Whether it is Smart Host, another startup or one of the established players, the short-term rental industry is ripe for disruption in so many areas and someone is going to deliver on the dynamic pricing premise.
Travel startup Smart Host is attempting to bring a dose of hotel and airline pricing methodologies — namely pricing based on ever-changing demand — to the vacation rental industry.
Co-founder and CEO Evan Hammer says the Techstars startup, which plans on presenting its solution in Austin September 3 and beginning a beta with several property management companies, is aggregating all sorts of pricing, booking and events’ data from public and private sources to enable property managers and vacation rental owners to take advantage of dynamic pricing based on expected demand and market conditions.
While hotels and airlines may alter their pricing several times daily, vacation rental owners and property managers are way behind the curve on dynamic pricing, Hammer says.
“Collecting data is a difficult challenge,” Hammer says. “It is easy to get pricing wrong.”
Hammer says that vacation rental managers and owners may currently use reservations’ software such as Escapia or InstaManager, but these solutions don’t provide or emphasize pricing.
While vacation rental owners and managers may know that there is a big conference or event coming into their markets, they may not have the tools to quickly change their pricing based on smaller events or pricing changes by hotels or other competitors, Hammer says.
In the Smart Host beta, the startup will use the data it has aggregated to provide recommended prices, and plans on showing, for example, that Smart Host is 75% or 90% confident that the vacation rental will attract a booking at a particular rate, Hammer says.
Smart Host was co-founded in March by Hammer, Nick Persico and Dave Redding. Hammer and Redding are software engineers and Persico has experience in sales.
“Smart Host is one of the many players trying to slice off a section of the overall vacation rental platform/ecosystem,” says T.J. Clark, co-founder and CEO of TurnKey Vacation Rentals, which provides management solutions to vacation rental owners. “It is true that 99% of vacation rental pricing is quite static and suboptimized compared to hotel-style dynamic management.”
Another startup working on dynamic pricing for vacation rentals is RateCoaster, which offers a rate-management engine to enable property managers and vacation rental owners adjust their rates based on business intelligence and changing market conditions.
“We’ve successfully [done a] beta, deployed and have active users that are seeing huge increases in revenue by using the platform,” says RateCoaster co-founder Eric Mason. “We’ve got successful two-way interfaces in place with several property management systems, allowing data to flow into RateCoaster and the RateCoaster rate to be published back to the PMS so properties are being properly positioned in real-time based on demand factors.”
Skift hasn’t seen the Smart Host beta so can’t opine on how well Smart Host may execute on its vision, but there certainly is plenty of room for pricing innovation in short-term rentals.
Smart Host and RateCoaster will face numerous challenges.
Among them, can it collect and analyze the data it would need at scale to provide a viable solution?
How specific can it get its pricing recommendations based on neighborhood, street and even individual vacation rental unit?
How big a market is there for dynamic pricing for vacation rentals, or are vacation rental owners and property managers seeking more comprehensive solutions, including pricing, marketing and reservations’ management?
Many vacation rentals aren’t even online so how ready are these owners for dynamic pricing?
Smart Host, which has been eligible to receive the $118,000 in seed investment that comes with acceptance in Techstars, will begin its journey in earnest next week and start to answer some of these strategic questions when it debuts its beta.
Photo credit: Smart Host co-founders (from left to right) Dave Redding, Nick Persico and Evan Hammer were set to present their solutions at Techstars in Austin September 3. Smart Host