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Beyond Price: Restrictions, OTA's, and Derived Prices


Restrictions, OTAs, Derived Prices

Owning a tourist accommodation can be a fulfilling and profitable endeavor, but paying attention to more than just the price is important. As a host, there are many factors that can impact your success, including restrictions, OTA's, and derived prices per occupancy. In this article, we'll delve into these details to help you make informed decisions about your investment.


Restrictions


Before buying a tourist accommodation, it's important to understand any restrictions that may apply. Depending on the location, zoning laws or rules may limit how you can use the property and short-term rentals regulations.


Additionally, if you plan to rent out your property through OTAs like Airbnb or Booking.com, you'll also need to adhere to their policies. These platforms often have their own set of rules and restrictions, including minimum stay requirements and guidelines for listing your property.


It's important to research these restrictions carefully and ensure that you're able to comply with them before making a purchase.


OTA's


As mentioned, OTAs can be a great way to advertise your tourist accommodation and reach a wider audience of potential guests. However, it's important to understand the costs associated with using these platforms.


Most OTAs charge a commission on each booking, which can range from 3% to 15% or more depending on the platform and the specifics of your listing. Additionally, some platforms may charge additional fees for services like payment processing or insurance.


When considering using an OTA to market your tourist accommodation, it's important to do your research and compare the costs across different platforms. While some may offer lower commission rates, they may also have lower levels of traffic or less robust marketing tools. It's important to weigh these factors against each other to determine the best fit for your property.


Derived Prices per Occupancy


Finally, it's important to understand how occupancy impacts the pricing of your tourist accommodation. Most OTAs and booking platforms use dynamic pricing algorithms to adjust rates based on supply and demand and other factors like seasonality and local events.


However, it's also important to consider how the number of guests impacts your pricing. Many platforms allow you to set different rates for different numbers of guests, which can help you maximize your earnings. For example, you may charge a higher nightly rate for two guests than you would for one, or a higher rate for four guests than you would for three.


While dynamic pricing algorithms can be a useful tool for setting rates, it's important to remember that they don't always take into account the nuances of your specific property or local market. A revenue manager has a unique understanding of the value of your property and the demand in your area, which can allow you to make more strategic pricing decisions than an algorithm alone.


For example, you may know that your property is particularly desirable during certain times of the year or for specific types of travelers. By adjusting your rates manually based on these insights, you can maximise your earnings and take advantage of these opportunities.


It's important to carefully consider these factors when setting your rates and monitor your pricing regularly to ensure that you're staying competitive in the market. Additionally, it's important to communicate clearly with guests about the rates for different occupancy levels to avoid any confusion or surprises.


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