Setting the correct price for your apartment, room, house or whichever establishment you decide to rent to the general public, is extremely important. Forgetting about certain overheads could leave you short for cash, or even in a position where you are experiencing a financial loss. We want to help you to avoid this and ensure you maximise your profits all year round!
Guide to Making Sure you Maximise your Revenue Profit All Year Round
As the owner of a rental property, your main goal should be to maximise your profits, but how do you do this without charging your tenants an absurd rental price?
The rent that you collect from tenants pays your mortgage, taxes, insurance, maintenance and building your reserve fund for bigger repairs. In the end, after paying all of the expenses associated with the property, you hope to have money left over to compensate you for your time.
T-o-y over location
The heavy emphasis over location overpowers another factor which is equally, if not, more important than this: TIME.
Time Of Year is a crucial variable when setting the price of your establishment, because, it could either refer to a minimum stay period(s), seasonal fluctuations and even check-in & check-out times.
Rental prices are heavily influenced by the seasonal changes in weather, temperature and of course, things to do in and around the city of choice. In Spain especially, we know that during the summer period, we see an increase in demand because children in education break up for summer, parents take holiday for their children, students in university finish for the year, and generally, the weather begins to soar during these months.
In terms of international tourist arrivals, Spain is the second favourite holiday destination after France, with a global market share of approx. 7%. The country has a high proportion of foreign visitors (2006: 59%). The tourism sector, with its very high proportion of GDP – currently about 17% – makes a considerable contribution to Spain’s economy.
Overall, around 100,000 international tourists visit Spain each year, the majority arriving from other Western European countries. Behind the United Kingdom, France and Germany make up the leading three inbound markets for tourism in Spain and with temperatures reaching an average of 35 degrees in summer, it is no surprise why.
Keeping up with current events
In Barcelona, there are many events taking place throughout the year. People from near and far will travel to be part of the festivities, so you must plan ahead. Big concerts, festivals and cultural activities are 3 of the biggest reasons people may travel to the city for a particular time.
When the Mobile World Congress was taking place, did you check your competitors’ rental prices? It is one of the biggest professional events that takes place in Barcelona and invites people from all around the world. The nightly prices for apartments and hotels were almost double than the average due to a high increase in demand; it is a great opportunity to create a large profit margin and an even better time to advertise your property.
Moreover, current affairs such as political events, or events that drive away demand are also important. You should consistently check your competitor’s prices in order to understand how they are interpreting the news and whether it is affecting their rental demand.
This is easy to see:
- Low Prices = Low Demand
- High Prices = High Demand
Find out more about factors that influence demand by downloading our guide here.