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Relationship Building: Creating Cultures That Build Trust in Relationships

By
Ali Cammelletti
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The vacation rental industry has an amazing foundation, one built on relationships and communication, which is why I was drawn to the industry and continue to enjoy working in it; the industry complements my hospitable spirit.

I watch how company owners and leaders connect. They are quick to offer help to one another and give advice on technology and new projects. The real struggle I see is facilitating the relationship-building mind-set for the company’s both internal and external customers. The key takeaway is that relationship building takes focus and time. As we navigate this fast-paced world where everyone wants everything now, it becomes more challenging to slow down and work on our business instead of in it.

When I work with companies that want a relationship-building culture, I often see that the key challenge is a lack of communication and direction for employees. This relates to employees’ lack of trust, as they often lack motivation to build relationships internally or externally. Because of this, communication and direction require the most focus time from company leaders.

I recommend beginning with the building blocks of trust. We can break this down to a simple formula that speaks to internal and external trust building, which includes frequent communication, openness, warmth, truth, and confidence, as Ron Zemke outlines in his book Delivering Knock Your Socks Off Service.

Once teams understand the main concepts of trust building, I like to bring in values, either personal or professional. I share my values of transparency, integrity, the platinum rule (treating others the way they want to be treated), respect, passion, and love. Discussing values also reveals what doesn’t align for employees, which can create potential friction and take away from relationship building.

Then, we talk about their values and what emotional triggers they might have. I had an employee share that she struggled with being yelled at. She said she didn’t know how to handle being yelled at and would feel upset and not know what to do. I explained, when people are upset, their IQ can decrease by up to 50 percent. When they act emotionally, they do not act as their best selves, and this has nothing to do with the service provider. I often feel that I am part therapist when coaching, but this is necessary because employees need to understand why they feel these emotions before they can use the right tools to change the situation.

All of us have different emotional triggers. Being mindful of those triggers allows us to acquire more tools for working through the friction that arises when we are triggered.

The next step is bringing in behavioral assessments. I recommend the StrengthsFinder model and its top five strengths; this model helps illuminate the areas where employees thrive and focus attention on those areas. It also assists an employer in looking at other departments in the company that could be a better fit for an employee.

Another favorite is the DISC assessment. This creates conversations on the behavior types that can be unsettling for some individuals. Using both assessments allows for team building because they help people understand others as well as their own strengths and weaknesses, which can create trust in internal relationships.

Once we have a solid sales team in place, I like to recommend a detailed sales IQ assessment that shows 16 areas in which employees are either highly developed or require development. These areas include preparing for sales, connecting with the head or the heart, collaborating with the buyer, and managing oneself.

During this assessment time, we also score employees during reservation sales, opportunity calls, and guest and owner services calls. We have one-on-one webcam coaching sessions to enhance their skills, and monthly employee-wide interactive relationship-building topics and a focus article or video supplement this.

Individuals revert to old behaviors after two weeks, and they usually retain only 20 percent of what they learn; therefore, I am a fan of providing additional focused content on a specific goal an employee is working on. I also suggest they self-score a call between coaching sessions so they can hear how they sound and where opportunities for improvement lie.

When creating change, it is essential to have the people being coached own and drive their change instead of have a supervisor tell them what to do. Sometimes an employee will ask for guidance, however, and I will make recommendations. When they say, “Just tell me what to do,” I have a conversation about their growth mind-set and their buy-in to the process.

Years ago, my good friend Sue Jones of HR4VR said to me: “I can coach skill, yet I cannot coach will.”

We cover various relationship-building sales skills. One specific skill is checking in with callers and asking if they have time to review different homes instead of assuming that they are too busy or want to have home links sent via email. We also discuss the importance of asking a minimum of two open-ended questions, which offers potential areas for relationship building through sharing commonalities and creates an emotional picture of how callers will experience their time in the area.

It is important that we understand why the guest is visiting, not make assumptions. For example, we wouldn’t build relationships if we talked about how much fun they would have at the home because it is next to a beach or ski mountain if they were coming for a celebration or business trip.

We should focus on hospitality and makes booking easy for clients by offering to call them back; this way, they don’t have to worry about calling us when they are living busy lives. I often hear, “I am not comfortable offering to call them back because I don’t like callbacks.” This is when we cover the platinum rule. The golden rule is about treating others the way we would like to be treated, whereas the platinum rule is treating others the way they would like to be treated.

A better technique is to ask the prospective client the following: “When are you looking to make a decision? If I don’t hear from you before then, can I call you?” Relationship building is soft and focuses on offerings, not hard pushes. We separate ourselves from third-party marketing sites by showing our gratitude because we recognize that our clients have many booking options.

By holding monthly interactive, company-wide webcasts, we allow multiple departments to learn about how their coworkers think about concepts such as showing empathy, building relationships through hospitality, practicing conflict transformation, and creating buyers by empowering self-care in a service industry. When we offer duplicate presentations, most supervisors like to attend both because they learn so much about their team members through those members’ questions and comments.

The goal is to bring all employees in for education and team building in a way that learning can happen and employees can connect internally. My goal is to have employees later approach each other about topics for support and to enable friendships that might not have otherwise happened. A happy and fun work environment motivates employees to stay at the company and continue to grow with it.

A relationship-building culture comes from within the company. First, we offer employees the tools and education they yearn for, although sometimes they don’t even realize they want it until they experience it. Relationship building then flows to guests, who hear and see it in the company during their stay, and this makes them want to return year after year because something about their interactions with the company feels good and creates a sense of belonging.

The leadership team requires mindfulness to continue internal development efforts. Possible options include mixing things up by bringing in a financial coach to share how to reduce debt and save for retirement or inviting a dream coach who can teach employees how to accomplish their goals. Other options could be creating book clubs or a platform where employees can share their successes. When building trust in relationships, the common theme throughout is communication.

“Clear is kind.” — Brené Brown

Average Length of Stay for Vacation Rentals Remains Largely Unchanged Over Last 3 Years

By
Amy Hinote
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Experts have been telling us for years that vacation rental guests are taking shorter vacations and that the average length of stay is shrinking. As you may have read in the article, “18 Months in Review,” we haven’t seen data supporting this claim, but we haven’t had access to actual data spanning a multiple-year window to prove—or disprove—the theory . . . until now. 

Today, Key Data Dashboard provided end-of-year data for our report, “3 Years of Vacation Rental Performance (2017 – 2019),” which will be published in the upcoming issue of VRM Intel Magazine. 

Subscribe to VRM Intel Magazine here. 

In the markets we analyzed, there has been almost no change in the overall length of stay for professional vacation rental managers. 

Average Length of Stay, 2017 – 2019 (in days)

Source data provided by Key Data Dashboard, January 2, 2020

With minor exceptions in North Carolina’s coastal destinations between 2018 and 2019, and the South Carolina coast and Lake Tahoe regions between 2017 and 2018, the average length of stay has remained unchanged over the last three years. 

The findings are important because vacation rental managers in these markets have been told (erroneously, at least in these markets) that new policies should be implemented to address the trend of vacationers taking shorter vacations, including reducing or eliminating minimum stay requirements.

Look for the report “3 Years of Vacation Rental Performance (2017 – 2019),” in the next magazine. The report will also provide ADR, occupancy rate, RevPAR, and booking window trends in these markets. 

Pricing Decisions for VRMs: Considering Levers and Constraints when Adjusting Pricing for Vacation Rentals

By
Anurag Verma
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0

Most people in the vacation rental industry are comfortable with the idea that prices and availability settings for vacation rentals should change depending on the season, days of the week, length of stay, lead time, and whether there’s a big holiday coming up. This is because year-round demand for vacation rentals fluctuates widely. Furthermore, in some cases, even demand for serving different needs varies depending on seasons and days of the week.

