Not long ago, vacation rental rate structures were simple and straightforward. Rates were set in advance with the property owners prior to when the “annual vacation planner” went to print. There were no flash sales or last minute discount email blasts. Capacity restrictions were minimal, limited to “Saturday-to-Saturday” or “four-night minimums.” Guests could easily grasp the idea that it costs more to visit the beach on July 4 or to go skiing on February 14.
Distribution channels were easier to manage as most reservations came in by phone calls or via direct website bookings, and pricing was opaque as it took time to shop competitors for an “apples to apples” comparison.
In recent years, VR managers became more adept at watching demand trends, while advances in property management systems simplified the adjusting of rates according to demand. Marketing executives realized that discounts and promotions could increase sales during periods of lower than expected demand; they also began using stay pattern restrictions to optimize yield when demand was strong. At the same time, pricing became transparent as listing services and online travel agencies made it easy for consumers to compare rates.
As a result, today’s agents are required to convey complex rate structures to the most educated callers our industry has ever had! Therefore, reservations sales agents need the skills to respond to the many challenging questions and objections they receive daily.
Explaining Top-Tier Rates
Guests have always asked questions such as: “Why is the rate higher this time?” But this is true even more so now that managers push the rate “lever” more frequently. The standard response is some version of, “Oh, well that’s a busy time of year so the rates go up.”
Here’s another perspective: The “normal” rates are the high-season/top tier rates. It’s not that we raise rates when it’s busy, it’s that we lower them when it’s slow! Example: “July is a fantastic time here at Beachtown USA so our prevailing rates apply. However, we always offer lower rates whenever it’s slower. Are your dates flexible?” Revenue managers love agents who shift demand to lower-rated dates because that’s when occupancy is needed.
Overcoming Objections to Minimum Stay Restrictions
Other “levers” being used more often these days for maximizing yield is minimum stay restrictions and day-of-arrival restrictions. For example, many companies in the condo market require three or four night stays over holiday weekends. First, your agents should probe to find out if the guest is able to extend their stay. If not, they can then promote the benefits of staying later on their last day or having the home ready immediately upon arrival. Examples: “Since you’d be paying for the extra night anyway, on the last day you can linger as long as you want and you won’t have to worry about the 11 AM check-out.” Or, “You can use the extra night the day prior to your actual arrival, that way if you arrive early the home will be ready and you won’t have to wait for our 4 PM check-in time.”
Using “Rate Framing” During Moderate-to-Low Demand
This technique works well when any rates other than top-tier are showing. The idea is to first reference the higher rates to position the lower rates as being a good value. Online giants such as Expedia and Amazon are famous for their “slash” pricing, whereby the “normal” rate is displayed with a strike-through next to the actual price. Your team’s ability to do this will vary according to how your PMS system displays the rate quotes, but wherever possible it is always a good idea to do so. “Normally in season this home runs about $4,000 a week but for your dates we are able to offer you a rate of $2,800.”
“Downselling” When Necessary
Most companies seem to find that the higher-rated properties tend to rent first. This might include ocean front condos, first row beach homes, or condos closest to the lake or ski lift. It might also include homes with the most contemporary décor and furnishings. Without training, when your agents do a search and find these options are already booked chances are they are saying “Oh, all we have left at that time is…” Instead, they should position remaining options as still being a good value by saying “Fortunately, at that time we still have…” If there are glaring deficiencies about the décor or location they should point those out so as to manage expectations, but they should then continue on to mention the positive attributes of the remaining options. To maximize revenue all properties must be booked!
How To Sell Homes That Are Over-Sized
Sometimes the caller is looking for a home for a smaller party such as just one couple, but the search reveals that only two or three bedroom options are open. Your agents might be saying “All we have left for your honeymoon is three bedrooms.” This almost makes it sound like we require the couple to sleep in all those bedrooms! Better to say, “Now I know it’s just the two of you, but what I still have left are three bedroom options and the good thing is that these have much larger living rooms…”
Using “Fade” Rates
Some managers empower their agents to offer lower rates than those that are published in order to close the deal, especially for dates (or homes) with unexpectedly low demand and/or for callers who are shopping on costly OTA websites. If so, train agents to first create urgency and gain commitment before offering the discount. Example: “Okay, I checked with my manager and if I can confirm this for you now, I can lock it in at the rate of $X.”
About the Author
KTN President Doug Kennedy has been the lodging industry’s leading expert in hospitality sales and guest services training for over two decades. His hotel clients have ranged from five star hotels such as large as The Venetian Las Vegas at 7,000+ rooms to luxury inns such as the Castle Hill Inn Newport, RI at 35 rooms. Over the years, he has conducted corporate sponsored training for most of the major hotel brands including Starwood, Wyndham, Marriott, Hilton, Intercontinental, Best Western, Choice, and Leading Hotels of the World. His current vacation rental industry clients include a diversity of companies ranging from large to smaller operators including Brett-Robinson, Brindley Beach Vacations, CabinsForYou, Sunriver Resort and Spectrum Resorts. His monthly sales training articles inspire readers worldwide. Email Doug Kennedy at firstname.lastname@example.org