Expedia is one of the most recognizable brands in online travel booking, and a valuable channel for hoteliers and VRMs alike. While they don’t have the same vacation rental market share as Airbnb or Booking.com, their reach is significant enough to warrant your attention.
The company has also been very friendly to the vacation rental industry, designating a standout section of their site and making efforts to improve their presence. This includes welcoming VRBO & HomeAway to the Expedia group.
Before you head over there and start your listing, there’s a couple things you should know about their pricing options though. They do things slightly differently..
PDP vs OBP – Which is Best?
Expedia offers just two pricing strategies for you to choose from: Per Day Pricing (PDP) and Occupancy Based Pricing (OBP).
Of course, if you’re using Rategenie, you’ll have no need to worry about all this since your pricing strategy is already being handled. But for those without, we can break Expedia’s offerings down:
Per Day Pricing
This is an industry standard strategy that you’re most likely already familiar with. You may know it is a ‘daily/nightly rate’ – it’s a simple flat fee per rental unit with a specified maximum number of occupants.
If the base number of occupants for your rental property is 4, bookings will cost the same for a party of 1 compared to a party of 4. You may still set extra person fees for each additional occupant.
Your property has a base occupancy of 2, a daily rate of $200, and a $50 extra person fee. A single guest books for two nights and pays $400.
He returns to book for two more days again, but with two friends this time. The cost for the first two people is $400 (same as before), but the extra person will add $50 extra for each day, bringing the total up to $500.
Occupancy Based Pricing
Here’s where things get interesting on Expedia. As you may have guessed, the OBP strategy focuses on cost per guest instead of cost per rental unit.
A typical OBP strategy may look like this:
- 1 Guest – $100
- 2 Guests – $150
- 3 Guests – $200
If you set a rate for 2 guests, but not for one, a single guest will be charged the rate for 2 guests. That’s your base price.
Just like the PDP strategy, if the maximum specified occupants is exceeded, each extra will be charged a fee per night.
Your rental property charges $100 for 1 guest and $200 for two. There is a $175 fee for extra persons. A single guest books for two nights and pays $200.
After checking out, he returns to book for two more days, but this time he has two friends with him. The cost for the first two is $400, while the extra guests adds another $350, bringing the total to $750.
Which Expedia Pricing Strategy is Best?
As with most price-related questions, there’s no defined answer without factoring in your rental property’s performance and your strategic preferences.
For instance, if your property tends to be booked by couples for its romantic setting (and lack of extra sleeping space), you may wish to use a Per Day Pricing strategy since you’re not likely to be pulling in 3+ person parties.
If you have a two-bedroom apartment, however, it’s likely that you’ll frequently have parties of 3 or 4 guests. In this case, you may maximize your profits by using an Occupancy Based Pricing strategy.
An important variable is competitor prices. Each of these strategies will comes with a different competitive strength and favorable search presences. Research your local competitors’ prices for differing occupants, then the advantage of either a PDP or OBP strategy will become much clearer!