Vacation rental property managers have a great problem on their hands… There’s always more money to be made. No matter your operation, there is always a finer line to tread with your strategy and that little bit more revenue to make.
In 2 blog posts we are taking you through the ways in which market intelligence can find you this extra revenue. We have broken this down into the following 4 optimisation segments:
For a look at the first topic of optimising rates, take a look at part 1 here: https://publications.seetransparent.com/2019/12/20/10-ways-market-intelligence-can-boost-your-revenue-part-1/
In this second post we will explore the last 3 segments; how data-based strategy can fuel optimised occupancy, inventory and finally, distribution.
When managing revenue it’s easy to fixate on rates, but occupancy can be more impactful on overall revenue. Securing the right type of bookings for a period of availability can make a huge difference – one more 2 night booking a month can easily equate to a 10% rate increase on every night sold!
5. Track Occupancy:
Monitor availability in conjunction with demand and rates to optimise occupancy. Capitalising on low availability and high demand, and absorbing low demand when occupancy is low will make a big difference to your revenue.
In order to maximise your revenue, it is important to squeeze as many bookings out of the existing demand as possible. Tracking market occupancy can provide a useful indicator for pricing optimally and comparing with your own can give tell tale signs of your performance.
In the top graph above, we can see the % of properties booked or blocked vs. available, and that rates roughly mirror this occupancy trend. Current demand does not however. Our lowest occupancy day, 22nd Jan, is also experiencing some of the lowest demand. This suggests that a sensible strategy is to undercut market average pricing on these days to absorb the little demand that does exist – increasing your odds of securing one of the few bookings. The 18th meanwhile sees a small peak in occupancy, but a notable one in demand: around 7% of the supply on that date was booked over the last week alone. Despite this, market pricing is only averaging around €5 higher per night. On this basis, it could be worthwhile raising prices 10% to capitalise on the small surge in demand on this date.
6. Understand Stay Controls:
Consider market minimum stay proportions to ensure your strategy is aligned. Review market minimum stay strategy by date, platform or stock type to get even more granular. Apply stay or rate controls based on your listing availability to position yourself for maximal occupancy.
Key to impressive RevPAR (revenue per available rental – a cornerstone metric in revenue management) is, logically, booking the most nights of those available as you can. A big part of this is being sensible about which kind of bookings you want when. if you have a 7 nights Monday-Sunday available some way off the check in date in high season, the last thing you want is a 2 night Friday/Saturday booking leaving you with Monday-Thursday and a lone Sunday night vacant. Firstly you’ll make a better margin in time and often money from fewer, larger bookings. Most crucially however, if beggars can afford to be choosers, it makes sense to take the bookings that leave you with sellable vacancies. So where you can afford to be selective, you should.
One method would be to switch off instant book and pick and choose whether a booking is advantageous as an enquiry comes in, but this will reduce your number of clicks/reservation attempts. Save yourself that hassle and the loss in interest in your listing and take the time to grasp the various stay controls at your disposal.
First, you can limit stay length. Alternatively, you can restrict bookings in that window to checkout on Sunday or no check in on Friday or Saturday for example. Arguably the most sensible however, is to ‘prioritise’ the bookings you attract more organically through rates. Pricing so that that Friday/Saturday night booking would compare to the revenue you would expect from a Friday/Saturday/Sunday booking, so you’re not losing out if that Sunday does remain vacant but you still stand a better chance of attracting those consumers looking for a Friday/Saturday 2 night stay.
Overall it is important to ensure that your minimum stay strategy isn’t out of step with your market. If you aren’t one of those 38.4%, you’re losing out to them on all one night bookings that occur.
Further, with the median stay in Barcelona being 4 days, if you’re one of the 15% with a minimum stay set at 5 days or more, you’re cutting yourself off from the most common booking consumer in your market. Analyse these statistics across your various inventory types and distribution platforms to get the best from each scenario.
Key to achieving more bookings at higher rates is managing more properties and doing your best to make it effective. Inventory quantity will obviously stand you in good stead for higher revenue, but weighting your efforts towards more lucrative stock types will also help.
7. Understand Market Supply:
Use supply data to consider and prioritise most lucrative or high-performing types of stock in your market. Track market progression & growth. Monitor individual competitor inventories.
The above heat map of advertised base rates in Barcelona gives an idea of the neighbourhoods housing stock that’s pitching higher rates. You can go one step further and download that supply file to identify key amenities, bedroom counts or zipcodes to influence rate in your market. Meanwhile, the below snapshot of occupancy for a portion of the coming year indicates that 1 bed stock is enjoying a higher occupancy than 2 bed properties. Demand is showing similarly and supply of the two stock types is comparable, hinting that 1 beds may be the better bet in terms of occupancy at least!
