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Business aficionados get benefits from the psychology of pricing. Nothing entices vacation rental customers more than offering discounts on Airbnb. In this article, rental owners and guests may get to know the benefits of discounts on AirBNB.

Why Discounts Work on AirBNB

Many times, we may have heard the saying “you need to spend money to make money”. This applies in the same way for short-term rentals. By offering a discount on your prices, in actuality, you are making more money. This is because without said discount, you lose the ability to secure that booking at all. 

Most rental experts urge the need for urgency as one of the reasons that discounts work well. By introducing the fear of missing out, customers get motivated and act in a quick way. This makes sure that they get financial benefits from the limited-time offer . 

The Benefits of Offering Discounts

Almost every guest likes to receive the benefits at a discounted price. Otherwise, they will miss out on saving some money. So that is the reason there is urgency involved and why discounts work. Following are some benefits that rental owners get for providing discounts:

Boost the Sales

Offering discounts can give you a very quick boost in sales. By offering a limited-time discount to your guests, you encourage them to book sooner rather than later. 

Grabbing New Customers

Offering discounts allows you to attract new customers. In the vacation rental spots, new customers are important. It helps you in running your business on returning customers along with new customers. But, relying only on repeat customers doesn’t help you in getting enough bookings. So, attracting new customers with captivate discount offers helps you in filling up the rental calendar.

More Reach

By giving discounts to your guests you can also extend your reach. Most rental owners want to attract guests from a specific market segment. This includes groups of guests who are budget-conscious travelers, young professionals, or families. So, offering a discount to such guests can serve to extend that target group.

Decreasing prices as a promotion deal allows your guests to pay your discount prices. This helps them to access your offering rather than normal prices.

The Drawbacks of Offering Discounts

In the hospitality industry, hosts fear some disadvantages when relying on discounts. Every vacation rental owner focuses on the reputation of the brand. Discount offers let your guests make a habit of “waiting” for discounts before purchasing. Short-term rentals pose the risk of getting into a price war competition. Following are the drawbacks of giving discounts on rental properties.

• We can hear many strong voices in most rental owners that stand against discounts. They dismiss them as ineffective. Many vacation rental hosts worry that discounts devalue the rental’s image within the marketplace.
• Many rental hosts believe that it’s an alarming signal to the guest that our property is inferior to our competitors. This makes your target guests suspicious of our property’s quality. They can have the opposite effect to what you would expect. 
• Discounts cut into your earnings, which makes many hosts unwilling to offer them. This happens in times when the business world is still recovering from the pandemic.

What Types of Airbnb Discounts Should We Offer?

Airbnb offers five types of promotions to its guests eager for bookings:

• Custom Promotion
• New Hosting Promotion
• Last Minute Discount
• Early Bird Discount
• Length of Stay Discount

Let’s take a look at each one of the discounted offers in detail:

1. Last-Minute Airbnb Discounts

Last-Minute Airbnb discount allows your guests for book stays a few days before check-in. It is a discounted booking offer. With this discount offer, guests will not aim for planning weeks or months ahead. This situation happened because of pandemic restrictions which made travel plans more unsure. DPGO settings will reduce your booking prices by a percentage which lets you set ahead of time on the interface.

2. Custom Promotion

The custom promotion can help in building a promotion with your preferred discount and travel dates. Depending on the discount you offer which fit your goals and market conditions. Your listing will enjoy several merchandising features in the Airbnb search results. This includes strike-through pricing and “new lower price” tagging. The merchandising “perks” increase with a 25 % higher discount will get your listing exposure in Airbnb’s email campaigns. While a 10% discount provides you strike-through pricing in the search results.

3. New Hosting Promotion

Managing a brand new listing offers you the advantage of Airbnb’s “new hosting promotion.” It is a 20% discount for the first three guests who book the rental property place in the next 30 days. You can opt in to this promotion with the help of Vrbo. It offers a similar “new hosting promotion”, so you can increase your visibility on many channels. Offering new hosting promotions is a great way to stay competitive and target guests. This allows them to stay for up to several months. Nowadays, “80% of hosts now accept longer term stays. Around half of Airbnb’s active listings are serving guests a discount on stays of one month or more.

New Hosting Promotion is one type of discount which gives guests more confidence. When guests are booking a new listing, this helps you as a host, you get your first few reviews. After earning three guest reviews, your listing will show its guest review score in the search results of AirBnB. Airbnb’s statistics suggest that hosts applying for the 20% new hosting promotion see a 30% decrease in time to get their first booking.

4. Early Bird Discount

Last minute discount is the opposite of an early bird discount. It provides your guests an incentive to book further in advance. The early bird discount is available in the “Pricing” tab of AirBnB. It does not offer a discount within a specific period close to the arrival date. But, the early bird discount is open for the guests who book before a certain window. You can choose a fixed amount for your discount. Also, you can specify a window of time from one to 36 months before you arrive. You also have the option to add many discount tiers for different time frames.

5. Length of Stay Discount

Length of Stay discount is the fifth type of discount available on the “Pricing” tab. The popular length of stay discounts that this discount offer provides are weekly and monthly discounts. Although you have the option to specify your own custom length of stay too. Guests may receive these discounts only if they book a rental property for the desired amount of nights. You can set many lengths of stay tiers with different discounts for types of stays that suit your needs. It is possible that you can set a weekly discount, a bi-weekly discount, a monthly discount or a 3-month discount.

Conclusion

Almost every sort of business offers discounts which is no denying the impact they can have on sales. That’s why vacation rental owners also sometimes offer low-price. But, keep this very clear that discounts may shrink your margins when you do it too often. Manytimes, it may give a negative perception of your rental property. Discounts can take your rental business at the next level to attract all types of guests. Whether you want to target budget-conscious travelers, business travelers, families or couples. Many of them are adventure seekers and offering a discount can serve to extend that target group. Decreasing prices are the limited promotion that lets you allow guests to pay your discounted prices to access your offering.