Pricing Your Rental Villa

Finding the right price for your villa in Thailand can be a tricky business. There are a number of things to consider: your running costs, your competition, your expected occupancy rate; and, changes in the rental market. Only when you have made an assessment of all these factors can you begin to price your villa correctly. And then, of course, there are seasonal price fluctuations to consider.

If you follow the prices for a successful hotel in Thailand you will shocked to discover just how often they change their prices. You will also be surprised at the lack of transparency when it comes to prices. There are often hidden extras such as tax, transfers, movie channels that don’t appear in the initial price quoted. If you go to booking engines such as Agoda, Booking.com, Trip Advisor etc. you will find a different price on each site. This is partly to do with commissions charged. If you are managing your own villa it can be a real headache dealing with all these prices.

I have found that it is worth trying booking sites but only keep up with 1 or 2 that perform for you. Most don’t produce much.

Running Costs

Here is a check list of running costs that you should consider:

1)    Electricity bill. This is the main bill due to air-con. Many hotels use keycards to stop people leaving the air-con on while they are out. Keep a close eye on your electricity bills when you have guests as this will help you estimate your electricity costs in renting your villa.
2)    Water. Big groups and families can often use a lot of water for showers. Hot water use will also impact on the electricity bill.
3)    Cleaning. If you offer a maid service, laundry service, rubbish removal etc. All these costs need to be factored into your price.
4)    Transfers / Agent fees. Many villas offer free pick up. It is a good idea as that way you don’t lose your customers at the last hurdle. It is also a chance for them to meet the villa agent, pay damage deposit, collect keys etc.
5)    Wear and tear. After a year you should spend money to repair your Thai villa. Chances are that it will need a lick of paint, this piece of wood replaced, filters cleaned and so on. Try to estimate a yearly cost for keeping the villa presentable. This should include such things as new sheets, a fee for use of fridge, TV and other expensive items. The more detailed you can be the better your estimate will be.

6) Legal fees.

Minimum you want to be making 50% more than all these costs put together. Of course the higher your occupancy rates the lower your profit margin needs to be per day rental. Some places make nearly all their money by making 200% profit at Christmas / New Year and over the year this works at a profit minus costs rate of about 50%. It varies. Keeping your eyes on thesew figures is key. Estimate what your minimum is to break even over the year. that will greatly help you to decide how much you can discount.

Your Competition

The received wisdom is that you try to slightly undercut your competition to attract more customers. There is a lot to be said for this approach. You need to study the villas that are the same size as yours, offer similar facilities and are in a similar location. It can be hard sometimes to find an exact match. This is good news as it means you have something unique to offer. I look at what hotels are charging to guide my pricing as well.

In Thailand there is often not much price undercutting going on. The market reaches a type of unspoken monopoly on prices, especially when there is no shortage of customers.

Much of the price changes go on with slightly altering the peak and low season prices. This is connected to expected occupancy levels.

Occupancy Levels

If you find you have high occupancy levels at Christmas and during the European summer holidays it is often not a bad idea to slightly raise your prices for these times. This will increase profit. By the same token if low season occupancy rates are low it is a good idea to drop the rates at these times of the year. Another idea is to offer monthly rates at these slow times. To make this possible you can offer different packages that perhaps don’t include maid service and other services. People keen for longer term lets often want a bare bones package. This suits you and the tenants. As long as you are making near your 50% profit margin there is no problem. Moreover, it is always good to have people staying – they help spread the word about the villa and can also be encouraged to leave positive comments on Trip Advisor. They can also form part of a repeat customer business.

If you have really low occupancy rates then you should consider drastically changing your marketing strategy, upgrading the villa and altering your prices. Pursue as many avenues and ideas as possible to get the bookings. Analyze what is putting people off.

Changes in the Rental Market

Holiday destinations in Thailand fall in and out of fashion. They go from being relatively unknown to being centres for mass tourism. They also fall out of favor. Places in Thailand have a habit of developing quickly and the market gets flooded. In Koh Samui hotels shot up in the 80s and 90s and now there are far too many rooms to fill. Everyone suffers, and no one can see the obvious that over-development is bad for business. In Koh Samui the hotel owners imagine all they need is more daily flights to the island. They don’t see that people are put off by the over-commercialism and high prices.

The 2008 global financial crisis has had an on-going impact on tourism to Thailand. It is a long recession and many North Americans and Europeans simply don’t have the same money to spend as before. Thus, offering cheap deals for the times when the Europeans are likely to visit is a good idea.

