PriceLabs emails me every month.
"Leon, optimize your Da Nang villa pricing with market intelligence!"
Here's the problem: Market intelligence systematically underprices premium guests.
When you price based on what competitors charge, you're making a fundamental error. You're assuming all guests have the same willingness to pay.
They don't.
The Market Data Trap
Market-based tools optimize for average guests—leaving premium guest revenue on the table.
- • Singapore exec pays whatever you ask
- • Budget backpacker negotiates everything
- • PriceLabs gives them the same rate
- • You lose 40-70% potential from premium guests
How Market Data Misleads You
Last month, I ran a test. I pulled PriceLabs recommendations for my Da Nang villa during peak season.
Their recommendation: $280/night
Based on local market rates. Competitors. Supply and demand.
Then I analyzed my actual bookings from that period:
Same Week, Different Guests:
PriceLabs would have charged everyone $280. I left zero revenue on the table.
The German family found me through Google, compared 12 properties, and booked the cheapest option.
The Singapore couple arrived direct, browsed for 3 minutes, and booked immediately.
Same property. Same week. Completely different price sensitivity.
The Three Fatal Flaws of Market Pricing
Flaw #1: The Lowest Common Denominator
Market rates represent what price-sensitive guests will pay. Not what premium guests will pay.
When competitors set rates based on market data, they create a race to the bottom. Everyone optimizes for the most price-conscious travelers.
Reality check: A Singapore executive doesn't care that other villas charge $280. He cares about quality, location, and availability. Price is secondary.
Flaw #2: The Geography Problem
Market tools assume guest budgets reflect local purchasing power.
This is completely backwards for STRs.
Your guests aren't local. They're international travelers with home-country purchasing power.
A $400/night rate in Da Nang feels cheap to a Manhattan resident. It feels expensive to a Bangkok resident.
PriceLabs doesn't know the difference.
Flaw #3: The Timing Blindness
Market data shows you what rates competitors set 30 days ago.
It doesn't show you the guest browsing your property right now.
That guest might be:
- A last-minute business traveler (premium pricing opportunity)
- A price-shopping family (standard pricing)
- A luxury seeker who views low prices as suspicious (premium required)
Market tools can't read guest intent. They give everyone the same rate.
The Behavioral Pricing Alternative
Instead of asking "What do competitors charge?" ask "What will this specific guest pay?"
Every booking tells a story:
Reading Guest Intent:
This isn't discriminatory pricing. It's market efficiency.
Airlines have used this model for decades. Business travelers pay more because they value convenience over cost. Leisure travelers pay less because they optimize for price.
Same flight. Same seat. Different willingness to pay.
The Revenue Impact
Over the last 12 months, I tracked revenue from behavioral pricing vs. PriceLabs recommendations:
12-Month Revenue Comparison:
Same property, same year. Only difference: reading guest intent.
The premium came entirely from high-intent guests. Price-sensitive guests still paid standard rates.
Your Options Moving Forward
You have three pricing strategies:
- Keep using market tools - Optimize for average guests, miss premium opportunities
- Implement behavioral pricing - Capture willingness to pay from every guest segment
- Hybrid approach - Use market data as a baseline, behavioral signals for premiums
Most operators choose option 1 because it's easy. The best operators choose option 2 because it's profitable.
The choice is yours.
Next Steps
If you're ready to move beyond market-based pricing:
- Audit your current booking patterns
- Identify high-intent guest segments
- Test behavioral pricing on premium segments
- Monitor guest satisfaction (it typically improves)
Market data has its place. But when it comes to maximizing revenue per guest, behavioral signals beat market averages every time.
See Your Revenue Opportunity
Calculate exactly how much revenue you're missing with market-based pricing.
Related Articles
Why Airlines Make More Than Hotels
The fundamental pricing philosophy difference that explains this revenue opportunity.
Read Strategy →How Behavioral Signals Work
Technical deep dive into the methodology behind reading guest intent and willingness to pay.
Read Technical Guide →