It is also possible to visualise management company inventories, such as this example below colour-coded by bedroom count. You can track how they are expanding, their pricing, ratings and more in order to inform your own decisions and strategy.
Break a big barrier to increased revenue by expanding your inventory effectively. Use supply data to prospect for unmanaged or underperforming stock. If relevant, you can also prospect for smaller management companies
The above GIF shows us an example of how to pick out unmanaged, low-performing listings to reach out to as potential management targets using the Transparent dashboard. There are many other ways to filter including bedroom type and zipcode so you can focus on your priority prospects.
Just as with the example in the previous sections, it is possible to visualise various PM portfolios including rates, occupancy, inventory and review performance. This has been a very useful tool for investors or for management companies looking to merge with or acquire competition.
A pivotal component of maximised revenue is making your listing bookable by as many people as possible and selling to the right person. Understanding the best bookings for the availability and maximising your chances of securing said bookings relies heavily on an optimal distribution strategy, and this will differ from situation to situation.
9. Create Optimal Listings & Market them on Optimal Mix of Channels:
Having an effective shop window to attract those all important guests should not be underestimated. Use market intelligence to analyse top listings and in-demand amenities – what are the high-performers doing right?
Below are 2 example listings selected from our supply map using the review score filter. Just looking at the basics of a listing can give some pointers. The lefthand image is taken from a low-performing listing. It offers only 8 photos with the main image showing nothing to entice a guest. The title also is not particularly informative or inviting.
Our righthand image meanwhile, is from a high-performing listing, which boasts 27 pictures and puts a bright and informative image centre-stage. A prospective guest immediately understands that this apartment is close to main points of interest, and can see much more about their potential accommodations. All the main OTAs agree that photos are the single most important aspect of any listing and these things play a role in the search ranking of your listing too. It is worth considering the language you are communicating in also!
Exploring the high-performing listing above, which offers 22 bright and emotive photos to describe the property layout, we can get a real idea of the drivers behind the most positive reviews. Most common mentions include: ‘patient and communicative host’, ‘well-equipped’ and ‘very clean place’. A listing may be the shop window that attracts the guest, but operations are important to the success story too, and this kind of research (and being able to track your own feedback) can inform your operational strategies a great deal.
It’s not all about having a luxury property – as with the top example of 2 comparable studios; simple considerations such as a good amount of high-quality photos and an informative listing go a long way. Equipping your property well and being attentive to cleanliness and guest experience will stand you in very good stead – so track your market reviews!
10. Platform distribution:
Each property and market performs differently on each distribution platforms and at different times. Identify the most lucrative platforms for each of your listings and price to prioritise optimal bookings.
Channel mix is very important. Whilst direct channels have the advantage of much better margins for you, you should only rely on these if you can get the traffic to them in a cost-effective way. Online travel agents (OTAs) offer a tempting alternative – pay them some commission to advertise your listings on their frictionless booking platforms with support and huge shop windows. VRMA have found that 67% of travellers prefer to book through OTAs. However, it is important to realise that different OTAs perform differently for different listings.
Above we can see that users from different countries favour different OTAs, so it is important to consider this in your distribution. Market intelligence can give you the breakdown of where guests in your market come from, and you can use this information to advertise on those sites most effective in those areas.
Below we consider the differences in the average booking that our top 5 OTA options attract. It makes sense for example that if you have a 3 day vacancy next week in a 1 bed property, you are most likely to find the customer and booking that fits on Expedia. This knowledge must be tempered with the performance of each channel in your market and stock type and key visitor nations, but these are all important in maximising your chances of securing those most profitable bookings that increase your overall revenue.
Finally, let’s look at a real example from our dashboard of how market rates can vary from platform to platform. Below, 2 beds in the same Barcelona zipcode, the 3rd row ‘compertitors’ shows that in the market, HomeAway listings are advertised around 15% higher.
This differences will of course vary across markets, dates and stock types so, as with all of the points we have mentioned, each case should be considered individually when selecting optimal channels and rates.
Managing this mammoth task…
Ultimately, all this optimisation on a listing by listing basis does introduce a pain point for PMs – how to manage listings plus availability and rates across multiple channels. Rentals United channel manager can help with that – they will provide you with a frictionless solution for this sticky issue and allow you to really exploit your distribution options. Check them out here if they could be of help to you: https://rentalsunited.com/.
Beyond this, it is hugely beneficial to illuminate the facts using market intelligence to ensure that your vacation rental strategy is positioned to really maximise your revenue. If you are interested in learning more, please register for a demo with one of the Transparent team here: