Pacing can be revolutionary to your revenue management. Vacation rental property managers are able to track and remedy stock performance on forthcoming dates by rate, occupancy and reservations with the new Transparent Smart Rental PRO pacing view. Forward looking pacing insights will ensure that you stay ahead of the curve – literally.
What’s it all about?
Pacing, in the short term rental world, is the evolution of performance – how occupancy, rate or reservations develop. It provides a reference point for property managers to track their inventory performance against over time.
These reference points come in the shape of pacing curves set by market, segment or historical pacing. Visualising performance relative to market competition or the previous year as dates approach allows revenue managers to adjust pricing or strategy for units or groups of inventory. Proactive adjustments based on a benchmark will help to maximise revenue across your portfolio.
Hotels, a beacon for more primitive vacation rental revenue management, have long since adopted pacing as means for identifying the optimum price for their units. Furthermore, property management behemoths are following suit. So how does it work?
Pricing by Pacing
The idea is to track how a particular unit or segment of your portfolio is performing against a standard. From there, you can granularly adjust your rates to counteract any incongruities. Generally speaking, pacing above a standard might mean you are leaving ADR on the table, while pacing below could indicate that you are limiting occupancy in some way.
Setting a relevant pacing reference is of utmost importance and it’s hard to be too specific. For example, if you are tracking a two bed in a particular zipcode against the performance of your entire market, the data might not be too relevant. Filter your data set to select a comparable segment in terms of property type, capacity and geography for instance, as these can be huge factors in performance. Once defined, a reference curve will dictate the targets you work towards.
You might look at pacing over the next year or leading up to a specific date; through a prism of achieved rate, occupancy or reservations. Furthermore, you could look at an entire market, or focus on one individual unit. So let’s look at some practical applications in the Transparent Smart Rental PRO dashboard and understand the actionable value they add.
Pacing by Year Occupancy & Reservations
Below you can see an example of a pacing curve for London over the upcoming calendar year. In this particular view, you can pinpoint how occupancy fluctuates across different dates for a market or a distinct set of properties. Comparing performance against a standard will highlight any dates underperforming or ‘overperforming’ for your selection. Rates can then be modified appropriately.
Second, we breakdown the number of reservations made per date in the same manner. This helps you to understand current demand trends for a selection. If your set is tracing above your reference or target, your reservations are stronger and could well be secured at a higher ADR. Conversely, slower pacing could indicate excessive rates or other required action to boost demand. This view also allows you to identify dates with standout levels of demand in general, which could secure higher, or demand lower, rates.
Both instances provide daily views, enabling granular rate adjustment to help maintain occupancy or boost ADR. Don’t forget that the more relevant the data is to your inventory segments, the more effective your strategy will be; filter the view to analyse more granular sets.
Pacing for a Specific Date
Here, for an individually selected date, you can compare the daily occupancy evolution over the last year with that of the same date the previous year. This means that you can measure to what degree your competitive set is booking leading up to a date, and pace against last year’s performance. Clearly this will only work for a set of listings, so occupancy isn’t binary. However, comparing curves with your competitive set is also very effective for making adjustments for specific approaching dates.
Pacing by Average Achieved Rate
Finally, introducing a chart to illustrate the average achieved rate for each night in your market over the forthcoming year. This view reveals the average converted rate of booked listings on each date. Therefore, it helps you to understand at what rate guests are booking, excluding fees. In practice, comparing your own daily booked rate for 3 bed apartments in a certain zipcode or individual properties with their competitive set, you can optimise your pricing to align with what guests are paying for each approaching date.
What it all means
Ultimately, pacing provides a basis for pricing that accounts for the context of the market as well as the performance under your belt. It also sheds light on other areas where you could be falling short, providing the opportunity to remedy them.
In the current climate, referring to historical pacing can indicate the gap to normalcy. However, it is less potent as a forecast or pacing target because demand shifts have forged new expectations and made historical data less relevant. That’s where forward-looking market insight comes in. The ability to pace against current market occupancy, reservations and rate in your market will keep your inventory ahead of that curve.
Being as segment specific as you can is critical to pinpointing occupancy and rates for particular stock and time points. In addition to layering filters, downloading data sets allows you to build reports and record performance in your own way.
Some questions you may want to ask are: How does my pricing compare with average booked rate over the summer? In the past several weeks how much has the occupancy risen or fallen for next month? How does the booking rate measure up to past patterns? How does this acceleration of bookings affect my revenue strategy? Ultimately, fine-tuning your pricing strategy could pay huge dividends to your revenue.
Try it out yourself
If you would like to see these features and more in action for yourself, you can! Book a personalised demo with one of our experts whenever you like: