Travel & Tech News You Can’t Miss – May 8th 2015

Travel & Tech News
Travel & Tech News

Disappointing news this week about vacation rentals’ performance on Expedia. Here’s the kicker to the whole story, “I think vacation rentals are an important market,” Expedia Inc. CEO Dara Khosrowshahi told financial analysts during the company’s first quarter of 2015 earnings call last week. “It’s an important product in many, many markets. As to whether it’s important for Expedia to be in, that remains to be determined.

Some of this is just growing pains for our industry, and some of this is failure to find that middle ground that will allow the square peg to fit into the round hole. Expedia wants quite a bit of control over the inventory, pricing and payments for vacation rentals (like they have with hotels) and many vacation rental companies can’t give up that much control. Particularly with a 15%-20% commission attached.

Everyone involved has their work cut out for them. Ultimately it has to be easy for the guests to book, lucrative enough for Expedia to make the right investment, and allow the vacation rentals companies (or owners) to continue to provide the personal touch that makes vacation rentals unique.

Did you survive “Mobilegeddon“? If your website isn’t mobile friendly, then you likely suffered in your Google search rankings as of April 21st.

Even if you still get the majority of your bookings over the phone or e-mail, 20% of searches are done on a mobile device, and it was recently reported that 25% of all digital transactions in the US were generated from a mobile device.

Speaking of mobile transactions, I have often said that virtual wallets and online currency are going to become the norm in the not too distant future. So it was interesting to read that Google Wallet funds are now FDIC insured.

There is still a ways to go before this becomes mainstream, but the writing is on the wall. Here’s something to think about; will your business be ready when this becomes the preferred method of payment?

The airlines are trying to be the first to integrate mobile payments into their guest experience. Here’s an article on how a few of them are making this happen. JetBlue will let you make in-flight purchases through their app on your iOS device ,and KLM is experimenting with booking flights on Facebook and Twitter.

Lots of change coming. Are you ready for it?

Until next week…

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3 Factors in Choosing the Right Vacation Rental Software

Searching for Software
Searching for Software

You have written out your business goals, created your feature set list of “must haves-like to haves-nice to haves”, done your research on trends and technology, and talked with your staff about their needs. Now you are finally ready to start shopping around. (Earlier posts in this series cover developing business goals and feature lists, click here to read them.)

#1 Awareness

Before you reach out to any software companies, look online and ask around to find out the various offerings and reputations of each one. Many of the software companies post detailed information about their feature sets, along with demo videos, and testimonials on their websites and social media pages.

It also helps to talk with their current customers and hear what their experience has been. But, make sure to consider the source when you are getting feedback. If someone is adamant about how great or awful a particular vendor is, are they also someone who always grumbles or offers praise regardless of the situation? Or do they tend to offer fair and balanced assessments. Don’t ignore their input, just be sure to put it in context.

Once you feel like you have a good lay of the land, reach out to those companies that you think are going to be the best fit for you. At this point, don’t worry about pricing.

#2 Be Realistic

Keeping in mind that no software is going to do everything that you could possibly want right out of the box, measure the offerings against your goals and feature list. If a software package will give you the tools to achieve all or most of your goals, has all of your “must haves”, a few of your “like to haves”, and has a great reputation for customer service, then they’ll be a good fit for you.

On the flipside you don’t want to purchase software that only has a few of your “must haves”, lots of “nice to haves”, and doesn’t really help you achieve your goals, but it’s well within your budget.

#3 Nuts and Bolts

Once you have your short list of software vendors, you can then shorten the list even further by considering things like pricing, timeframe, data import tools, training resources, and cancellation/refund policy.

Let’s look at each of these briefly;

Pricing – This should not be your sole deciding factor. That said, you don’t want to choose something that you have to go into debt to purchase.

One thing to keep in mind is that purchasing software around the end of the Quarter or year (end of March, end of June, end of September, and end of Dec) can sometimes net you a significant discount. Many sales people are trying to make their quarterly/annual goals and may be willing to give you a price break in order to get your business. Or instead of lowering the price they may be willing to throw in additional services at no cost.

