I love pricing. Always have. I studied economics in college, I love business, and now that I run a short-term rental (STR) group on Oahu, pricing strategy is my playground. Every week, I send my owners an email updating them on the pricing of their unit. It’s fun for me—like a real-life game of supply and demand, but with actual money on the line. And I like money. Numbers tell a story, and if you listen carefully, you can make a lot more of it.
So, let’s break down how seasonality works in STR markets, and more importantly, how you can use it to make more money.
Defining Seasonality & Key Metrics
Seasonality in STR markets refers to predictable shifts in demand for available rental inventory, influencing both pricing and occupancy rates. Some markets, like ski towns or beach destinations with harsh winters, experience massive fluctuations in both demand and pricing. Oahu, however, is a bit different. While it doesn’t have the extreme dips of a mountain town in summer or a Florida beach town in January, it still has significant demand shifts throughout the year.
To set the foundation, here are a few terms you need to know:
- ADR (Average Daily Rate) – The average price per night that a rental is booked for.
- Occupancy Rate – The percentage of available nights that are booked over a given period.
- Lead Time – The number of days between when a guest books and when they check in. Longer lead times mean guests are booking well in advance, while shorter lead times suggest a lot of last-minute bookings.
The Strategy: Be the First Booked in Slow Season, the Last Booked in Peak Season
One of the biggest mistakes STR owners make? Flat pricing. A one-size-fits-all rate throughout the year means you’re either leaving money on the table during peak season or sitting with empty nights in the slow season. Here’s how to avoid that:
1. Get Booked Early in the Slow Season
When demand is lower, you do not want to be the last one in a pricing race to the bottom. If you wait too long to drop your prices, you’ll be left competing for last-minute bargain hunters. Instead, lower your prices proactively to secure bookings ahead of time. This increases your lead time, giving you predictable revenue and avoiding the stress of scrambling for last-minute guests.
2. Hold Prices High in Peak Season
During high-demand periods (for Oahu: summer, holidays, and spring break), keep prices high. There’s always excess demand, and you can always drop rates last-minute if needed. The goal is to maximize revenue per booking, not just to get booked fast.
Real-World Example: The $1000 Christmas Booking
We manage a unit that typically rents for $400-$500 per night. In slower seasons, we strategically lower the price to the low $400s or even high $300s to secure bookings in advance. However, during peak season, we hold firm at $500+ per night—and it pays off. Last Christmas, this unit booked for nearly $1000 per night. Had we used a flat pricing model, we’d have left thousands on the table.
Even if we aimed for a consistent middle ground, say $450/night year-round, we’d still be losing money on both ends: low occupancy in the off-season and missed revenue during peak times. This is why pricing needs to be dynamic.
The Power of Dynamic Pricing (With Manual Oversight)
Automated pricing tools like PriceLabs, Wheelhouse, and Beyond Pricing can analyze demand fluctuations and adjust rates in real-time. But they’re not perfect. If you rely only on software, you’ll often see suboptimal pricing. Manual oversight is key—adjusting for unique market trends, special events, and competitor analysis. The best approach is software-driven dynamic pricing with strategic manual intervention to fine-tune rates and ensure maximum profitability.
The Takeaway
Pricing is both an art and a science. Understand your market, track key metrics, and use dynamic pricing strategies to adjust for seasonality. Be proactive in slow seasons, hold strong in peak seasons, and always tweak your pricing model to reflect real-time data. STRs are a business—treat them like one, and you’ll make far more money than the average host leaving it to chance.
Now go optimize your pricing and thank me when your next peak-season guest pays double what you would’ve charged otherwise.