The Art of Negotiation

Its been said that negotiation is truly an art-form, because it usually involves letting go of something we want to keep, in this case money. Therefore, as a property owner, you should be ready to address potential requests in advance by deciding what youre comfortable with.

Be prepared for the fact that about 20% of renters will ask for a discount or a break of some kind. Some are more forward about the request than others. As you become more seasoned, youll be able to discern which requests are reasonable and which are absurd. If a request is too demanding, you should think twice. As you gain confidence with your rental business, youll know when to simply decline. When a potential renter does make a request, I suggest listening to their needs and offering things that add value to their stay. Offering a special doesnt always mean discounting your rates. Ideally it should be something that makes the guests stay more enjoyable and at the same time offers you, the owner, a competitive edge and secures the reservation (an example could be a welcome basket, a gift certificate for dinner or a round of golf, beach badges for the week, or a lift ticket for the slopes). Remember, your goal is to have a positive cash flow, and part of that long-term goal may be building up a repeat customer base.

How you approach the issue of offering discounts or specials is up to you. Rate negotiation will vary by individual styles of conducting business. Some owners prefer to post a single rate year round and never deviate from it. Others will vary rates by season or opt to lower their rates based upon the length of stay. Ultimately, it comes down to what youre comfortable with and can keep track of. But remember, its all in the perceived value to the customer. Think of it in terms of the sales and discounts you see on TV during the holidays. Each store has a strategy. Of course, you cant give away the farm, nor would you want to, so you have to know what youre comfortable with. So, be ready to offer a discount. but stand your ground when a guest asks for too much. Ultimately, its important to realize that in certain cases theres a fine line between offering a small concession and potentially losing the rental to someone else. Make sure you know what your neighbors are offering and what your bottom line is.

A good rule of thumb is: some money in your pocket is better than none, especially if its a last-minute rental and you risk seeing the unit go vacant otherwise. But beware, its unwise to cut prices drastically on a continual basis, because you prevent yourself and others from enjoying a fair market value price. If you are in a resort community, undercutting prices undervalues a property and may hurt property values in the future. The best bet is to be creative and flexible, and to always do your homework.