Every revenue manager knows the moment. Occupancy is pacing behind. The calendar is filling up slower than last year. Someone in ownership sends the message: "Should we drop rates?"

It's the most instinctive move in the playbook — and more often than not, it's the wrong one.

Before you touch a single rate, there are four things worth working through first. Dropping rates without exhausting your other options is like turning up the volume when the problem is a blown speaker. It feels like action. It doesn't fix anything.

Here's the framework I use before I ever consider a rate reduction.

1. Length of Stay

LOS settings are often just as powerful as rate changes — and they're reversible without the psychological damage a price drop does to perceived value.

Think about length of stay as visibility. The more flexible your minimum stay requirement, the more searches your property appears in. It's that simple: more flexible LOS equals more visibility in search results equals more bookings. And you haven't touched your rate.

A few things worth understanding about how LOS actually behaves:

Your guests are already booking longer than your minimum. This is one of the most consistently overlooked data points in revenue management. Consumers frequently book longer stays than whatever your minimum is set to — which means an overly restrictive minimum isn't protecting your revenue, it's just filtering out guests who would have booked anyway.

The post-pandemic shift is real. Average stay lengths have declined across most markets since 2020. The classic 7-night, Saturday-to-Saturday restriction that used to be standard in coastal and mountain markets is increasingly a conversion killer. Guests want flexibility. Markets that have adapted their LOS settings have generally outperformed those that haven't.

Gap control is where I find the most immediate wins. A 2-night gap between existing bookings — with a 3-night minimum in place — is just inventory that sits empty. Reduce your LOS requirement for gaps by at least one night and watch what fills in before you consider dropping rate. This one adjustment alone can recover revenue that looked like a demand problem.

Some LOS best practices worth keeping in mind:

  • Protect your mid-to-high demand periods with appropriate minimums — don't loosen LOS uniformly across the calendar
  • Be proactive; make LOS adjustments well in advance rather than reactively inside the booking window
  • Coordinate LOS tactics with any marketing campaigns your team is running — a 3-night promotional offer paired with a 4-night minimum is a conflict, not a strategy
  • Consider extended-stay and early-arrival discounts to add nights to existing bookings after they're made
  • Seasons, holidays, and local events all warrant their own LOS review — what works in peak season often actively hurts you in shoulder periods

2. Marketing Strategy

Rate is only one variable in whether a property converts. If the rate is right but the listing isn't performing, you have a different problem — and dropping rate won't solve it.

As the number of professional operators in this industry continues to grow, the gap between properties with strong marketing and those without is widening. Revenue strategy and marketing strategy are no longer separate conversations. The teams that are winning treat them as one.

Photo optimization is more impactful than most operators realize. Your lead photo is your first impression, and your photo hierarchy tells a story — or it doesn't. A few things that matter more than people acknowledge:

  • Shoot for your market's conditions. Beach markets should show sun, blue water, and clear skies. Mountain markets should show snow. Fall markets should show color. The photo that converts in July is not the same photo that converts in October, and using the wrong one costs you bookings.
  • Write detailed photo descriptions that highlight every feature visible in the frame — not just the name of the room. "Living room" is not a description. "Bright open living area with gulf views, sleeper sofa, and direct access to the balcony" is a description.
  • Sometimes less is more. An over-photographed listing with 80 redundant interior shots can actually reduce conversion compared to a tighter, well-curated gallery that tells a clear story.

Channel mix matters more than most managers optimize for. Are you on every platform that's relevant to your portfolio and brand? Every amenity counts — especially on older listings where offerings may have been updated but the listing itself hasn't kept pace. A listing optimizer is worth considering for properties that aren't converting at their expected rate.

One point worth emphasizing: direct booking is king. Every direct booking you capture is one where you control the relationship, the data, and the margin. It should be a strategic priority, not a secondary channel.

Promotions are a demand driver, not a default setting. This distinction separates good revenue managers from average ones. Promo codes and discount campaigns work — when they're targeted, tied to specific booking windows, and tracked rigorously. When they become standard operating procedure, they train guests to wait for deals and permanently compress your revenue.

Use promotions with intent, anchored to your brand. Evolve them as consumer behavior shifts. What worked last year may not be relevant this year — and running last year's playbook without examining the results is a reliable way to underperform a market that has moved on.

