When you rent out your spare room it’s important to make sure you are getting the best possible rent for the room you are renting out.  However, it’s easy to focus solely on setting a high price for the room, overlooking the potential benefits of a higher occupancy rate. Over the last decade, we have worked with thousands of hosts to help them set the right price to ensure that they meet the annual income goals they set for their spare room.

In this blog post, we'll explore why it's crucial to prioritise occupancy rate over price to maximize your annual rent income in Ireland.

Setting Your Room Price

Even in a market with high demand, it’s important that you price your room correctly and in line with the current market value. At Hosting Power we regularly review reports on the market value of rental properties across Ireland. This allows us to best advise the prices that would work best for our hosts.

Higher Price = Higher Income? Not necessarily

When renting out your room it makes better sense to calculate your income goals on a yearly basis. Ask yourself over the course of the next 12 months how much income would you like to earn from your room and let that guide your pricing.

When you rent out your room on a medium-term basis but opt for a higher rent for your room, you might actually end up earning less, or even much less. This is because at that higher rent rate, your overall occupancy rate tends to decrease.

Here’s why; a higher room rate sets a false expectation of earning more rent from your spare room. When you set the room price too high what often ends up happening is you will earn more on the individual bookings you get, but you will get fewer bookings.

We have seen this happen time and again. A Host will increase their room rate with the hope of increasing their annual income. Initially, the room gets a few bookings at the higher price, but the room sits empty for a longer period of time within the year (if not the majority of the year). And an empty room is a lost income opportunity and will stop you from reaching your yearly income goal.
 

The Right Rate To Maximise Annual Rental Income

The right rent rate to reach your yearly goals is a rate that is neither too high nor too low, but instead, is a reasonable price for your spare room and encourages a higher occupancy rate, which directly impacts your annual rental income.

What we advise is setting a rent rate even just slightly lower than the market price. It will not only ensure you reach your yearly rent goal but your guest will also feel that they have paid the right price and be happier with the booking.
A fully occupied room means more bookings, and a more predictable and steady stream of rental income throughout the year. Even if your room is priced slightly lower than others in your area, a high occupancy rate can compensate for the difference and actually earn you more money in the long run.
 

Happy Guest, Happy Experience

Offering a room at a slightly lower rate has another powerful advantage: it not only attracts more bookings but also leaves guests feeling like they've got an incredible deal. By setting a fair rent rate, hosts create a harmonious environment based on value and trust, where guests genuinely appreciate the savings they've made. This sense of getting a great deal cultivates a positive experience, fostering a deep sense of gratitude and satisfaction among guests. 

Pricing Support

We are continuously carrying out research and data checks on the market value of rooms for rent all over Ireland. We then offer support and advice to our hosts and work with them to ensure they set a price that will meet their yearly goals.

To get a better understanding of how you can calculate the rental price you should charge your guest you can read this blog post here. Or alternatively, we can do all the hard work for you, all you need to do is fill in an application form here.

In Summary

Prioritising the occupancy rate over an inflated rental price can result in increased earnings for the entire year. By consistently maintaining a high occupancy rate, you create a reliable and steady income stream that spans months or even the entire year. Rather than focusing on short-term gains from a few high-priced bookings, think long-term and aim to keep your room occupied as much as possible. This way, you can maximise your annual rental income and enjoy the financial benefits of being a successful host in Ireland.

Setting a reasonable price for your spare room is also appealing to a broader audience, which gives you more scope to accept the specific guests who suit your own criteria. So, take a step back, evaluate your pricing strategy, and focus on keeping your room occupied to unlock the full earning potential of your rental property!

If you want to see the price we would recommend for your room, click the button below to take the first step.