The hospitality industry is suffering from a serious condition. Few recognize it, and therefore even fewer know how to treat it. The condition is one in which vacation rental managers (VRMs) devote more and more of their marketing budget to generating leads while paying exorbitant amounts for every inquiry, but at the end of the day, a huge percentage of these are going unbooked.
Demand-itis: when demand is plentiful, but not enough of it is being captured.
It seems natural to diversify—going after variety and volume—however, learning to turn existing demand into business is far more efficient and profitable. In hospitality, marketing budgets devour a huge percentage of overall revenue.
Consider a VRM with a $100,000 marketing budget. This company receives 9,000 inquiries as a result of its marketing efforts. This means that every inquiry costs $11.11. (We have seen this number climb as high as $30 or $40 per inquiry.) If reservations agents are converting only 30 percent, this means that there are 6,300 leads that have gone unbooked—that’s almost $70,000 in leads.
The cure for this condition is to increase conversions for existing leads by improving performance on the ground level. The three factors to consider are:
Traditionally, reservations agents have been treated as order takers: self-focused, following a script, filling out a form, and booking a home. To capitalize on existing demand, reservations agents should be thought of as sales professionals who are guest-focused and devoted to earning trust and loyalty, as well as listeners instead of talkers and creators of an experience. Reservations agents should be hired as salespeople and trained with the aim of creating an exceptional guest experience from the get-go. Successful training and coaching can increase conversions incrementally over time, so a 5 percent initial increase may become much higher in the long run.
Lead Management Improvements
Proper lead management is essential for VRMs. A typical scenario for VRMs: Three different home inquiries from one guest all become different leads. Multiple agents may end up reaching out to the same guest, in which case the guest experience is muddled and the guest story can get lost. Alternatively, agents may spend valuable time merging leads when they could be generating revenue through outbound calls or recording vital guest details. With true lead management software, the guest is the lead, and the lead is integrated with a CRM so that the whole story is captured.
Outbound Sales Programs
What’s happening with the calls that go unbooked? What about that other 70 percent? If you’re not following up, they are booking with your competition. Of course, in some cases, your properties just aren’t the right fit. In many cases, the guest is just in the middle of the decision-making process, and a thoughtful follow-up call that says “Hey, we know you’re considering a Valentine’s Day visit to ski with your fiancé, and we have the perfect romantic home with a hot tub available during that time” goes a long way toward showing guests that you are invested in their experience.
A portion of outbound sales can also be automated. For instance, an East Coast VRM with 200 units created an email program that triggered an email to be sent to “hot leads” four days after the last touch point with an agent. The email reminder—“Let’s finalize your vacation”—created 727 bookings with revenue of over $877,000 in just five months.
The rising cost of guest acquisition is a hot-button topic. Yes, the cost is rising. The solution is not to spin your wheels faster to drive more demand—it is to fine-tune essential operations in order to capitalize on the leads that already exist. Have a serious look at how many leads are coming in versus conversion rates, and then consider what happens when you increase conversions by 5 percent through agents or add on an outbound program that captures an additional 2 percent.
Then there’s the possibility we haven’t even discussed yet: implementing a marketing tracking program that shifts money from programs that don’t work to programs that do—this can add on another 2 percent. This can look like hundreds of thousands of dollars that can go into enhancing the guest experience in myriad ways. The alternative is to keep sending that money out the door to other marketing programs to drive more leads, many of which will go unbooked without focusing on the foundation: curing the Demand-itis.