High-low season and how it affects Marbella rental earnings
One of the most important things to do when you put your property on the holiday rental market is setting the right price – and understanding how the seasonal variations work.
Once your second home is ready to rent out, the next important step is to set the price. In the tourist industry this is often called the Average Daily Rate (ADR), to which you can also add a weekly rate, for people who book the property for longer stays.
To determine the ADR, you have to bear two things in mind: 1) the seasonal variations, and 2) how your property compares with other similar ones. In other words, to compete successfully you will not want to set your price much above those of similar alternatives, while also not wanting to drop too far below.
Remember that optimal income from holiday rentals comes from the combination of two factors: a good rate and optimal occupancy. Combined they produce the best returns, so when the price is just right and your location and marketing are good, you will also enjoy high occupancy.
Benchmarking
Studying the price of nearby and similar spec properties is a research exercise called benchmarking, and it will give you a clear idea of the pricing range within which you can work. Firstly, compare your property with similar ones in the broader area, and see what they charge, then do the same with regard to properties in your location, focusing on similar ones.
Once you know what a same spec holiday home in your area goes for, you’re ready to set your price, but now you also have to bear the seasonal variations in mind. Different destinations have different high and low seasons. For ski resorts winter is high, summer low – for beach resorts like the Costa del Sol it is the other way around, for city destinations the variation tends to be lower, and in areas with attractions such as golf it runs from September to May.
Knowing when there are holidays and school holidays in your main markets also helps to adjust prices effectively. For a Marbella property it would be July to September absolute high summer season, and the rest of the year lower season, as there no longer is a ‘dead’ part of year. Within the lower season, the periods closer to summer (September and May-June) enjoy a mid-level, and there are also seasonal holiday-based peaks such as Christmas and Easter to bear in mind, as well as the fact that you may have to offer some incentives in January and February.
With the above and good marketing in mind, you’re ready to start earning.