But be careful, this can backfire on you. If your salesperson is having a great quarter or year and doesn’t need your business to make their sales goals, not only will you not receive the discount that you’re hoping for but you could lose your window of opportunity for a timely installation. Tread very carefully with this one.

Timeframe – How quickly can they start working with you? Are they backlogged for two months or can they get started with you right away? What is the average amount of time that a company of your size takes to get installed?

Keep in mind that a backlog is not necessarily a bad thing. It can indicate that quite a few companies see the software as the best option to have. Where it can prove difficult is when their time frame doesn’t align with your timeframe.

Understand too, that how quickly or not an installation takes is largely dependent on you. Getting a feel for timeframe from the software vendor can help serve as a guide for budgeting your time and give you a realistic expectation.

Data Import – Can they do it? What can they import? Does it cost extra or come as part of the package? How much will you manually have to enter on your own? The answers to these questions will impact your installation timeline.

Training Resources – Do they offer videos? Live classes? On-site training? Are they extra or do they come standard? Do they break out training in smaller chunks to get you running or do they throw too much at you all at once?

One of the nice things I have found about video training is that you can refer back to it as often as you need to. You can pause, rewind, fast forward, etc. to suit your learning style. Video training is not the be-all-end-all, but it is a very valuable tool.

The way that I recommend to approach training is to focus on getting started, rather than learning everything there is to know. Learn what you need to in order to get up and running. Then go back and become an expert.

Cancellation & Refund – No one likes to get here but it inevitably happens once in a while. Different companies offer different things, so you’ll need to ask about this specifically.

One thing to keep in mind is that software companies incur costs and expend resources in helping you get installed. Like any good business they need to make sure that they cover their costs or they won’t be in business long. So just because a company doesn’t offer you a full refund, doesn’t mean they just want your money. They need to stay in business too so they can continue to support their customers.

Making a Decision

Now you can make the best choice for your business based on all of the variables. And most importantly, don’t ignore your gut. If it’s telling you to go with ABC Company even though on paper they may not be the best fit, don’t ignore that. Likewise, if your gut is telling you that something is wrong with XYZ Company even though they have everything you could possibly want, then it’s probably too good to be true. You may need to take more time, do more research, or talk to more people that use the product. That’s ok. Better to make a wise decision, even if it takes a little longer, than an impulsive one.

If you would like help in choosing new software, navigating a software installation, or getting back on track with an existing one, contact me through Contact tab on this website. I have managed and assisted with dozens of software installations and can help you make yours successful.

Next – Priorities

The Most Important Component in Vacation Rental Software Installation: Your Staff

Teamwork
Teamwork

The most important component that will determine the success or failure of a new software installation is getting your staff on board with the project. This is so critical to success that I felt it deserved its own post. I have seen software installations literally come apart at the seams because the staff refused to going along with it. Unfortunately it forced the business owners to throw in the towel and they often didn’t recoup all of their investment. The good news is that this can be avoided with a little bit of planning and communication beforehand.

Heads Up

First, let your staff know that you are thinking about switching to new software as soon as you have made the decision to start looking. If nothing else, it gives them time to get used to the idea. Explain to them why you believe it is the right move for your company (be specific) and invite their feedback, questions, and concerns. If you wait to tell them until you have already chosen new software, you may have missed blind spots that they could have helped you see that would have changed your mind.

Heads Together

Second, invite them into the process of evaluating how new software can help you reach your business goals. They are the experts at their job and can help you create your list of “must haves”. This also gives them some ownership in the process, which makes them more invested in its success.

The instances where I’ve seen software installations come completely unraveled are where the staff resented the fact that they were not consulted about the change in the first place. So they complained about every little thing and made mountains out of mole hills until the owners threw up their hands in defeat. This could have been avoided by inviting them into the process from the beginning.

It’s A Team Effort

Third, as you look at the various options that are out there, have your staff (ideally your department heads/team leads) evaluate the software with you. But do your salesperson a favor and designate a single point of contact that compiles everyone’s questions/concerns and sends it to them once or twice a week.

Don’t overwhelm them by having everyone in the company bombard them with questions and comments.