By contrast Russians, Chinese and other Asians are coming in droves to Thailand. Finding ways to get exposure in these markets is a good idea. One way is to offer other languages on your website. Also finding the online sites that these relatively new markets use to search for villa rental is a good idea. However, beware these customers often are far more astute with their spending and are looking for bargains that eat heavily into your profits. Also they often have very different expectations to European guests.

Pricing your villa correctly to balance being attractive to the consumer and making a healthy return for your money is not simple. The more factors you consider the more accurate you can be in assessing the mood of the market.

New Seo - The New Playing Field

One of the most important selling tools you have for selling a house in Thailand is the internet. Through the internet you can reach millions potentially, although sometimes it is hard to get more than a handful of people to your site everyday.

That just got harder with the new changes this April to the Google Algorithm. The change seems to penalize those who try to boost there position in the SERPS. Those who don't regularly send links to there sites are unaffected; but those who were seeing good progress in their position in Google for keywords have, in many cases, seen the carpet pulled out from under their feet. Do not panic is the old seo wisdom - the site will be back. I'm not so sure. Some of my sites have been down for the longest time. If Google preferred genuine content above you, then you would have less reason to grumble; but often that is not the case. Here is what I'm more certain about:

Good original content

1) Google is trying to find a way mathematically to discern shit from shinola. The better you can write and the more originality and value you can add to your writing the more you will be rewarded both now and in the future with good SERPS position and Page Rank.

Perseverance

2) If you just continue sending backlinks to your site or sites then over time they will come back. The key is to hit a variety of key phrases. If you just keep linking 'property for sale in Thailand' then you will be forever penalized by Google. You must spread your links over lots of related keywords and phrases related to your niche. Variety.

Aged Domains

3) The new (and not so new) idea in SEO is to fool Google by buying age and page rank. Every day valuable sites and URLs just get discontinued because someone lost interest or just plain forgot to renew their URL address. In auctions you can buy sites with 100s if not 1,000s of backlinks. You can find sites with page rank up to 5. If you buy a site with age it will soak up the links and will not be penalized so readily by Google. It may seem like starting again but you will be surprised how much difference age makes in the SERPS. You can also just move shop as it were, by redirecting your old site to your newly acquired aged domain.

Other Sources of Traffic

4) The final bit of advice is to find ways to not rely on Google. Lots of people make a good living from their sites and they are poorly placed in Google. How do they do this? The answer is through referrals. If you can get your links on sites with high traffic then you can see good traffic just from people clicking through to your site. The future is that more and more people will just pay for targeted traffic. Adwords is about this very topic.

Don't Dispair

You can make a sale. It is only a matter of time and hard work. The internet is only one way to sell your house. It is an important way no doubt and there is no reason to think that you cannot compete with 'the big boys'. The internet is a level playing field.

Marketing Tip: Pillar Content

Sometimes it takes new technology to re-discover old truths. One of these truths is that for all media people are drawn towards quality content that internet marketers now call 'pillar content'. Such is the extent to which quality drives popularity that many websites thrive not through artificial link building but from popular momentum generated by free links, bookmarks, Facebook thumbs up and so on.

Basically if you add value you get more interest. When selling something it is only a successful ploy to wave a price tag under someone's eyes if they have already decided to buy. People who type 'buy adidas trainers' into google are more than 60% of the time going to do just that online. The conclusion being that being number one in google.com for 'buy adidas trainers' allows you to just place a big picture and a link on your page and you have a sale.

From the marketers viewpoint most buyers are still in the uncommitted stage. They are turned off by adverts but turned on by information. This is why free maps with advertising down the side is a successful marketing ploy: it is pilllar content and promotion.

This is the key - pillar content and promotion. So if you are trying to sell a Thai villa or other property then you need a website that offers good information about the surrounding area, visa regulations, weather etc. This specific information by itself will generate traffic.

For a brochure, it is sometimes a good idea to include some value in the printed media to make people hold onto it. That is the thinking behind coupons in magazines and newspapers. Again a map or a timetable or a list of useful telephone numbers and websites gives the brochure an element of pillar content that makes it a better promotional tool.

In short, it is about going the extra mile and not being totally in the face of the customer that ideas of buying can take seed and maybe go from thought to reality. And then you have a sale. That's when you want to be up there for 'buy adidas trainers'.