What does a vacation rental manager really need to keep prices competitive and revenue growing? Simply publishing seasonal rates can actually hurt your revenue. Successful vacation rental management professionals understand the importance of revenue management software. Outperforming the competition takes finesse, and simply adjusting prices won't give your business an advantage.
For long-term success, you need an effective revenue management strategy.
Here are six components vacation rental property management companies should implement as part of their revenue management strategy:
1. Track key areas
What metrics do you use to track business growth? Make sure to measure areas like available units, units sold, occupancy and average rate. This will help you identify areas where your business is excelling and how you can improve. You should also track both rate plan production and channel production.
2. Forecast guest behavior
No two guests are the same, and learning more about who is staying in your property at what times allows you to forecast and adjust rates accordingly.
“When implementing a revenue management strategy, you’ll need to segment customers in order to forecast with accurate predictability” said Matt Hoffman, Division Vice President of Kigo.
For example, a guest who is traveling for business may choose to stay for several extra days to explore the city and mix sightseeing with meetings. A family taking a vacation will behave differently, and their schedule will not be the same. Segmenting customers helps improve forecasting and allows you to plan more effectively.
3. Price strategically
"Perception and demand for products is constantly shifting. We know travelers are willing to pay different amounts at different times, depending on many factors such as seasonality" Hoffman said.
To get pricing right, it's important to think from the perspective of your guests and consider what they value. Avoid offering a low price point to a guest who may be willing to pay more by implementing fences, or conditions that must be met for a certain rate to be made available. These are made up of variables like policies, stay restrictions, and booking windows.
4. Use availability management
Your inventory is valuable, and you want to leverage properties to their full advantage. Single night stays can end up hurting your business during a busy weekend or holiday season, so consider placing availability restrictions on discounted rate categories. This will help maximize your revenue and prevent you from losing money.
5. Distribute through the right channels
Do you know what channels are making you the most money? Instead of being everywhere, distribute your property listings only to the listing portals that are cost-effective.
6. Communicate effectively
The hospitality industry is a dynamic and constantly evolving space. To stay competitive, vacation rental property managers need to remain educated on changing market conditions. Maintain regular communication with all stakeholders to determine how each can contribute to the revenue management efforts of their respective properties.
Set the best price, for every property, in every season
Kigo’s revenue management software system gives you an advantage over the competition and maximizes the revenue from every available night in your property. Interested in learning more? Schedule a demo of our revenue management software solution today!
(Editor’s note- we have updated and republished this article to benefit readers new to the Kigo blog).