Once you have decided on a particular software package, explain to your staff why you chose that particular option and help them see how their feedback made it happen.

Dealing with Stragglers

Even after all of the above you may still have an employee or two that refuses to get on board. Maybe you went with a different option than what they wanted, maybe they’re afraid for their job, or are just resistant to change in general. Whatever the reason, try and understand specifically what they are concerned about. Then, ask for their help in making this a success. Software installation is a huge project and everyone involved is critical to its success.

If that doesn’t work, you may have to put your foot down and explain that while you understand and appreciate their concerns, you believe this is the best move for the business. At the end of the day a company is not a democracy. You’re the boss and you have to decide what’s best for the business. People are counting on you to lead them.

This person may no longer be in the right role, or a good fit for your company. They might be better suited for a different team or it may be time to part ways. Whatever the case, you may have to make some hard decisions. It’s an unfortunate part of leadership that never becomes easy.

The good news is that by involving your staff and communicating regularly, it will greatly reduce the chances of these kinds of situations considerably.

Next – How to Find the Right Software

Buying New Software – 4 Steps to Ensuring Success

Setting Goals

Switching vacation rental software can be a daunting task.

Who has the best options?
Which offering is most cost effective?
What will you have to give up and what will you gain?
How disruptive will it be?

Before you undertake the task of switching software, there are a few things that you can do up front to make the job easier down the road. You will also want to give yourself plenty of time to prepare for the switch. I recommend budgeting at least a year for the entire process. That covers everything from looking at the different offerings to the actual installation of the software.

But before you start looking at what is out there, you’ll want to decide a few things first.

#1 Determine what your business goals are for the next 2, 5, and 10 years.

What are your goals as a company for each of those time segments? To increase your revenue? Stronger relationships with your owners? Growing your inventory? Enhancing your guest services? Reducing operating costs?

Knowing what you want to accomplish in the short, mid, and long term, will inform your decisions about the kind of software and services that you should purchase.

I recommend picking no more than 2-3 goals per time segment to drive towards. You can always update or adjust your goals if you find that your priorities have changed. Your long term goals in particular will change as time goes on, but they provide a clear direction for you to move in.

Write out exactly what these look like for you. What does “increasing your revenue” look like? By how much? What is the percentage or amount growth required to take your business to the next level? What are the specific steps that you need to get there?

What specifically does “enhancing your guest services” look like? What tools do you need to do it? What would you like to do that you can’t currently do?

If you don’t know the answers right away, that’s perfectly ok. Spend some time brainstorming, researching, and getting input from your partners and staff. The point isn’t to have the perfect list that will never change, but to have specifics that will guide the direction you move in. Those items may change depending on various things that are completely out of your control. That’s ok.

#2 Develop a comprehensive list of “must haves”, “like to haves”, and “nice to haves”.

No software package is going to do everything you could ever possibly want it to. There are going to be trade-offs and different ways of doing things within each option.

To get as close to the ideal for your business as possible, you need to know what matters most and what you can live without.

Instead of focusing on everything that your current software has that you don’t want to give up, focus instead on those business goals you wrote down. What do you need to achieve those goals? What do you need to continue to perform operationally while you move towards those goals? Define “need” as “can’t possibly live without”. It’s not that you could live without it and just prefer not to, you have to have that particular feature/report/widget in order to do what you need to do. This list should be as short and concise as possible. Remember, these are needs not wants.

Next come your “like to haves”. These are things that you could live without if you had to, but it could be fairly painful. They don’t directly tie into the achievement of your goals and operational requirements, but they support the things that do. Or they make your life a heck of a lot easier.

Finally there are your “nice to haves”. These are things that would be cool to have but your business isn’t any better or worse off with or without them.

Make sure to involve your staff in this process and have them come up with their own lists based on their roles within the business and the goals you developed. This will not only give you a stronger pictures of your business needs, but will also help them have a sense of ownership in the decision as well. This can make things quite a bit smoother down the line and shouldn’t be underestimated.

