Webinar: Revenue Success in 2022 – How to Keep Up the Momentum

January and February will undoubtedly see a surge in bookings as people start to plan their spring and summer holidays. To maximise revenue in the New Year, you need to start thinking about your approach to revenue management now.

While there’s still some lingering uncertainty, with eased travel restrictions and a full year of vaccine rollouts behind us, we can finally start to plan ahead. Furthermore, property managers who are closing a record-breaking year will undoubtedly shoot even higher in 2022. Revenue managers are already feeling the pressure of trying to hit those new goals.

So what is 2022 going to look like? Should you model your revenue management strategy on historical data from 2019, 2020 or 2021? And beyond setting your prices, how can you make sure that you’re putting your best foot forward on all your sales channels?

We want to help you start the year off right. That’s why we hosted a webinar where revenue management experts Doug Truitt ( Rentals United) and John DeRoulet ( Wheelhouse), hosts of the RevBytes Podcast, gave their best tips for revenue success in 2022.

How to improve your distribution in 2022

There are three main distribution checkpoints that you need to pass for revenue success in 2022:

1. Availability

Availability is the single most important aspect for property managers to generate revenue. You can have the best property in the world, but if you don’t have availability, you’re not going to get any bookings.

So here’s what you should do:

1. Identify your in-demand dates for spring and summer. Utilise your historical data to challenge any assumptions you may have.
2. Talk to your homeowners. Start laying out expectations regarding blackout dates and level set revenue assumptions.
3. Communicate what the high-demand dates are with your entire company. It’s crucial that everyone understands what your points of focus are.

2. Listing health

After availability, the most important thing is knowing what you’re sending out to your channels and making sure you’re putting your best foot forward.

Ask yourself the following questions:

• Are your properties live and bookable? Can they be found and can they be booked?
• Are your properties displaying the way you intend them to? For example, do you have the right hero image and max occupancy showing?
• Are all the amenities listed? Will your listings show up when guests filter their searches on OTAs?

It’s important to periodically audit your listings because there could be mismatches between your front end and your backend. To make sure your listings are bookable, look at the front end, check how your properties are displaying and spot-check some availability.

This is a time-consuming task, so you can either delegate it to an intern/someone in your team, or you can use a tool like the Rentals United Data Studio Property Health Cards.

The Property Health Cards provide a quick and efficient way to see what properties need work in order to improve conversions. They allow you to health-check your listings, track Unsellable Nights and give you a Listings Quality Score so you can assess your properties’ performance at a glance.

Learn more about RU Data Studio Property Health Cards. 

3. Channel optimisation

Last but not least, you need to look at your distribution mix and optimise your presence on sales channels.

• Look at historical channel performance over high-demand dates. This helps you prioritise your time and know where to focus your attention.
• Utilise LOS performance YoY to consider changing your restrictions or promotions. OTAs prioritise listings with promotions – so how can you take advantage of them to get more eyeballs on your properties?
• Respond to all your reviews. With the heavy booking season upon us, guests will be spending a lot of money and they’ll be looking for accommodation providers they can trust. Be sure that guests looking at your listings can see how available and attentive you are. Even if you have a bad review, responding to it in a professional manner helps to instil confidence in bookers.

Lastly, if you don’t already, make sure that you have some form of flexible cancellation policy. On Booking.com, for example, you can have multiple rate plans for the same property: this could be a flexible one and a less flexible one. You can put a premium rate on the flexible one to drive conversions.

How to approach revenue management in 2022

The last couple of years has been interesting for revenue managers. There has been a lot of reacting to quick changes in the market. So as we look at revenue management for 2022, there are a few things to consider.

As a revenue manager, you’re going to have to make an educated guess and set a strategy for how you think the year is going to look.

In the past, such strategies tended to be built from a combination of historical data, seasonality and day-of-the-week trends. There weren’t significant variations between how a unit would operate year over year if you understood basic things like seasonality and day-of-the-week trends. 

Of course, you would do things to optimise your strategy, for example, improve your occupancy in the low season, but there weren’t significant differences in your approach.

However, what we’ve seen since the beginning of the pandemic is that the traditionally stable elements of revenue management planning (like seasonality, day-of-the-week trends, booking windows, etc) are not stable anymore. 

There have been significant interruptions to our occupancy, changes to the supply in the market (with companies going in and out of business, the competitive environment has rapidly changed), short-term changes to government policies that impacted bookings and pent-up demand which created high seasons when they weren’t there before.

So how do you build a revenue management strategy in 2022?

Historical data is still going to be the most accurate data for us to predict the future. But the question is, what historical data are we going to use? Is 2022 going to be like 2019? Is it going to be like 2020? Or 2021?

Apply creative Short Term Rental Pricing Hacks

What’s likely to happen is that it’s going to be a mix of all of these, at different times in different markets. You’ll need to identify what historical model is going to be the best fit for that month and then adjust so you can make the most money for your company.

