Tag Archives: TripAdvisor

Expedia’s Purchase of Orbitz Approved – What This Means for Vacation Rentals

Photo by Alexas_Fotos
Photo by Alexas_Fotos

Many have seen this coming, and the writing has been on the wall for quite a while now. With hotels firmly in place, it’s just a matter of time before one of these companies (Expedia or Priceline) dominates the vacation rental market.

I think this is likely to play out one of a few ways;

  • One of these companies buys AirBnb. My money is on Priceline given recent comments by their CEO. AirBnb is a cash cow and they are better suited to the hotel model. (Mostly RBO and willing to rent for a single night.)
  • Expedia doubles down on TripAdvisor (they essentially own it) and tries to crack the vacation rental nut. They definitely have the cash, though they have had plenty of time to do it without any significant results. TripAdvisor seems to be focusing more on hotels, and will likely decide that’s where the money is for now. Particularly given their less than stellar recent financial results, they will likely decide they can’t risk putting too many eggs in the vacation rental basket.
  • One of the companies make a strategic investment in HomeAway. I doubt an acquisition is on the horizon, though it could happen. My money is on Priceline given that Expedia already owns TripAdvisor and as mentioned above, Priceline is chomping at the bit to get into vacation rentals. (It’s also possible that HomeAway becomes a viable contender to Expedia and Priceline, but I think that’s unlikely at this point.)

Of the three, my money is on the first scenario, though I would not be surprised to see the third one happen.

What this means is that more and more bookings are going to be made through OTAs and the standard is going to be the “Book It Now” model. (I predict that by 2020 the majority of listings will be this way.)

What does this mean for vacation rental managers?

  • Diversify revenue streams – the majority of revenue for vr managers has historically come from rent. With OTAs and listing sites taking anywhere from 10%-30%, other revenue streams will become critical. This will include everything from additional charges to concierge services and damage waivers. (Companies like Discover Sunriver are doing some really innovative stuff with their loyalty programs. Check it out here.)
  • Yield Management – this is already an important part of revenue management, and it will become more and more critical as time goes on. The days of having two pricing structures (high season and low season) are almost gone. If you aren’t capitalizing on the nuances of supply and demand then you are falling farther and farther behind. (Read more on Yield Management strategies here.)
  • Direct marketing – Use the OTA’s and marketing sites to get new customers through the front door, then use direct marketing to past guests to keep them company back. This is going to become critical for survival. (Read here and here for more idea on this.)
  • Automate, automate, automate – Streamlined processes are going to be key to reducing costs. This doesn’t mean sacrificing that personal touch that differentiates vacation rentals from hotels. This means automating processes like check-in/out, keyless entry, auto-correspondence and credit card processing, etc. It won’t be cost effective to employ someone to manually send out guest correspondence and process credit cards for example.

The good news is that this is still just the beginning of the transition, so there is plenty of time to start making changes and gradually transition. You can start now upgrading units to keyless entry and remote climate control. Start now building a loyalty program and direct marketing campaigns. Explore new ways of driving revenue through additional services, referrals, and programs.

3 Powerful Ways Vacation Rental Companies Can Adapt to Changes in the Marketplace

Be prepared for change.
Be prepared for change.

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.

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.