You will then combine all of the lists into one master list of “must haves”, “like to haves” and “need to haves”. Be brutal in your assessment of what is a “must have” and what is a “like to have” or “nice to have”. As painful and frustrating as this process can be, it will make things much easier in determining whether a product is a good fit for you or not.

#3 Data clean up

This is never fun, but you will be glad that you did it. Any software that you purchase should be able to import some of your data. At the very least things like Units, Contacts, and Owners.

If you have been using your current software for any length of time, there is probably quite a bit of junk in there. Duplicate entries, fields you used for things other than what they were designed for, etc.

As soon as you know you want to start shopping for new software, start on a data cleanup project. Determine what you want to bring over to the new software (it may or may not be importable, but it can always be manually entered) and what you don’t care about. Don’t fall into the trap of “I need to have everything”. If you host your current software, then you can always refer back to it if you find that there is data you need. If you are using cloud based software, export as much of your data as you can by running reports, exporting them to Excel or PDF, and saving them to a local drive to refer to later. (Make sure to save them to more than one drive in case your machine crashes. Burning the data to a cd is always a good idea.)

Then go about cleaning the data up. You may be able to pay your nephew a few bucks an hour to do this, or buy your staff pizza if they put in extra hours for data clean up. However you do it, you will never regret getting started sooner rather than later, and it probably won’t take as long as you think. A few hours each Saturday for a month will probably take care of it.

#4 What is it that you don’t currently know?

We’ve all had the experience of buying something only to find out about a different offering that, had we only known, we would have gone with. “I wouldn’t have bought the iPhone 5 if I had known the iPhone 6 was coming out in 3 months!” Right?

What is it that is just past the horizon that you are currently unaware of? Do your research and try to find out. Maybe there isn’t anything. Maybe you are totally up on all of the trends and new offerings in the marketplace and have a keen grasp on where things are headed. But make sure.

Read articles, talk to people, and attend webinars. Invest a few hours a week in your education on this. It can save you a bunch of anxiety and regret down the road if you know you are purchasing something that won’t soon be outdated. HomeAway, TripAdvisor, Tnooz, and PhocusWright are just a few of the companies that regularly report on new trends and technologies. I also write a blog post every Friday around news, trends and findings in the travel and tech industries that will help you.

No matter the size of your company, how long you have been in business, or how tech savvy you may be, give yourself plenty of time to choose and install new software. Make sure that you have taken the time to clarify exactly what you need to get where you want to be.

Next – Selling it to Your Staff

Travel & Tech News – Social Media, Mobile, and More

Travel & Tech News
Travel & Tech News

Do you use social media to market your rentals and interact with prospects and guests? Here is a great article on how to make Twitter work for you.  “65% of leisure travelers start researching online before they’ve decided where or how to travel.” This is a huge opportunity for engagement.

Ever wonder if your audience is seeing the tweets, posts, and articles that you put out through your socials media accounts? This article tells you the best times to post to social media.

While aimed at hotels, this article provides a great lesson in online engagement that can be applied to vacation rentals. “Hotels that responded to more than 50% of social reviews grew occupancy rates by 6.4%, more than twice the rate of properties that largely ignored social media reviews.” The same goes for your Guest Reviews. A company that responds to its customers (whether it be a complaint or praise) communicates that it’s paying attention and that it cares.

Are you ready for the “mobile mind shift“? Mobile commerce is forecasted to hit $75 billion by 2018. Here’s the kicker, “… no matter where they are or what device they are using, they expect a personalized, fast, rich and no-hassle online experience.”

Do you need a mobile app to stay competitive in this new mobile-centric world? Research from Phocuswright suggests that you don’t. Airline apps are by far the most widely used at 42%, follow by OTAs at 13%, a pretty steep drop off. The research finds that mobile friendly websites are where most travelers to look for places to stay and things to do, however.

And finally, just for the fun of it, if you are ever in Rome you can go to Roman Gladiator school, for about $140. I’m totally doing this if I ever get to Rome.

Until next week!

Value

Value

There is some really great and encouraging information in this recent article from TripAdvisor regarding the 2015 travel season. According to the article, more travelers are planning on staying in vacation rentals this year due to an abundance of information about them being available online in the form of reviews and photos.

