(C1a) Pricing essentials for your listings

• The total cost for a booking is determined by the following 5 variables

1. Daily rate
2. Cleaning fee
3. Additional guest fee
4. Platform service fee
5. Occupancy tax

• Platform fees (paid by both the guests and the host) and occupancy tax (paid by the guests only) are retained by the platform and not delivered to the host.  These 2 items (tax and service fees) may amount to 20% to 35% of the total cost for a booking paid by the guests; a very significant figure. Note that occupancy tax is waived if the booking is longer than a certain number of days (typically 30 days).

• The host can use the above 5 variables to skillfully fine tune the total cost of a booking for the guests to maximize revenue.

• We have developed an Integrated Dynamic Pricing (IDP) system to better price listings and to achieve higher profit.

• The IDP system starts with a good design of physical properties.  It is then followed by a systematic naming convention to achieve efficiency through organization.

• It then uses an intelligent and effective approach to blend both expert information known by the host and software generated dynamic prices.  This system can be easily implemented and executed. It is effective and easy to use, and produce the listing rate near the optimal price. You may view our IDP system as an intelligent dynamic pricing system.

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• Many factors affect "search ranking" of a listing. Listing rate (price) is just one of the factors.  Price is important as the guest may use it to make the final decision. Other factors such as the quality of photos, number of reviews, guest ratings, response time, instant booking activation, and cancellation policy may also affect search ranking of a listing. You want to be in the first page of the displayed listings.

• Always answer guest's initial inquiry, even if it is a spam inquiry since the Airbnb/VRBO computer system may not treat it as a spam message. If you do not respond to a message, it counts against the host's response rate very badly.

• Listing price can be set based on the cost of the listing or the demand of the listing. In the end, it is all determined by demand.

• A listing is either rented out (sold) or not (vacant).  The loss function (penalty) for a vacant listing is much higher than a listing booked at a lower rate. The loss functions for these two types of errors are very non-symmetric. 

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• Does the hosts need PMS, channel manager, or dynamic pricing tools? Both Airbnb and VRBO portals provide extensive capabilities beyond any typical PMS.  It is unlikely that a big and clumsy PMS will further enhance your efficiency or productively. Airbnb and VRBO are the top platformers in the short-term rental market and have their own well-established channels.  Dynamic pricing services are smaller tools that are more likely to be beneficial to the hosts.

• It is useful to note that Airbnb no longer updates calendar information instantaneously (or real-time).  Sometimes the delay could take several hours depending on the nature of the modification. Listing rates sent by dynamic pricing services are not updated immediately and may have significant delays. 

• Listing prices are typically updated once a day by the pricing service providers. The information is then sent to Airbnb/VRBO according to a preset schedule.

• Pricing services advise the host not to take their eyes off the generated prices and provide an "override" feature as a necessary enhancement.

• Changing the listing rates manually improves the search ranking of the listings in your service.

• For software tools, less is more and simpler is better (generally speaking).

• Our IDP approach is easy to implement, and avoids many complications associated with generalized dynamic pricing tools.

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• There are many reasons that you need a backup for each of your listings (it is just like you need a spare key for each of your cars). The backup listings can be blocked out if overbooking is a concern. 

• Your service platform does not encourage you to have a backup listing, but they do allow you to duplicate a listing.  You can block out the duplicate listing after it is created.  Duplication of a listing under Airbnb/VRBO does not create a carbon copy of the original listing.  Some key information may not be duplicated and needs to be added after the initial duplication. As an example, The cleaning fee is initialize to $0 and must be altered to the actual cleaning fee.

• Your listing is blocked by your platform for 24 hours when the guest is in the status of "Awaiting ID", "Awaiting payment', and alike.

• If the guest did not follow the proper alteration procedure (e.g., the guest left your premise early or failed to show), your listing will not be available for booking on the platform.

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• VRBO and most PMS can only display price/availability information one listing at a time. When you have more than one listing, it is more effective to display price/availability in a multi-calendar format (i.e., listings by dates).

• Multi-calendar display is very convenient and can be made into a powerful tool. If your platform already has it (e.g., Airbnb), you should take advantage of it. We use the multi-calendar feature for various management and analysis tasks.

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• It is important to have a systematic way to name the the listings in your hosting service. With a good naming convention, a lot of tasks/management/analysis can be accomplished more effectively. It is all about names.

• A good naming system is also the basis for the IDP strategy.

• There are many ways to improve the overall rating of reviews in your hosting service. A good naming system is one of them, and it costs almost nothing if a right approach is started at the early stage of your service.

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• You may allow for Instant booking or Request booking for a listing.

• Listing with Instant booking has a higher search ranking on Airbnb/VRBO. It also reduces the amount of communication, a lot of advantages.

• Request booking is a very useful supplementary booking method and can be used in conjunction with Instant booking.

• In the IDP strategy, both booking methods are used.

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• The issue of overbooking is over exaggerated. Some software tools or services emphasize strongly that their capability avoids overbooking.  Is overbooking is really such a big problem? Yes, it is a big problem if you have no plan to begin with, but with an appropriate plan it has advantages.

• In our booking and operation management, we have a unique and comprehensive approach to address overbooking related issues.

•  A listing could be suspended (5 to 30 days days or longer) for a number of reasons.  One of them is due to the overall review rating over the last 365 days dropped. It is important for the host to plan ahead if it occurs.

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• Your platforms may offer you a wide range of cancellation policies in case a booking is cancelled by a guest.  The variations of these cancellation policies may make you feel plenty confused.  To the host, there is only one good policy, that is the Strict Policy (particularly in high season). This policy allows you to have certainty for planning.

• The host can still provide a refund to the guest under the Strict Policy, but this is purely as the courtesy from the host.  The host has no obligation to offer a refund unless there is aa accuracy issue in the listing.

• Strict policy may lower your search ranking on the platform (as a penalty from Airbnb/VRBO). The hosts want to keep this in mind during off season with lower demand.

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• Cost (intrinsic price), historical data, market data, future data, trend, seasonality, weekend/weekday, holidays/special events, orphan days are factors in setting the daily price of a listing.

• No simple answers to price your listings. The IDP strategy provides an easy and effective solution for pricing listings.

• Pricing and reverse pricing can be used jointly to increase profit.

• Below is an article provided by Airbnb on "How search work", an useful article to review

https://www.airbnb.com/resources/hosting-homes/a/how-search-works-on-airbnb-460

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None currently

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• Upgrade and alteration can be used to addressed many issues.

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