What is occupancy-based pricing?

Occupancy-based pricing sets multiple price points for the same property or unit depending on how many people stay there. Typically, within this strategy, the more guests you host, the higher your daily rate is. The accommodation remains the same regardless of the occupancy, but with a price adjustment.

Some hosts find that, although the accommodation itself doesn’t change depending on the number of people staying, the utilities are significantly greater. With a high occupancy, there tends to be more significant usage of water, electricity, and general utilities around the property, causing the overhead to increase for hosts.

To offset these costs, some hosts opt for occupancy-based pricing that adjusts the rates, and consequently, the owner’s expenses based on the number of guests.

Is the occupancy-based pricing suitable for your vacation rental?

There are upsides to occupancy-based pricing, such as increased revenue. However, there can also be some negatives. Some hosts argue that this strategy can make it more difficult to track income. Further, your guests might react negatively to this form of pricing if it comes across as stingy or as a sneaky way to increase the cost.

Ultimately, it’s up to you to decide if occupancy-based pricing helps or hinders your vacation rental business.

If you’re frequently hosting a large number of guests, it might make sense to adjust your average daily rate to compensate for the cost of hosting more people. On the other hand, if your large-sized accommodation is typically only occupied by guests or couples, having occupancy-based pricing in place for the occasional big reservation would make sense.

How to set occupancy-based pricing on Airbnb?

There’s no direct way to set occupancy-based pricing on Airbnb, but there are some workarounds available.

If you rent out multiple rooms within a home, you can list each room as a separate listing. The downside of this is that you will have to manage each listing individually within the platform. Alternatively, you can lower the occupancy limit and charge an additional guest fee.