Speaking of photos, having photo captions can greatly increase the number of inquiries a unit gets. Here is a really informative article about how to write great photo captions for your units.

Reviews are also extremely valuable to you. Not only do they give your prospective guests confidence in booking with you, they can also tell you where your blind spots are. I also know vacation rental managers who use reviews to get their owners to upgrade furniture, amenities, or the unit itself. If you aren’t reading your reviews to learn how you can better serve your guests, you are missing out a big opportunity.

One of the biggest things that jumped out at me in this article was how much value is a determining factor in a traveler’s decision.

For instance, 49% plan on booking a vacation rental after having read about or discovered the value and/or amenities that it offers over other forms of lodging. It goes on to say that 62% cited vacation rentals offering lower rates than hotels as their motivation for staying in a vacation rental in the future.

I think something that often gets overlooked, but is worth clarifying, is that value doesn’t necessarily mean the lowest price. It just means that the customer wants to feel like they got more for their dollar than they would have with a different option.

Let me share a quick story about value that I saw firsthand a few years back. Our local ice cream shop was under new ownership and the new owner was intent on making a profit like any good business person. What ended up happening though is that the servings became a lot smaller than they were under the previous owners, which upset many of the customers. I remember watching one disgruntled customer asking to talk to the owner, and then explaining how it was unacceptable that he paid $5 for the little bit of ice cream that he received. The new owner tried to explain that the previous owners were too generous with the serving size which reduced their profits to the point of having to sell the business. The angry customer didn’t care what the rationale was though. Then he said something that I’ll never forget. He was referring to the taco place across the street and he said, “When I take my family to eat over there, I get a free meal after I purchase 6 meals. That makes me feel good. I feel like I’m getting some value for my dollar.” (Emphasis mine)

What I learned that day was that how a customer feels about the transaction is waaaaaay more important than the actual details of said transaction. Let’s just look at the facts for a minute.
When this customer took his family of 4 to the taco place, he likely spent ~$10 per person, at least. A taco or burrito, plus a drink came out to roughly $10 after tax was included. From a strictly economic standpoint, this is a terrible deal for him. He has to spend $60 in order to get $10. Granted, you could argue that it was money he was going to spend anyway, but that doesn’t matter. What matters most is that he felt like he was getting value. Now I’m not suggesting that it’s ok to deceive customers and make them think that they are getting something for nothing. The point I’m trying to make is that how a customer feels about the transaction, based on their perception of the value they are receiving, is what matters most to them.

Here is some more interesting information from the article about value. The highest percentage (26%) cited a kitchen as the most important amenity. It then goes on to say that 72% cite this as their main cost savings measure. If travelers want to cut costs by preparing at least some of their own meals and eating in, one way to accommodate this and provide value would be to offer (for a small fee) a grocery package that could be purchased so that when they arrive some of the basics (milk, eggs, bread, peanut butter, etc.) are already there in the unit, thus saving them a trip to the store and allowing them to get right into their vacation. Or leaving a $10 Trader Joe’s gift card (or whichever local grocery store you like) along with a handwritten “Thanks for staying with us!” card on the kitchen counter for those guests that are spending more than $X with you. I guarantee that will make a positive impression, and that $10 you spend on the card has the potential to bring you way more in word of mouth referrals.

The last thing I thought was noteworthy is that nearly half (48%) cited free parking as a motivator for staying in a vacation rental.

Now these are all folks that “get it” when it comes to vacation rentals. But what about those that don’t get it yet? One of the best things that you can do is to educate your prospective guests on the value they are receiving by staying with you over the other alternatives. Help them understand through your website, correspondence, phone conversations, etc. that they get more square footage for their dollar with a vacation rental, not to mention more privacy, solo use of the amenities and features, etc. Adding details such as “A 5 minute walk to the beach” or “15 minutes from downtown” into your unit descriptions and photo captions will help the guest understand they aren’t losing anything by staying with you instead of a hotel. (Most hotels are closer to things like movie theaters, restaurants, stores, beaches, etc.) Call out “Free Parking” as a selling point in your unit descriptions and/or photo captions as well.

