Ben Edwards
Catchy title, right? With the current political environment, it’s sure to catch your eye. While I will not attempt to decipher the current political climate in this article, I would like to discuss certain changes in the industry that will force vacation rental managers to review and possibly revise current business models.
I continue to say the only constant in the vacation rental industry is change. Our team is seeing a myriad of changes in the industry affecting nearly all facets of the business. Vacation rental managers should consider the impact these changes could have on their business and may make them susceptible to loss of revenue, erosion of profit margin or loss of inventory.
As more inventory is distributed alongside hotels and limited service properties, vacation rental managers will be required to provide more commercial offerings. The days of managing a property with owner hand me downs are over. Vacation rental properties need to be properly furnished, inspected, safe and ready to rent. Too many operators are selling sub-par products that lack proper quality inspections, are not outfitted with the requisite safety features, or simply not ready to rent. Owner communication is key as properties require certain upgrades. These upgrades should be correlated to increase reservation conversion and the need to limit liability from a life safety perspective.
With the increase in popularity of vacation rentals as a lodging alternative comes increased competition. The easiest way for a competitor to increase inventory is to decrease their fee or commission associated with managing the property. Operators are too quick to give away certain services in an effort to gain a property. If an owner’s relationship is predicated on price, it will always be grounded in price. We do not recommend engaging in a race to the bottom, as we find the best companies compete on service. Owners appreciate service. You might ask an owner that is considering leaving your rental management program, “How hard do you think your new company will work for a reduced rate?” Or, “How long is your reduced rate locked in for?” Owners should also consider the level of service associated with a low-cost provider. Many of these companies also are cutting costs in housekeeping or eliminating inspections all together. If you proactively maintain your relationship with owners, communicate regularly and in a meaningful fashion, owners are less likely to be wooed by a cut-rate offer. By knowing your owner, their family and their needs, you will strengthen the relationship, reduce the volatility and have a better owner partner.
Last, we are finding that vacation rental managers are not properly monitoring certain statistics, production and conversion in the business. With the constant change in the industry, it is incumbent that vacation rental managers review, analyze and change the course based upon what the data conveys. Too many operators lack proper tracking and measurable reports needed to make informed business decisions. Assimilating reservation statistics, monitoring occupancy and averaging daily rate will help vacation rental managers be more progressive while competing for guests in addition to increasing reservations. Increasing and decreasing rates is imperative in an effort to drive more revenue. Staying on top of your company’s data will allow you to compete with regional/national players and ensure that your business is staying ahead of the competition.
If your business is struggling with the changes afoot in the vacation rental industry, consider reviewing your business model and practices. Make changes and measure the return of any new initiative.
