Vacation rental revenue management is the method of using analytics to examine availability and price to predict guest behaviour with the aim of maximising revenue. It ensures that a property has the correct rate, on the right channel, at the right time and is key to boosting profits.
Now more than ever, it’s essential to make sure you are expanding the value of your property portfolio. If vacation rental revenue management was not already a priority for your company, it should become a vital building block in your regrowth from the pandemic.
The companies that are most successful in the vacation rental industry, generate the biggest margins and have the most time to focus on their growth are the ones that understand how to constantly adapt their revenue management strategies.
In this blog post, we’ll talk about a new approach to vacation rental revenue management that will help you transform your strategy and hit your revenue goals in 2021.
By definition, the primary aim of a vacation rental revenue management strategy is:
The pandemic has challenged each of these pillars within the traditional revenue management strategy.
Is the product the right product for the customers that are booking? Are the right customers for the product still out there buying? Are the rates, MLOS and cancellation policies poised at the right time for optimal conversion? Am I displaying on the right channels where the right customer is purchasing?
These are questions that all revenue managers have no doubt had about their past, present and future strategies.
To make sure you are getting the best out of your strategy, you need to take time out from your day-to-day pickups and adjustments. Let those thoughts sink in before defining your new strategies. You need time to reflect and react in ways that align with your revenue goals to get the biggest impact.
Here are some of the question you should ask yourself:
A revenue management strategy has been and will always be crucially important. It really just comes down to if you are giving yourself a break to think differently about your approach and follow the trail to where your product is right for the customer, at the right time, on the right channel, at the right price during these unprecedented times.
Paying attention to the outliers, both positive and negative, allows you to course-correct properties that are not meeting expectations and try to replicate the successes of properties exceeding expectations to optimise your business.
The Covid-19 crisis has created a new era for revenue management. Previously, smart property management companies would adjust their prices based on seasons and use historical data from a data provider or their portfolio data to mark up prices based on the previous year’s economic growth.
Now, however, we are living in a new era. Historical data no longer applies. That’s not to say historical data isn’t useful. It can still be used to understand various underlying trends, but solely using historical data from 2020 and beyond will no longer be enough.
The Covid-19 pandemic has changed the demand and supply behaviour for the short-term, and it is a bit of a guessing game as to what might happen in the future.
So what happens when historical data is no longer enough to make the right decisions? What other types of data are there that you can use?
Historical data has been the benchmark for many revenue managers to understand seasonality, booking windows, yielding changes, forecasting, etc. This pandemic has flipped things on its head with regards to that methodology.
Seasonality may not have changed as much with regards to what is a high and low season. But booking windows have changed, LOS and rates are different than what we’ve seen before, and building forecasts has been near impossible considering the integrity of historical trends has been severely damaged.
Going forward, having a more proactive model while closely monitoring what is converting and taking place in the markets will shape the future.
The days of “Let’s wait and see if we just haven’t hit the booking window yet” are gone, and they’re not coming back for a long while.
Having more insight into what markets are doing from a booking window, ADR and LOS perspective and comparing them to your own pickup will be strong indicators to where you should be positioned for optimal conversion.
Advertising the right features for each channel is crucial as well since there has been some channel shift in the space.
This is purely dependent on the goals and strategies of each company. However, to be successful right now in getting the best bookings, assertive reactive behaviour is unquestionably needed.
Having a data analyst/revenue management specialist devoted to watching the market’s reactions is very important as the new travel landscape is taking shape and on the verge of a rebound.
At the same time, there are ways to help simplify workflows by using measurable data visualisation tools to see what is picking up above and below standards in order to spend the most efficient time adjusting rates, MLOS, promotions and more.
Rentals United has just launched a new product, Rentals United Data Studio to help property managers worldwide optimise their revenue strategies.
The goal was to build a tool during these challenging times that helps property managers gain back valuable time by focusing on what matters to strengthen their business.
This new revenue management tool is fully integrated with the Rentals United vacation rental channel manager. It allows property managers to:
Through RU Data Studio, property managers can access revenue success and reporting services including:
RU Data Studio has three tiers: Basic, Standard and Premium. The Basic version is included for every Rentals United client and gives them access to a high-level view of their reservation data. Property managers can choose to upgrade to either RU Data Studio Standard or Premium which allow for more access to detailed data analysis.
Revenue management and channel management go hand-in-hand and are intricately tied to one another. This new product enables property managers to fully understand the health of a business through the most important metrics from a revenue management perspective.
Considering all of the observations we have covered in this article, I expect the following factors to impact revenue management strategies in the immediate future significantly:
If you have any questions regarding revenue management, please feel free to get in touch with me. I can help you set up Rentals United Data Studio which will help you make the right decisions at the right time.
Contact me at email@example.com
Editor’s note: This post was originally published in July 2018 and has been updated for accuracy, depth and comprehensiveness.