Remember, how a customer feels about the transaction, based on their perception of the value they are receiving, is what matters most to them. Calling out all of the ways that your unit(s) offer value to the customers can be a powerful motivator in getting them to stay with you and tell their friends and family about it.

Travel & Tech News – Services, Instant Messaging, and Canada

Travel & Lodging News & Information
News & Information

Amazon is getting into the “handy man” and demand services business, with “Amazon Home Services”. This could be a useful resource for vacation rental companies that need work done on their units and don’t have a regular plumber, electrician, handy man, etc. Or just want to shop around for the best price.

Here’s another new idea that Amazon is trying out; “Dash” buttons. (Press the button and it automatically orders you a new batch of the item it is associated with. Paper towels, detergent, etc.) Imagine a day when your guests don’t have to call you for something they need, but can just press a button and have it delivered.It’s hard to say whether this will actually take off or become a novelty relegated to “Remember When?” type articles and shows. Regardless, it is more evidence that services on demand via wireless technology are becoming the norm and will soon be expected, rather than just a luxury.

In the not too distant future, you may communicate with your guests predominantly through an instant messaging service. Hotels are already trying to figure out what this looks like, and services like Facebook’s Business Messenger could make it really easy and affordable.  This line from the article sums the idea up nicely, “…messaging is a platform for customer-centricity, which is among the biggest opportunities we have.

HomeAway makes an expansion into the Canadian market by investing in CanadaStays. According to the article, destinations in places like Montreal and British Columbia saw demand grow by double digits last year. This is potentially a very good thing for all involved as it adds popular inventory to the HomeAway Network for travelers, but could also get other North American properties in front of Canadian travelers. My guess is that it will be offered as a part of the bundling packages that HomeAway provides.

The Truth About Yield Management Pt. 6 – Demands & Solutions

Demands & Solutions

One of the concerns that I have heard around yield management, particularly around last minute deals and reduced rates, is that other guests may learn of it and demand the same offer, thus reducing the amount of total revenue earned even further. While it has been my experience that this doesn’t happen nearly as often as one would think (it requires the customer to monitor your rates and offerings after they book with you, which the majority don’t have the time or inclination to do), it’s a valid concern none the less. There are those handful of guests that continue to shop around even after their stay is booked.

I don’t believe that there is one right or wrong answer for this situation. In my experience the best option for any situation like this comes down to considering the various factors involved and then making the best decision that you can based on the information that you have.

The various factors that can play into this are;

The Guest: Who are they and are they worth keeping as a customer? If they are a loyal customer that always writes positive reviews about their stay and has recommended your company to their friends and family, I would be inclined to give them the deal, or at least some kind of reduction. Particularly if the difference is small.

On the other hand, if this guest is always a pain to deal with, complains about everything, and leaves the unit a mess, I would be inclined to hold my ground on the price. Why lose money on a guest that you really don’t care to have back and probably isn’t saying nice things about you anyway?

The Unit: Is it a high end unit that rents for a premium? Is the unit comparable to other units where a deal has been given? If the guest is staying in a high end unit and asking you to match a deal that was offered on a more economical unit, you could offer the deal but in a different unit that is more in line with the price they will be paying. (Assuming there is one available.) You could also offer to split the difference, give them an extra night for free, or a discounted or complimentary activity (jet ski rental, movie tickets, etc.).

The Owner: Will the owner of the unit mind you offering a reduction? Will they ask 20 questions and critique your reasons for price matching? Is making this guest happy worth the tradeoff of potentially upsetting the owner? Perhaps offering the guest a price match in a different unit is the way to go.

The Cost: Will offering a deal reduce the stay to a loss for your business? Will you be setting a dangerous precedent with this guest that will teach them to expect reductions in the future?

The Season: Is this the high season when you are booked nearly to capacity and what is still available is going for a premium? Or is this the low season where quite a bit is available and you can afford to wiggle on the price a little?

Again, I don’t think there is one right answer to this kind of situation. I think it’s wise to weigh all of the factors and make the best decision that you can. I also don’t think it’s right to cave in to the customer just because they ask for a deal, but if a win-win-win solution can be found that keeps everyone happy (the guest, the owner, and you) then that is the best option for everyone.

If you decide to say “no”, for whatever reason, don’t apologize for it. You can simply explain that particular deal is no longer being offered, or is only for certain units, or their stay does not meet the criteria (assuming that all of these things are true), but you would be happy to offer them a reduced rate on their next stay if they book before they check out.

But that’s not all!

There are other factors that play heavily into customer satisfaction that could encourage them to ask for a discount, prevent them from coming back and/or recommending you to their friends and family.

The Center for Hospitality Research at Cornell University found the following issues had the most impact on customer satisfaction.*

#1 Problems experienced during the stay – whether it was the hot tub not working, the internet being down, or the unit being dirty, this was the biggest factor that negatively impacted customer satisfaction.

#2 The Reservation details were inaccurate – incorrect dates, party size, etc.

#3 Billing errors – incorrect amounts, showing outstanding balances when they guest was actually all paid up, etc.

#4 Check-in took longer than 5 minutes – this may or may not apply depending on the type of units that you have, or whether the guest needs to check in at all. Regardless, it does have an impact on customer satisfaction.

Here’s why this is all relevant, delighted guests spend much more than dissatisfied guests. In this particular study, delighted guests spent almost 50% more on ancillary offerings than dissatisfied guests did. Great customer satisfaction directly translates into more revenue.

I think it’s important to remember that in trying to grow your business, maximize revenue, create new revenue streams, enhance your offerings, etc., it is easy to forget that the guest experience still has to be positive in order to turn them into a repeat guest and/or an advocate for your business. Losing sight of this will undercut your efforts in those other areas.

*Data taken from the report “Making Customer Satisfaction Pay: Connecting Survey Data to Financial Outcomes in the Hotel Industry”, Cornell Hospitality Industry Perspectives, No 5 July 2010.

 

 

Travel & Lodging News from Around the Web – The Economy and Mobile Payments

News & Information
News & Information

The US dollar has hit an eleven year high, with forecasts and data saying that the economy is coming back in full force. This is great news for the travel industry as Airlines for America (an advocacy group that boasts such members as Alaska, Delta, and Southwest Airlines, along with UPS, Fedex, and many more) reports that Spring 2015 air travel is the highest its been in 7 years. This is great news for vacation rental companies, and a perfect reason to reach out to past guests about why they should include you in their Spring and Summer travel plans.

Speaking of the dollar and airlines, UATP (a payment network for airlines) announced that it will begin offering its members the ability to accept Bitcoin as payment for flights.  (Bitcoin is a digital currency that is more secure and efficient than credit cards and other forms of online payment.)

Facebook also threw its hat in the ring saying that it will soon allow its users to send money to each other over the Facebook instant messaging app. Imagine if Facebook becomes a viable booking channel for vacation rentals with the ability for the guest to pay for their stay, write reviews, upload pictures, and share it all with their friends. Which vacation rental software company will be the first to integrate with Facebook?

And speaking of mobile payments, airlines, travel companies, and some hotels are already starting to gear offerings and integration with the Apple Watch. The Apple Watch uses Apple Pay which is already accepted by many banks and stores as a method of payment. (As of March 3rd there are over 100 banks, credit unions, and credit/debit cards partnered with Apple for Apple Pay. Including Visa, Wells Fargo, Bank of America, and Chase.)

Why is this relevant to vacation rentals? Without knowing how it will all shake out, I feel pretty confident in predicting that in 5 years, 10 at the absolute outside, a significant portion of customers will expect to be able to pay for their travel and lodging via mobile devices, using some form of digital currency like Apple Pay or Bitcoin.

Think I’m dreaming? Consider this; the first generation iPhone was released on June 29, 2007, almost eight years ago. In that eight years, smartphones have completely revolutionized our day to day lives. How we communicate, how we interact with the world, how we get our news, find places to eat, and even read books. (I have a Kindle app on my iPhone so that I can read a book anywhere I find myself with time to kill.) Both the Dept of Justice and former chairman of the Federal Reserve Ben Bernanke have commented on the legitimacy, increased security and efficiency of digital currencies like Bitcoin. Time will ultimately tell, but mobile devices, mobile payments, and digital currency aren’t going away. They will become more and more integrated into our lives, and those companies that profit the most will be those that recognize this and use it to provide value and ease to the customers. They don’t have to be the first, just the best.

