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    Top Five Underutilized Revenue Management Strategies

    For the past few years, property managers did not have to think about how to get a customer to book their home. As the vacation rental industry returns to pre-pandemic times, property managers find themselves struggling to keep their homes booked. With the increase in supply and the decrease in demand, it is time to ensure we are optimizing all opportunities available, implement strategic marketing, and then applying best practices to achieve maximum results. In this article, we discuss the five most underutilized revenue management strategies and best practices to increase market share and revenue for your owners.

    1. Data Organization

    The most common mistake property managers make is applying a broad strategy to all inventory when only a subset of the product really needed the change. Organizing your inventory into smaller subsets of manageable data will give the property manager direct insight into struggling homes. Grouping homes into categories based on bedroom size, location, view, and amenity will allow you to identify trends for like products.

    Most property managers have a mix of inventory ranging from studios to six-bedroom homes and larger, along with having a mix of condos. Most condos and vacation homes will have a different booking window and, therefore, will need a different strategy. If a company identifies that they are pacing down further out, instead of dropping the price for all homes, having organized data will help identify that potentially only the larger homes are pacing down and any studio or one bedroom is still outside of the booking window and does not need any adjustment for those dates at this time. Ensuring that you look at segments of inventory individually will safeguard you in making the right moves necessary to make the most of your inventory’s opportunity.

    2. Data Analysis

    Before implementing any strategy, we must first establish a starting point. Reporting helps property managers understand how they are currently performing, so when they make changes, the data will show how the numbers have changed, and the property manager will know if the strategy worked or if they need to continue to modify the strategy. Think of reporting as your report card. One of the most underutilized reports is the booking window report. A booking window report will identify how far in advance customers make their reservations and at what price.

    Most property managers will know the dates they are going to sell out; however, they are apprehensive if they are leaving money on the table. The booking window report will give insights into how a company is pacing based on days to arrival and at what price. Data organization is very important when reviewing this report because it will need to be analyzed by location, bedroom size, and amenities. This is especially important if you have a broad mix of homes.

    3. Nightly Minimum Optimization

    Managing nightly minimums is just as important as managing prices. Many times, price is not the reason a home sits empty. The restriction of a longer stay requirement or the restriction of forcing a specific check-in date will turn business away. Reducing nightly minimums as the check-in date approaches will increase marketplace exposure. Offering flexibility on the day of arrival and proactively reducing the nightly minimum requirement can capture additional bookings with rent equal to or higher than the original setting.

    Most property managers will say managing nightly minimums is easy: “seven-night minimum, Saturday to Saturday stay restriction, three-night minimum off-season, my strategy is set for the year.”

    During times of strong demand, many times that strategy can hold true; however, people want flexibility and will pay for convenience. People will pay 1.5 times the cost of coffee to have it delivered to their house, simply for convenience. That holds true for the vacation rental industry as well. When was the last time you went on vacation and stayed Saturday through Saturday? Charging different prices for different lengths of stay is common within the vacation rental industry. Daily pricing three to six nights, weekly pricing, and monthly pricing—but what if we took that strategy and optimized it? What if someone could only stay two nights but was charged as if they stayed for three? What if someone could only stay four nights but paid as if they stayed for seven? Would we turn those guests away? It’s a win-win for everyone if the owner made their expected income, the guest was able to book the vacation of their dreams, and the property manager captures their share.

    Off-season is when the strategy flips. Instead of charging more for fewer nights stayed, now the property manager can charge less for more nights stayed. If the demand changes to stay one to two nights and midweek sits empty, utilizing a discount for longer stays will capture shoulder night business and increase market share.

    4. Managing GAP Nights/Orphan Nights

    What happens to all the unsold nights in between stays and the homes that sit empty? Managing orphan/gap nights is a great way to drive incremental revenue.

    Offering to stay one more night: Offer guests on either side of the open night to either come in one day early or stay one day later. Even if they extend 50 percent off the rent for that night, that is incremental revenue gained.

    Extend a late check-out or early check-in around open nights on the calendar: To hold the integrity of the rate for customers, instead of offering them an entire night for a discounted price, it is also recommended to offer an early check-in or late check-out to the existing customers for a flat fee or per-hour fee. 

    Managing availability and controlling nightly minimums go hand in hand with maximizing calendars. 

    5. Maximizing Exposure Within the Marketplace

    Set it and forget it is a thing of the past. Just putting a listing on a partner channel is not enough anymore. With the supply growth over the past few years, the online marketplaces have become more saturated and competitive. Maintaining a good header, organizing pictures to keep the customer engaged with your listing, and, of course, making sure the price is competitively positioned are just a few things to keep your listing fresh.

    Now let’s take it to the next level. With the increase in supply within the marketplace, it is now time for property managers to increase their exposure to different platforms. The question arises: If you are not 100 percent occupied every night of the year, why would you not want to put your inventory on more listing sites? Not every channel performs the same way, nor do they share the same booking window, the same demographics of guests, or book all the same inventory. With organized data, reviewing the reports will give insight into the performance of each channel of distribution. Most sites are pay for performance, so there is no cost associated unless they generate a reservation, and if the leads are slow and there is plenty of availability, do we want to restrict other sites from spending their marketing dollars to promote your investment? Increasing exposure in the marketplace will create brand awareness and optimize opportunities to generate more revenue. Remember: Demand determines price, not your gut.

    Desiree Garcia leads the revenue management division of InhabitIQ and is the co-founder of the revenue management software, RevMax. Garcia has watched the evolution of revenue management through the hospitality industry and emerging in the arena of vacation rentals and alternative housing. 

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