There are two major principles involved in deciding how to change your prices.

1)  Matching demand with supply

For example, if your area or portfolio is getting completely booked during high season and is 30 percent occupied in low season, that indicates seasonal prices can be adjusted more drastically than what’s being done currently. Of course, there is sometimes no way to fix this with prices alone. It’s quite possible that in low season your occupancy won’t exceed 30 percent unless you drop to an unacceptably low rate.

2. Segmentation

Depending on location, larger family groups are likely to book longer vacations in high season, while in low season, smaller families and couples book shorter weekend getaways. Once you smaller booking window than longer stays, you can cater to both audiences based on how far out they book.

Although the basic principles of revenue management for vacation rentals mirror similar industries (think hotels and airlines), practicing revenue management in vacation rentals is significantly more complex.

> Uniqueness

Each rental is unique and not identical to the one next door, unlike hotels with multiple rooms that are exactly the same.

> Portfolio optimization vs. equitable distribution

In most cases, each rental is owned by a different entity that wants its property to do as well as others being managed by you (or someone else). Unlike hotels, which only care about total revenue made by all the units in the property—and in some cases across all properties in an area—you have to worry about individual owners being happy.

> Highly fragmented supply

Vacation rentals managed by multiple companies and owners are all competing for limited demand in the area, especially during low seasons. If the occupancy is only going to be 30 percent, you want your rentals to be in that 30 percent. This starts a race to lower prices that might not always be fruitful.

> Owner restrictions

Owners of the rentals you’re managing might not give you complete freedom to do what you think is going to maximize revenue for them. This is not to say the owners are wrong, just that they may have their own concerns. But these concerns add additional constraints on your strategies.

Complexities aside, even in industries where the practice of revenue management has matured, pricing is still is one of the more rewarding problems to solve, both intellectually and monetarily.

When thinking about revenue management strategies to implement for your vacation rentals, it is important to understand what levers you can pull and what constraints you have to operate within.

The most commonly used levers tend to be the nightly rates, minimum length of stay (LOS), LOS discounts, and fees. When working with any of these levers, it is important to be aware of any constraints and the effect the levers might have on them.

> Owner restrictions

Owners of the rentals you’re managing might not give you complete freedom to do what you think is going to maximize revenue for them. This is not to say the owners are wrong, just that they may have their own concerns. But these concerns add additional constraints on your strategies.

Complexities aside, even in industries where the practice of revenue management has matured, pricing is still is one of the more rewarding problems to solve, both intellectually and monetarily.

When thinking about revenue management strategies to implement for your vacation rentals, it is important to understand what levers you can pull and what constraints you have to operate within.

The most commonly used levers tend to be the nightly rates, minimum length of stay (LOS), LOS discounts, and fees. When working with any of these levers, it is important to be aware of any constraints and the effect the levers might have on them.

Nightly Rates

There are a few well-established frameworks that different managers use, varying in complexity with respect to both analytical capabilities and execution.

> Fixed rates

Many rental managers set or adjust rates for the next year or two at one point in the year, and then change them again for next year after the high season is over. This was fairly common when active revenue management wasn’t as popular as it is today, and distribution constraints didn’t allow for changing rates too often. While these are easy on distribution, you run the risk of not reacting to changes in demand trends as well.

> Dynamic rates

Many vacation rental companies have people on their teams who monitor portfolio performance, watching for abnormal booking patterns, and adjust rates accordingly.

> Automated dynamic rates

In the past few years, the use of automated dynamic pricing has become fairly common. Property managers set up a system, provide certain guidelines to make sure the prices don’t go outside a comfort zone, and the system changes prices daily based on supply and demand trends.

