Year periods command premium rates. Business travel in Portsmouth and Southampton provides a consistent floor.
Spring (March to May): Rising demand as weather improves. Easter commands peak rates. Mid-tier rates become the standard as the season progresses.
The London 90-Day Rule Impact
For London properties operating under the 90-day rule, dynamic pricing is even more critical. Every day matters when you have a limited number of operating days. Maximising revenue per available night through dynamic pricing can make the difference between a viable London SA operation and an uneconomic one.
While the South Coast does not have the 90-day rule, similar principles apply during peak seasons. Every summer weekend is an opportunity to maximise revenue.
Beyond Platform Pricing
Dynamic pricing should also apply to your minimum night stay requirements. During peak periods, enforce two or three-night minimums to attract higher-value bookings. During quiet periods, allow single-night bookings to fill gaps.
Consider length-of-stay discounts for weekly or monthly bookings. A 30-day corporate stay at a discounted rate can provide stable income that offsets quiet midweek periods.
Common Mistakes
Setting and forgetting. Dynamic pricing requires ongoing attention. Reviewing your rates once a quarter is not enough. Weekly reviews are the minimum for professional operators.
Pricing below the competition without reason. If you drop your rate to fill a booking, do so because the market supports it, not because you are afraid of empty nights. Dropping the price too far attracts less desirable guests and sets a low perceived value.
Ignoring platform fees. When setting your rate, remember that Airbnb and Booking.com take a percentage. Your target net rate should account for these fees.
Dynamic pricing is non-negotiable for professional service accommodation. Whether you use software or manual reviews, active pricing management will significantly improve your revenue performance.
Contact Xelox Properties today to arrange a no-obligation conversation about how we can help with your property investment goals.