The Impact of Hostaway Dynamic Pricing on Vacation Rental Performance

A Causal Analysis Using Difference-in-Difference Methodology

Hostaway Research Study | January 2026

Executive Summary

This research report presents findings from a rigorous year-long study examining the impact of Hostaway's Dynamic Pricing solution on vacation rental performance. Using advanced Difference-in-Difference (DID) methodology—a gold-standard approach in causal inference—we isolated the true effect of dynamic pricing by controlling for market trends, seasonality, and other external factors.

Key Findings:

• Revenue per Available Room (RevPAR): +25.1% increase

• Occupancy Rate: +28.6% increase

• Average Daily Rate (ADR): -2.5% decrease

These results demonstrate that Hostaway's Dynamic Pricing delivers substantial revenue gains by optimizing occupancy through strategic pricing, resulting in nearly 25% higher revenue performance compared to properties using manual pricing strategies.

Introduction

In the competitive vacation rental market, pricing strategy is one of the most critical levers for maximizing revenue and occupancy. However, manual pricing approaches often fail to account for real-time market dynamics, seasonal fluctuations, and competitive positioning.

Hostaway's Dynamic Pricing solution leverages sophisticated AI algorithms to automatically adjust rates based on market conditions, demand patterns, and competitive intelligence. This study was designed to measure the true causal impact of implementing dynamic pricing on key performance metrics.

Research Objective

To quantify the incremental impact of Hostaway's Dynamic Pricing on:

• Revenue per Available Room (RevPAR)

• Occupancy rates

• Average Daily Rate (ADR)

Methodology

Study Design: Difference-in-Difference Analysis

We employed the Difference-in-Difference (DID) method, a rigorous causal inference technique widely used in economics and policy evaluation. This approach:

1. Compares changes over time between treatment and control groups

2. Controls for time-invariant confounders that affect both groups equally

3. Isolates the treatment effect by removing common trends such as seasonality and market-wide changes

The DID formula removes market-level trends and seasonal effects:

DID Effect = (Treatment After − Treatment Before) − (Control After − Control Before)

Study Groups

Treatment Group

• Hostaway listings with Dynamic Pricing enabled

• Received algorithmic rate optimization throughout the study period

Control Group

• Hostaway listings without Dynamic Pricing enabled

• Maintained manual or static pricing approaches

Control Group Assignment

To ensure comparable analysis, we addressed the challenge that control group listings don't have a natural "activation date":

• Synthetic Date Assignment: Control listings were assigned synthetic activation dates using the same distribution as Dynamic Pricing listings

• Purpose: This ensures comparable seasonal timing and market conditions between treatment and control groups

• Benefit: Eliminates bias from seasonal enrollment patterns

Data Quality & Filtering

To ensure analytical rigor, we applied stringent data quality measures:

Market-Level Filters:

• Excluded markets with fewer than 10 Hostaway listings to ensure statistical reliability

• Focused on markets with sufficient sample sizes for meaningful comparison

Listing-Level Filters:

• Discarded listings with zero occupancy (inactive or non-operational properties)

• Applied outlier handling: capped RevPAR, adjusted occupancy, and ADR changes at ±1,000% to prevent extreme values from skewing results

Study Duration:

• 12-month observation period over the 2026 calendar year

• Provided sufficient data to capture seasonal variations and long-term trends

Results

Performance Metrics: Treatment vs. Control

The table below presents the percentage change in key performance metrics for both Dynamic Pricing users (Treatment) and manual pricing users (Control), along with the causal DID effect:

Interpretation of Results

Revenue Per Available Room (RevPAR): +25.1%

The DID analysis reveals that Dynamic Pricing users achieved a 25.1 percentage point higher increase in RevPAR compared to the control group. This represents the incremental revenue benefit directly attributable to dynamic pricing, after accounting for market-wide revenue growth that affected all properties.

• While both groups experienced revenue growth (reflecting overall market conditions), Dynamic Pricing users captured significantly more of that growth

• The 25.1% DID effect isolates the causal impact of the pricing strategy

Occupancy Rate: +28.6%

Dynamic Pricing users saw occupancy rates increase by 28.6 percentage points more than control properties. This substantial improvement indicates that:

• Algorithmic pricing successfully optimizes rates to attract more bookings

• Properties avoid leaving rooms empty due to overpricing

• Dynamic adjustments capture demand across different booking windows

Average Daily Rate (ADR): −2.5%

The slight decrease in ADR (−2.5%) reveals the strategic mechanism behind Dynamic Pricing's success:

• The algorithm prioritizes revenue optimization over rate maximization

• By strategically lowering rates when needed, the system drives higher occupancy

• The net effect is significantly higher total revenue (as evidenced by the +25.1% RevPAR gain)

This finding reinforces a critical principle in revenue management: maximizing nightly rates doesn't maximize total revenue. Dynamic Pricing finds the optimal balance.

Business Implications

For Property Managers

Proven Revenue Growth Implementing Dynamic Pricing delivers measurable, causal revenue improvements of over 25%, even after controlling for market trends and seasonality.

Occupancy Optimization The 28.6% occupancy improvement means fewer vacant nights and more consistent cash flow—critical for operational planning and owner satisfaction.

Strategic Pricing Philosophy The results validate the "fill the calendar" approach: modest rate adjustments that drive occupancy deliver superior total revenue compared to holding firm on high rates.

For Owners

Maximized Returns Owners benefit from substantially higher revenue generation without requiring operational changes or increased effort.

Data-Driven Confidence Rigorous causal analysis provides confidence that these gains are not merely coincidental market improvements but direct results of the pricing strategy.

For Guests

Market-Appropriate Rates Dynamic pricing ensures rates reflect true market conditions, creating better value perception and driving conversion.

Why This Study Matters

Rigorous Causal Methodology

Many performance studies suffer from selection bias or fail to account for confounding factors like seasonality and market trends. Our Difference-in-Difference approach addresses these challenges by:

• Removing market-wide effects: Both groups experience the same external market conditions; DID isolates what's different

• Controlling for seasonality: Synthetic date assignment ensures seasonal comparability

• Establishing causality: Not just correlation—we measure the incremental effect of Dynamic Pricing

Real-World Application

This study analyzed actual Hostaway listings over a full year, capturing:

• Real market dynamics

• Diverse property types and locations

• Seasonal variations and demand fluctuations

• Authentic operational conditions

Conclusion

This comprehensive study provides compelling evidence that Hostaway's Dynamic Pricing delivers substantial, measurable revenue improvements. Using rigorous Difference-in-Difference methodology to establish causality, we found:

• 25.1% increase in Revenue per Available Room

• 28.6% increase in Occupancy rates

• Strategic pricing optimization that prioritizes total revenue over nightly rate maximization

For vacation rental property managers seeking to maximize revenue, improve occupancy, and leverage data-driven pricing strategies, these results demonstrate that Dynamic Pricing is not just a convenience—it's a proven revenue driver with quantifiable business impact.

The findings underscore a fundamental truth in revenue management: optimal pricing is not about charging the highest rate possible, but about finding the rate that maximizes total revenue. Hostaway's Dynamic Pricing achieves exactly that.

Learn more about Hostaway Dynamic Pricing and schedule a demo at hostaway.com

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