“If you don’t like change, you’re going to like irrelevance even less.” – Gen. Eric Shinseki
There is massive change underway concerning how vacation rentals are marketed, booked, and paid for online. We’re just in the beginning stages, but make no mistake, the industry is going through a massive shift again.
The fact is, like it or not, the genie isn’t going back into the bottle. Gone are the days when guests shopped out of a catalogue or brochure and booked their vacations several months, if not a year, in advance, and never tried to haggle over price.
Now guests compare prices, book at the last minute, and think they deserve a discount simply for shopping online. To complicate things even further, companies spend millions of dollars a month to convince guests to book their vacations through them, instead of picking up the phone and calling you. What’s more, the move is being made to allow guests to book your units without having to send an inquiry first.
The good news is, all is not lost. But it’s going to take some adaptation and that word no one likes, “change”.
Here are some things that you can do today to help ensure that your vacation rental business will be around for years to come.
Market to your past guests – I can’t encourage this enough. You are sitting on a goldmine in the form of your past guests and yet most vacation rental companies do not actively market to their past guests. This is the most important thing you can do that will offset people going to an OTA or listing site in order to book their next stay with you.
Contact them regularly (bi-monthly is fine) with compelling calls to action and offers. Just getting in front of them isn’t enough. Tell them why they should stay with you again instead of going somewhere else.
Target communications to specific segments of your customer base. Do you have homes that are perfect for families? Send an e-mail highlighting those units to past guests with kids and talk about all of the family friendly things that your area offers.
Have units that don’t seem to rent as well as the rest? Put together a “bargain” offering. Lower the minimum night stay for those units. Offer up to two tickets for a local event or show if they book one of the units by a certain date. There is a ton that you can do to keep your company top of mind with your past guests. Be creative and leverage your uniqueness.
Yield Management – If you don’t know what this is, you need to. In a nutshell, Yield Management is taking advantage of supply and demand. You can raise or lower your rates and minimum night stay in order to capture more revenue. More revenue = longevity and greater freedom.
Here’s one example of how you can leverage this. The majority of guests book holiday vacations (Christmas, New Year’s Eve, etc.) several months or more in advance. Determine how far in advance you get the majority of those bookings and charge a premium for booking during that period. Say you get the majority of your holiday bookings 8 months prior to arrival. Increase your rates 10%-15% for bookings that are made 8 months or more in advance.
On the flipside, determine the time period in which you get virtually no bookings for the holidays (usually a week or two before the date) and offer a reduced rate and/or reduced min night stay to capture additional revenue. The goal is to leave as little money on the table as possible.
Distribution – This has become the “necessary evil” for many vacation rental companies. Distribution channels like HomeAway, Airbnb, and TripAdvisor are here to stay. Like it or not, most travelers are going to start at these websites to book their next vacation. So having your units on these sites gets them in front of eyeballs that otherwise wouldn’t see them. The thing is, you don’t have to love this fact in order to benefit from it. Get the guest through distribution, and keep them coming back through direct marketing.
Here are a couple of guidelines for distribution:
- Use what works. You don’t have to be on every site out there. Focus your inventory on the sites that drive the most bookings and ignore the rest. Even if what works is a little more expensive than what you’d prefer.
- Make sure your units stand out. Take the time to get great photos. Write descriptions that help the guests see themselves in the unit and enjoying all that the location has to offer. Don’t assume that guests are going to connect the dots on why they should stay with you. Write photo captions. Highlight positive guest reviews and respond to negative ones. Don’t try to hide the fact that you got less than a 5 star review. The negative reviews give legitimacy to the positive.
- Split the marketing costs with your owners. More and more sites are moving towards a commission based pricing structure and many vacation rental companies can’t afford to swallow the entire commission. It’s worth suggesting to your owners that in order to continue to participate on a particular website (which delivers $X a year for them) you can’t continue to eat the entire commission. All of the companies that I know that have done this haven’t regretted it. Some of their owners said “no”, but they’ve been surprised at the number that have said “yes”. Most people tend to be pretty reasonable and fair if you frame your request in a thoughtful, “win-win” sort of way.
Putting it all Together
Each one of these things is good to do but the key is to combine all of them into a cohesive strategy. What works best for you will depend on your location, type of guests, booking trends, and individual economics. It takes a little bit of time to find what works for you, but it is absolutely worth it in the long run.
If you need help getting started or aren’t sure how to figure out what will work best, I can help. Contact me and we’ll get started.