> “Supervised” dynamic rates

While automated dynamic pricing is beneficial, it is recommended that you don’t “set and forget” because human oversight is a key ingredient when using automated systems, which might not know some things you know based on experience. While every revenue manager has a standard set of reports, some common things to keep an eye on are discussed toward the end of this article.

Minimum-Stay Requirements

Minimum-stay restrictions greatly influence your revenue strategy but are also constrained by owner preferences and distribution strategy. Some common frameworks are listed below, and they’re all about allowing you to segment demand to meet supply.

> Saturday-to-Saturday weekly rentals

These are more common in traditional leisure vacation rentals than in urban short-term rentals and are based on behavior from repeat guests who book week-long stays from Saturday to Saturday. This system prevents short gaps in your calendar and provides a sense of operational certainty because you know there won’t be turnovers on days other than Saturday. But with vacation rentals going more mainstream, there is significant demand for shorter stays and stays that don’t start on a Saturday, which you would be completely ignoring with this strategy.

> Segmentation by season, or having different minimum stays for different times of the year

This strategy is probably the most common among vacation rentals that better understand the value of segmenting their customers. Longer stays are still required in high seasons but without the Saturday check-in restrictions, and shorter stays are granted for the shoulder and off seasons, realizing that there still are people visiting during these seasons for quick getaways.

> Dynamic minimum stay, or segmentation by booking window

This strategy takes segmentation up a notch by recognizing that people who book last minute generally tend to book shorter stays. With this in mind, you could start with your usual LOS requirements for each season but lower them as the dates get closer and there are vacancies remaining.

> Dynamic minimum-stay plus, or unlocking vacant but unbookable supply

There are times when your minimum stay is five nights, but you have a four-night gap sitting between two bookings that no one can book. Adjusting minimum-stay requirements to match what’s available (either manually or automatically) is a great way to make sure these availabilities end up filled. If your constraints allow, this is a great way to increase revenue.

LOS Pricing

Having incentives to book longer stays reduces your average daily rate but might increase midweek occupancy and is easier on your operations. On the flip side, not having those incentives will result in a greater number of shorter stays (as long as your minimum-stay strategies allow for it) and be operationally expensive.

The most common frameworks that let you slide along this scale to help find the right place include the following:

> Weekly or monthly discounts to encourage longer stays

> “Short-break” pricing where guests can book one or two nights as long as they pay the price for three nights

> Complete LOS pricing/discounts plus premiums for shorter stays and discounts for longer stays

Monitoring Your Revenue Management Strategy

Whether you go with manual or automated revenue management frameworks, it is important to monitor the way your rentals are performing and take corrective action if needed. Some basic reports used by revenue managers include the following:

> Year-over-year booking curve, ADR, and Revenue per Available Night (RevPAN) reports.

It is good to be aware of how key metrics for your business are shaping up for the upcoming month compared to last year. Year-over-year booking curve, ADR, and RevPAN reports help you understand if a corrective action should be taken, regardless of whether it’s because of your pricing strategy or changes in underlying demand.

These reports are usually run at an aggregated level, both for a timeframe and a segment of your portfolio that behaves similarly (e.g., four-bedroom beach-facing homes in September) and shows how the chosen metrics are trending compared to a similar time last year.

Suppose we’re 15 weeks away from September, and you want to know how things look compared to last year. Knowing the final occupancy rate for September last year is useful, but only after September has ended this year as well; before that point, you’re not able to make any corrective changes. The following chart demonstrates that knowing how occupied your rentals were for the month of September around the same time last year allows you to be proactive.

The booking curve suggests that we’re trailing compared to last year. This might seem bad, but without similar reports/charts for ADR and RevPAN, we don’t see a complete picture. Let’s also look at similar charts for ADR and RevPAN.

These suggest something more nuanced. Though we’re trailing on occupancy, the ADR has been higher, and in terms of RevPAN, we’re almost even with last year. And we have more left to sell in the last few weeks; this is a much better position to be in! Comparing metrics year-over-year doesn’t mean that last year was the best you could do and is what you should be repeating; the data should be used as a guideline to see if your revenue is on track to be similar or better than last year.

