What has 2017 meant to you? As we near the midway point of the year, it’s good to look back at the trends that have taken shape and the ways in which they have impacted your business. At the same time, looking ahead to the biggest challenges in front of you helps you prepare.
Arrival caught up with Kirsten Brink of Vantage Resort Realty of Maryland to get her take on the areas in which vacation rental managers should be capitalizing right now, and how to best prepare for the rest of 2017 and beyond.
What is the biggest opportunity that vacation rental managers should be capitalizing on right now?
Brink: The biggest opportunity that vacation rental managers should be capitalizing on right now centers around dynamic pricing and shorter stays. Over the past 14 years I have watched the market shift from a domination of weekly rentals to a division of weekly, mini-week and flexible rental options. As the supply of vacation rentals has increased over the last decade, the demand has also increased, though customers now seek an average of 3-5 night stays. The demand for shorter stays has followed tandem with an increase in last-minute bookings.
As the market shifts towards shorter stays, it is important for all vacation rental managers to take a look at their pricing strategies to ensure that they are in line with customer expectations and the market overall. Customers expect flexible travel options and while this may be uncomfortable for those with a traditional mindset, it is time to consider making the shift to a flexible rental calendar where customers can arrive on any day they seek for the right price. This manner of thinking is essentially what has driven the rapid successful growth of OTAs, such as Airbnb. By providing prospective guests with a variety of rental options at optimal pricing levels, this will drive revenue for all.
It is very important that all rental managers understand that dynamic pricing does not mean discounted pricing. It is truly a model for adjusting pricing and centers around a daily pricing model where prices are higher or lower based on circumstance. Rather than having rates for set weeks or months throughout the year, all rental managers should closely analyze the seasonality of their business, historical demand and occupancy levels. Based on this data, they can set more intelligent prices which can allow them to stand out from the competition. As demand for certain time periods and even certain inventory increases, managers have the opportunity to increase prices in order to maximize revenue.
So far in 2017, what has been the biggest trend that has impacted this industry?
Brink: The biggest trend impacting the vacation rental industry is the overall increase in bookings from OTAs, including Homeaway, Airbnb, TripAdvisor, VRBO, and Booking.com. Over the past few years, the key players in the OTA channels have been on a steep learning curve of the vacation rental market, mainly through acquisition and assimilation of other companies. This rapid growth has come with a number of growing pains for many vacation rental managers as we have had to learn new algorithms as well as adapt to new rules of integration and instant booking in the OTA game. As a result, those in the industry who were using OTA’s mainly as an advertising platform have been forced to think more strategically in order to maximize revenues. Gone are the days of listing a property on Homeaway for the sole purpose of driving customers to the overall portfolio. Many companies have also seen their individual websites drift down the list of search results which makes it even more difficult to direct traffic. As calendar integration and search results have become centered on providing the guest the most relevant results, vacation rental managers are seeing a decrease in overall inquiries generated for properties even as they see an increase in bookings from these OTAs.
While changes within the individual OTAs have presented a variety of challenges, there are a number of opportunities that vacation rental management companies can capitalize on. The first opportunity comes in the form of education. Each manager that has properties listed on one of these sites should be educating themselves regularly as to what changes have been made, those that are in the pipeline and where they stack up against the competition on these sites. The next opportunity comes in the form of feedback. Positive customer feedback and reviews are like gold on OTAs. Customers frequently search by ratings and those that have positive reviews will appear in the top of the search results, increasing the likelihood of booking. The last opportunity I will discuss here is to acquire new listings simply as a result of owner frustration. As we all know, vacation rental property management is not a walk in the park. Many homeowners are becoming frustrated with the complexity and hassle of managing properties on their owner. This is a golden opportunity for educated and experienced managers to jump in and sweep them off their feet so to speak.
What is the one piece of advice you would give to vacation rental managers as they prepare for the second half of 2017?
Brink: My one piece of advice to vacation rental managers as they are preparing for the remainder of 2017 is to focus on capitalizing upon positive guest experiences. Many of us spend the day putting out fires and “saving the world” during our individual seasons. As a result, we get lost in the negatives. This is not only detrimental to individual morale but it also does nothing to truly promote the business. As you get positive guest feedback, really take the time to feel it and enjoy it. Let the “warm fuzzies” take over and wash the negative away. Share the feedback, encourage your team and promote it whenever possible. Once it all sinks in, be sure to thank the guest and ask them to spread the word. Ask for that feedback the same way that your reservation team asks for the sale.
Reviews are golden. Anyone interacting with guests should ask for feedback, ask for online reviews and respond accordingly. Even negative feedback can present an opportunity to turn positive with the appropriate response. Make sure your organization has a strategy for capturing & responding to reviews as well as a resolution for solving any problems mentioned. Customers who have had challenging experiences may end up being the greatest advocates for the business, provided that their problems are solved appropriately.