3. Owner Relations

This is the lever most revenue managers least want to talk about — and the one that, when neglected, undermines everything else.

Rate strategy doesn't exist in isolation. If the owner of an underperforming unit has unrealistic expectations about what that unit can achieve — based on its condition, its amenities, its location, its reviews — then every rate decision you make is fighting a headwind that never goes away.

Establishing trust is the foundation. Honesty and transparency aren't just good values; they're operational necessities. Communicate proactively, not reactively. Show competence and knowledge. Don't assume the owner understands the market the way you do — explain it, with data, every time.

Set realistic expectations from the start. Be honest about a unit's actual potential based on its quality, its location, its amenities, and its review history. An owner set up with accurate expectations from the beginning is a partner. An owner sold a rosy picture the property can't deliver is a recurring problem.

The hard conversations are the most important ones. When pacing is soft and an owner wants to know why, the answer should be supported by factual data — not feelings, not hedging, not vague market commentary. Show them where the unit sits relative to its comp set. Show them what their reviews say. Show them the gap between expectations and evidence. Then build a plan together.

Mastering the hard conversation supported by data is what separates revenue managers who build long-term owner relationships from those who constantly manage owner churn.

Owner relations best practices:

  • Establish and understand each owner's revenue expectations early — don't let assumptions fester into disappointment
  • Offer proactive, periodic updates rather than waiting for owners to ask
  • Start with why when delivering difficult news — context before conclusion
  • Follow up consistently; responsiveness builds trust faster than almost anything else

4. Fees

Total booking cost — not nightly rate — is what the consumer sees when comparing properties on a search results page. A nightly rate that looks competitive can be killed by a cleaning fee that pushes the total cost 40% above comparable properties.

Before you reduce rate, audit your fee structure.

The total price of the booking is what drives conversion. A guest searching for a 3-night stay is looking at an all-in number. If your fees are calibrated for 7-night stays and the market has shifted toward shorter bookings, your fee structure is working against you — and dropping nightly rate won't fix it.

Adjusting fees can be more effective than adjusting rate — and it keeps more actual revenue in the owner's pocket. A fee adjustment that improves booking velocity at the same nightly rate outperforms a rate cut that achieves the same occupancy at lower revenue per night.

Ensure your fee structure scales properly. Flat fees regardless of stay length penalize short stays and can make your property uncompetitive in the booking windows where most shoulder-season volume comes from.

For new or struggling properties, consider a temporary fee reduction to build early traction. Early reviews are often worth more than early revenue. A property with 50 strong reviews at a sustainable fee structure will outperform a property with 5 reviews at optimized fees. Getting to that review threshold faster is worth the short-term concession.

The Decision Framework

Here's how I sequence these levers before I ever consider touching rate:

First: Is the issue LOS? Loosen restrictions, address gap nights, and reassess before anything else.

Second: Is the listing converting at its expected rate? If not, optimize photos, descriptions, amenities, and channel presence before adjusting rate.

Third: Is the fee structure creating total-cost friction? Test fee adjustments and measure the impact on booking velocity.

Fourth: Is there an owner expectations problem creating strategic misalignment? Have the hard conversation with data before making rate moves that paper over the real issue.

Only then — if you've worked through the above and pacing is still soft — does a rate adjustment become the right conversation. And even then, it should be targeted, measured, and monitored. If pickup improves within 48–72 hours, maintain the new position. If it doesn't, you have more diagnosis to do before going further.

The Underlying Principle

Rate cuts feel decisive. They look like action. They're easy to execute and easy to justify in the moment.

But they compress margin, they condition guests to expect lower prices, and they frequently don't address the actual reason a property isn't booking. The portfolios that consistently outperform their markets aren't managed by people who cut rates fastest. They're managed by people who understand the full range of levers available — and reach for the right one at the right time.

The next time the instinct is to drop rates, start with these four questions first. The answer to "should we drop rates?" is almost always: not yet.

Rick Jernigan is Revenue Manager at Brett Robinson Vacation Rentals and co-founder of Vrroom Revenue Consulting. He presented at the DARM Conference in 2024. For a portfolio consultation, contact the Vrroom team at vrroom@brettrobinson.com.