Surge Pricing: How You Can Reap the Benefits of High Short-Term Rental Demand

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During much of the year, this short-term, two-bedroom rental in Indio, California, a lovely, quiet, desert town about 35 minutes past Palm Springs, hovers around $172 a night. That is, until mid-April every year when thousands of revelers descend on the world-famous Coachella music festival, the listing says it is a 17-minute walk away.

During those weeks, this very same rental commands $808 a night. That’s more than a 369% increase, and it’s the same for every rental in the area, in every price range—for example, $410 goes to $756; $2,300 goes to $6,386, etc. 

My primary residence is in a bucolic residential suburb of New York City, where there isn’t much of an STR market to speak of—that is, until July 2026, when the FIFA World Cup Final comes to MetLife Stadium, five miles from my house. I have never rented my primary home a day that I’ve owned it. Will I consider putting it up on VRBO or Airbnb to capitalize on this once-in-a-lifetime event? You betcha.  

To that point, there’s seasonal pricing, and then there’s event or surge pricing—like when the Super Bowl comes to town or Taylor Swift adds an extra night to her tour near you. You’ll want to take advantage of any event that drives demand, or you’ll be leaving money on the table.

So, what’s the difference between dynamic pricing and surge pricing, and how do you get the best STR rate and experience for your situation?

What Is Dynamic Pricing?

Dynamic pricing is where you change the per-night cost of your rental based on the season, day of the week, availability of other rentals in your area, and tons of other factors. You can do this manually, or many of the short-term rental sites (including VRBO and Airbnb) offer an algorithm that will do this for you. You can opt to accept their recommendations or stick to your own devices. 

There are also software platforms that specialize in dynamic short-term rental pricing like PriceLabs or Beyond—many of which API into your preferred booking platform, so they’re easy to use.

What Is Surge Pricing?

Surge pricing is a subset of dynamic pricing and works just like your Uber fees—when there is very high demand, your ride home from a work dinner can go up 50% from one day to the next. People will pay more during these times of high demand, and you want to be ready when it happens. 

Events that might warrant surge pricing

• Sporting events: National or college games.
• Entertainment events: Big music festivals or artists on tour. 
• Hyperlocal cultural events: Festivals, conferences, or shows. 
• Natural occurrences: Leaf-peeping, cherry blossom season, or the total eclipse on April 8.
• Back to school, graduation, or parent weekends: If you live near a college, hotels will often sell out during these peak weekends when families come to town.

What to charge

The algorithms on the rental platforms will have suggestions, but you’ll also want to check out the competition yourself. Historically, towns with more modest prices the rest of the year tend to go up the most (percentage-wise) when there is an event. 

But everything is local, and everything changes. This year’s Vegas Super Bowl caused short-term prices to increase about 180% on average, but the right amount for you really depends on rates and demand in your market.

Other Ways to Optimize

Make sure you’re ready for the higher interest and demand around these surge moments—that means you may be receiving more guest messages than usual, and you may want to update your profile with your distance to the event. 

Think about ways your listing can stand out relative to the event. When I list my house for the World Cup, you can bet I’m going to take a picture of my huge backyard with the already-set-up soccer goals and let potential guests know we are ready for them to get their kicks in between matches!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.