Until next week.

The Truth About Yield Management Pt. 5 – Customer Segments

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There are numerous ways that customers can be segmented (geographic region, demographics, psychographics, etc.) but for the purposes of yield management and maximizing revenue, we want to segment them by purchasing behavior. What this really translates into is profitability. It can feel like a sin to say that not all customers are equal (I.e. some are more profitable than others) but it’s true none the less.

Ideally, you want to have offerings for all of our customer segments in order to capture the most amount of revenue possible. This can be difficult to do, but yield management and price elasticity make it easier.

If we segment customers into purchasing behavior we get 4 groups; (Note that these groups can overlap a bit, and there are many nuanced subcategories. For the purpose of simplicity we’ll stick with these four general groups.)

The Bargain Hunter; these folks are mainly interested in the best deal that they can find. That doesn’t mean that they don’t have standards, but they are willing to give up certain things in order to get a great bargain. For this group it’s all about the best value and how much they saved in the process.

The Planner; this group’s main focus is getting everything set for the family vacation/event that they are putting together. They can be very budget conscious (I.e. overlap into the Bargain Hunter category) but their goal is to have all of their ducks in a row well in advance of the trip, with as few surprises and hiccups as possible.

The Jet-setter; this group isn’t looking for a bargain, for them it’s all about the experience. Money is not nearly as big a concern as it is for the other two groups. They are willing to pay top dollar for convenience, privacy, and whatever else they feel they need.

The Procrastinator; these folks have left their planning, or their decision to travel, to the last minute and now they are scrambling to get it all together.

Sound familiar?

Now let’s look at these groups in order of profitability and how yield management (the right service to the right customer at the right time for the right price) can help us meet each of their needs and capitalize on the revenue potential in the process.

The Jet-setter: These folks have the most to spend and are willing to spend it in order to have the kind of stay they want. Progressive pricing (increasing the daily rate as occupancy goes up) is the best way to capture additional revenue from this group.

The Procrastinator: This group can be willing to pay a premium for their stay due to their lack of planning. They know they left everything to the last minute and therefor aren’t going to have many options. Progressive pricing works well here too. If occupancy is on the lower side, then a reduced rate or last minute deal can capture their revenue and likely turn them into a repeat guest. (Assuming they have a great stay with no headaches.)

The Planner: These folks are a bit harder because they tend to plan quite a ways out where occupancy may not be all that high. Incentives to stay longer or upgrade to a better unit can come in handy here. For example, we could offer this guest a slightly reduced rate if they are willing to stay at least a week. Let’s say our daily rate is $350 and the average length of stay is 3 nights. That comes out to $1,050 in rent. If we make the offer that the daily rate is $300 if they stay a minimum of 5 nights, that brings in $1,500 in rent and also helps drive up the occupancy percentage so that our progressive pricing (daily rate increases when we hit 70% occupancy, again at 80%, etc.) kicks in. The guest also received a deal on their stay which tends to make them feel good.

The Bargain Hunter: While this group is our least profitable in the short term, if we can turn them into repeat guests, their lifetime value goes up. While this group is always looking for a deal, they want to get the best value possible, not necessarily the lowest price. If they can stay in a penthouse for $350 a night (normally $500 a night), instead of a bungalow for $200, that’s a great bargain for them. Offering last minute deals helps capture this market, and even though we’re dropping our price to accommodate them, their stay increases occupancy which helps our progressive pricing plan and drive up rent overall.

The most effective pricing plans will have options for each of these buyer segments. I know that “discount” is a dirty word for some, but keeping the long game (or losing the battle to win the war, if you prefer) is the key here. Offering a discount can still bring in more revenue than it otherwise would have if the stay is longer, it increases occupancy allowing other yield management strategies to kick in, and we can turn the guest in a repeat customer.

Next – Demands & Solutions