Why dropping your price when bookings slow down is the wrong move (and what to do instead)
- May 29
- 6 min read
When bookings slow down, most short-term rental hosts and property managers reach for the same lever: price. Drop the nightly rate, fill the calendar, move on. It feels like a solution. According to Amber Knight, General Manager at BookingsCloud, it's usually a symptom – and one that can make the underlying problem considerably worse.
Amber joined the Host Planet Podcast to talk through the revenue management mistakes she sees repeatedly across large STR portfolios, what the best operators do differently when occupancy drops, and why the marketing and revenue management functions in most property management businesses are still not working together the way they should be.
The real problem isn't demand – it's visibility
The first thing Amber challenges is the assumption behind the price drop instinct: that fewer bookings means weaker demand.
"Most operators don't have a demand problem. They have a visibility problem. Not enough people are seeing their properties." – Amber Knight, BookingsCloud
This distinction matters enormously. If the issue is that your listing isn't appearing in enough search results – because your platform ranking is low, your reviews are thin, or your listing copy isn't working hard enough – then dropping your price doesn't fix anything. It just means you earn less from the bookings you were already going to get.
Worse, habitual discounting trains guests to wait. If a segment of your audience learns that prices fall in the final week before a stay, they'll hold off booking at full rate. The host ends up contributing to the very occupancy problem they were trying to solve.
The question to ask when bookings slow isn't "should I drop the price?" It's "how many people are actually seeing my listing – and what happens when they do?"
Dropping your price is the most overused lever in short-term rentals
Amber is direct about why price gets reached for so often: it's the easiest thing to change.
"Pricing doesn't create demand. It responds to it. It's a revenue management tool, not a marketing one. But because it's easy to adjust, it gets treated as if it does both jobs."
The industry started talking seriously about RevPAR – revenue per available room, the combination of average daily rate and occupancy – around 2017 and 2018. That shift in thinking was largely positive: it moved operators away from optimising for ADR alone and toward maximising total revenue across all available nights. But the practical response in many businesses was still to treat pricing as the primary dial, rather than one of several.
What the best operators understand is that pricing can only optimise the demand that already exists. It cannot generate new demand. That's a marketing function – and the two need to work together, inside the same strategic framework, to move occupancy in any meaningful way.
How to differentiate your property in a competitive market
For operators in what Amber calls "cookie-cutter" locations – high-density markets where supply is abundant and properties are broadly similar – the temptation to compete on price is even stronger. And the trap is even deeper.
"If you're one of 300 condos in a building, price is probably your only lever unless you actively differentiate. But differentiation is possible – it just takes more intention."
Her recommendations for standing out in a crowded market:
Your website and local presence. In high-supply markets, being identifiably local – a recognisable brand with a local team, local knowledge, and a professional operation – is a meaningful differentiator. Guests booking a condo in a large complex have no strong reason to choose one manager over another unless one of them communicates something different.
Ask the owner why their property is special. This is one of Amber's most practical suggestions, and one of the most underused. "Talk to the homeowners. Ask them: why did you buy this property? Why is your unit the best one in the building?" The answers often reveal details that would never appear in a standard listing – specific furniture choices, books left on the shelves, a particular view at a particular time of day. Those details, when put into listing copy as a personal note from the owner, personalise the property in a way that no algorithm can replicate.
Build your reviews, and build them consistently. Properties with more than ten solid reviews operate in a different competitive tier from those without them. Getting past that threshold – particularly in the early months of a listing – should be treated as a strategic priority, not an afterthought.
OTA dependency: How reliant Is too reliant?
One of the more consequential strategic questions for property managers right now is how much of their booking volume to route through OTAs versus direct channels. Amber's answer is nuanced – and market-specific.
"Seven or eight years ago, Airbnb and VRBO came in and transformed distribution for this industry. And a lot of operators leaned in heavily – because it worked. The question now is whether the balance is right."
Her view is that a diversified booking portfolio is almost always preferable to heavy OTA dependence – but the right mix varies by market. A property in Nashville, Tennessee, has different demand dynamics and guest acquisition patterns to one in Hilton Head, South Carolina, or Sunriver, Oregon. The right balance in each case is different.
What direct bookings offer, regardless of market, is control. When a guest books direct, you know their name. You have their contact information. Your communication is not filtered through a platform's messaging system. And if something changes on the OTA side – an algorithm update, a policy change, a shift in the fee structure – your business is not entirely at the mercy of it.
"The platforms are exceptional at capturing existing demand. Someone who already knows they want a four-bedroom property near the beach, with pet-friendly access and a ground-floor bedroom – the OTA will find them and show them relevant results efficiently. That's what they're built for."
Direct booking strategy does something different. It gets you in front of guests before they're actively searching – before they open the Airbnb app and scroll through 5,000 results. That's a harder thing to do, but when it works, the outcomes are better: higher average booking value, longer stays, and guests who identify with your brand rather than the platform they found you on.
Capturing demand vs. creating demand: What's the difference?
This is the distinction Amber keeps returning to, and it's the conceptual shift that separates reactive operators from strategic ones.
Capturing demand is what OTAs do. A guest has an intent – a trip to a specific location, specific dates, specific requirements – and the platform matches that intent to available inventory. Your job in this system is to be discoverable and competitive when the search happens.
Creating demand is what marketing does. It means reaching potential guests before they have a specific search intent – building brand awareness, creating aspiration, giving guests a reason to choose your properties on their next trip before they've even decided to take one.
Most property management businesses are almost entirely focused on the first. The best operators are increasingly investing in the second – and the compound effect, over time, is a guest base that books earlier, pays more, and returns more often.
What the best operators do differently when occupancy drops
Across all the operators Amber works with, the ones who navigate occupancy downturns best share a mindset rather than a specific tactic.
"The best operators are curious and adaptable. When something isn't working, they don't just pull the obvious lever. They ask why they made the decisions they made, whether the conditions that justified those decisions still apply, and what the data is actually telling them."
In practical terms, this looks like integrating marketing and revenue management into a single strategic system rather than treating them as separate functions. It means diversifying channels deliberately – understanding the specific strengths of each OTA and allocating inventory accordingly – rather than defaulting to the biggest platform. And it means thinking at the portfolio level rather than fighting for each individual reservation in isolation.
The operators who struggle when demand softens are typically the ones who have only one response available: cut the price, hope for a booking, repeat. The ones who thrive are the ones who've built enough strategic surface area – in their channel mix, their direct booking capability, their differentiation – that a dip in one area doesn't take the whole business with it.
About Amber Knight
Amber Knight is a revenue management and marketing strategist at BookingsCloud, working with large short-term rental portfolios and property management companies on distribution strategy, direct booking growth, and integrated revenue management. She is a regular voice in the STR industry on the intersection of marketing and revenue management – two functions that, in her view, most property management businesses have not yet brought close enough together.
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