Here’s a simple recap of what each of the past three years looked like in most markets:

• 2019: Traditional seasonality for your market. You could consider this as the baseline for when things were “normal” and use it as a benchmark for when things will go back to “normal” in 2022.
• 2020: Q1 and part of Q2 were “normal”, then restrictions resulted in significant drops in Q2 and beyond.
• 2021: Q1 and Q2 were massively restricted, then Q3 brought a boom (particularly in the US).

At this moment in time, we’re still living in uncertainty. Going into the New Year, you need to plan, but you also need to be prepared for alternative scenarios.

To put it simply, you need to think about:

• What do you think is going to happen?
• What you would do if something else happened?

To help you work out an approach to your revenue management strategy in 2022, let’s look at an example:

A snapshot of the Miami market

The below graphs show key changes in booking behaviour in the Miami market over the last 3 years. We can see the differences between 2019, 2020 and 2021 and how different situations affected demand in this particular market.

Of course, the specifics are going to be different in your market but the concepts we’re about to discuss will apply.

Occupancy snapshot of Miami, 2019 vs 2020 vs 2021. Source: Wheelhouse.

Miami’s booking data (average length of stay and average booking window) by creation week of the first 24 weeks of the year for 2019, 2020, 2021. Source: Rentals United Data Studio. 

Miami’s booking data (average length of stay and average booking window) by creation week of the first 24 weeks of the year for 2019, 2020, 2021. Source: Rentals United Data Studio.

Key takeaways:

• LOS in 2021 was significantly higher than 2020 and 2019. → Consider changing your MLOS restrictions or at least monitoring them as daily pickups happen.
• Booking windows were shorter in 2020 and 2021 than in 2019. → Keep an eye on your booking windows for spring/summer bookings in the first months of 2022. These will be an early indicator of whether the year is going to look like 2019, 2020 or 2021.
• Seasonality shifted in several markets. For example, in Miami, the summer (which normally isn’t the high season) became a very busy season in 2021. At the same time, what’s traditionally considered the high season in Miami didn’t do as well. So is the summer going to be higher this year too? Or is it going to drop back to 2019 levels?

Sync pricing across channels like Airbnb.

We’ve already started seeing some really early bookings for the spring-summer next year, which could indicate that things will go back to 2019 levels. However, you do have to be prepared for the possibility of: what if we go into lockdown next year? What’s your strategy going to be then?

As you’re doing your daily pickups, you need to pay attention to your in-demand dates, the ones that brought you the most success in 2020-2021 and make sure that they’ll bring the same or better results this year too. And if it looks like they won’t, then you need to react as quickly as possible.

Example revenue management strategy for 2022

Naturally, your revenue management strategy will depend on your market. But to help you work out a tailored approach for your unique situation, let’s look at an example for a revenue plan.

Use advanced Dynamic Pricing Tools.

Let’s assume that, in a Southern US market like Miami, Q1 2022 is going to be closer to a historical seasonality than it has been in the past two years.

So, instead of using RevPAR from the last two years, establish your RevPARs based on this being a high season pre-Covid. 

However, these days, things can change very quickly. So set some periodic reminders for yourself and check back if your strategy is still relevant. Ask yourself:

• Is the trend you identified still going on? Can you see it in market data?
• Are you comfortable holding this price position?
• Are the bookings you’re getting reinforcing your strategy?

If your answer to any of these questions is no, then you need to make adjustments.

Next, look at your bookings for the summer period. Start by holding your rate higher than what your expectations were in 2019 but not quite as high as when they peaked in 2021. As time passes and you acquire more information, consider lowering these rates to a normal seasonality level.

If the spring ends up being really strong and like 2019, then maybe you should revert the summer back to that trend before the booking window starts for this year. However, if you’re seeing a lot of early bookings, keep your rates high.

The key is to set yourself reminders and constantly check on how your strategy is performing compared to your expectations. Even if you’re using dynamic software, you need to watch your rates like a hawk while things are this volatile.

You can also test promotions – like an LOS discount – on channels, but make sure to check back on those periodically, too.

Finally, a couple of extra tips:

• Re-standardise your cleaning practices across all your channels. We’ve been in a pandemic for almost two years now and a lot has changed. Are you displaying your most recent cleaning protocols? What Covid-related amenities are relevant now? Are you taking advantage of all the relevant amenities that channels provide?
• Go through your reviews. If it’s been 6 months since your listing received a review, that’s not going to help you get booked. You need recent reviews when people want to buy, not when they want to stay. So what can you do about it?

The bottom line

We hope this summary of our webinar, Revenue Success in 2022, has helped you organise your thoughts and come up with an approach to distribution and revenue management in the New Year.

Here are our top tips, recapped. And if you want to learn more, watch the webinar recording now.

How to improve your distribution in 2022:

• Optimise your listings for spring break/summer bookings.
• Speak with homeowners to ensure availability for in-demand dates.
• Develop a plan to leverage your top-converting channels.

How to approach revenue management in 2022:

• Identify what historical model is going to be the best fit for each month and make adjustments.
• Set reminders for yourself to check back on your strategy and corroborate your assumptions periodically.
• Don’t forget to audit your listings and make sure they have up-to-date hygiene and safety information as well as recent reviews.

Update pricing through Reinventing Revenue Management.