Throughout the year, month and even day-to-day, there will be a fluctuating demand for your property. During larger-scale events, the demand for vacation rentals will increase, giving you the opportunity to increase your revenue.
Events can be challenging to manage. They can have a major influence on local demand which means your prices should be adjusted accordingly and in a timely manner. It is necessary to forecast possible demand and take advantage of increased market rates.
Compression describes this market condition where demand outstrips supply and it is important to recognise these periods and capitalise on them with maximised rates.
Getting ahead of the game with compression isn’t easy, but with the correct data and analysis it can be done. Particularly if you manage a market that tends to host events, especially bigger international occasions, understanding and capitalising on these spikes will be highly beneficial to your revenue.
There are two main steps. Firstly, identify key dates in the calendar year and then, ensure that you take into account the dates leading up to and following the event.
Mobile World Congress 2020, Barcelona
Mobile World Congress (MWC) takes place each year in Barcelona (24-27 February 2020). This example presents some interesting statistics that demonstrate the potential of events to impact rates. Property managers that have an insight into events and demand have already made proactive rate adjustments to ensure they won’t be leaving money on the table. See the following analysis from Transparent’s PM dashboard:
There is a spike in ADR during MWC, which almost doubles relative to the week before, from approximately 200€ to 400€; this PM has acknowledged forecasted demand for the event and increased his rates.
The market ADR on the opening day of MWC sits at 71% higher than the average over the following year. This PM is aware of the potential demand, also increasing prices to 65% above the yearly average (345.99€). Although PM rates are lower than the market throughout these 2 weeks, they are clearly anticipating the demand for MWC.
PMs have also accounted for arrival prior to and delayed departure from the event, with stepped rate increases and decreases for the 3 days before and after the event. Although these days tie in with the weekend, we can see that prices are significantly higher than the previous weekend.
Additionally, the ‘Demand’ data points in Figures 2 and 3 show the current occupancy rates of a given night. You’ll note that demand is only slightly heightened; averaging 43% throughout the event, versus the same days of the previous week, which average 37%. Whilst the event is still 6 months away and peak demand had not yet been realised, the market and this PM have already forecasted an increased demand and preemptively raised their rates. As the event draws nearer, it will also be important to look at how the demand and pick-up data develop to make proactive adjustments and get ahead of your competitors and maximise revenue.
By looking at events and analysing occupancy rates and the pick-up, you can understand the demand of your market at a given time; ensuring your rates are optimised and aligned with market pricing and occupancy trends. Pick up illustrates how many listings in a market have become unavailable in the last week. If the data shows a peak in demand, you can capitalise on this by increasing your rates.
If you are aware of what is going on in your market in the future and how your pricing compares to the market and your competitive set, you will be able to make proactive rate adjustments to ensure you aren’t leaving money on the table and your occupancy is optimised.
Transparents Dashboards give property managers insight into the current state of their performance, market and competition, allowing them to maximise revenue by aligning strategy with reality. The calendar view details key events happening in your market, enabling proactive adjustments to optimise strategy.