The reports also illustrate market behaviors that might have nothing to do with your pricing strategy. Suppose you’re trailing on both occupancy and ADR (and as a result, RevPAN) compared to last year. This suggests that there may be less demand than last year because even though you’re selling for a lower price, you’re not selling more. You can try finding out if it’s softness in demand everyone is experiencing or if it’s something only you’re seeing. Either way, the solution now seems to lean toward demand stimulation rather than pricing.

> Future-looking occupancy and pickup rates

These reports can show how the demand for future dates is shaping up and if there’s a date-level pricing adjustment that can help. The chart below shows the current occupancy outlook and which of those bookings were made in the past week. This will identify peak demand periods, which will be high overall, or periods that are not yet highly occupied but may become so (where the bookings in the last week are particularly strong).

There isn’t enough space here to cover everything seasoned revenue managers look at, but if you aren’t using these reports yet, these, along with some unit-level reports, might be considered. Though we’ve included the reports in this segment about pricing, it is important to note that other levers (minimum stay, LOS pricing, etc.) influence these in an equally meaningful way.

Practicing Revenue Management

Now that you know the frameworks that can be used to pull the various levers you have available and understand the metrics you should be monitoring, it is important to identify where you are currently placed and see what constraints are stopping you from experimenting and finding out if there’s something better you can do. Revenue management is a continuous improvement process. Even airlines, which are considered pioneers of the field and started five decades ago, are still innovating on this front. With that in mind, even if just for a few of your properties, experiment!

Connecting Systems: APIs in the Vacation Rental Industry

By
Amy Hinote
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By definition, an application programming interface (API) is a set of routines, protocols, and tools for connecting software applications.

Simply put, in the vacation rental industry, an API is the communication protocol that allows your technology systems to connect and interact with each other. For example, think about your software system, website, and keyless lock system. Information in your property management software/system (PMS) is pushed out to your website and keyless lock system, and information from your website and keyless lock system is pushed back into your PMS.

This connectivity is accomplished via APIs, and each PMS has a different API specification. Your PMS company provides this API documentation to your other tech providers, and each of your other technology providers “writes to” this API to connect with your PMS.

Examples of third-party technology companies that use APIs to connect with your PMS include the providers of your website, customer relationship management (CRM) system, keyless locks, smart home platform, property care/housekeeping/maintenance scheduling, comparative data, revenue management, channel management, third-party booking websites, document signing, SMS messaging, travel insurance, and credit card processing.

We reached out to 25 technology executives to learn more about API usage and where the industry is heading in 2020 regarding connectivity between systems.

 

APIs Create a Significant Barrier to Entry for Third-Party Tech Companies

Because APIs are not standardized, the complexity, learning curve, and expense of implementing and maintaining API-driven connections with software systems create a significant barrier to entry for emerging third-party technology companies.

For example, Brandon Sauls, founder and CEO of InterCoastal Net Designs (ICND), told us that ICND is currently connected to 20 software companies through APIs, and, as mentioned above, each one is different.

As a VRM, how many times have you ventured through a conference exhibit area exploring new technology offerings and asked a vendor, “Do you connect to (or integrate with) my software/PMS?”

This is the first question VRMs ask because they know that—if the answer is no—they cannot use the new solution; any technology purchased that doesn’t have an integration with their software requires prohibitive manual and duplicate entry of the data that would otherwise be pushed/pulled via an API.

“Most PMSs have their own structure for how they consume and provide data in their API,” said Anurag Verma, founder and CEO of PriceLabs, “This is very understandable, since each PMS was designed differently in how they store data and how they develop their API; but [it] creates connection and maintenance challenges.”

In the absence of standardization, there are three key reasons that APIs create a barrier for new technology companies that want to enter the vacation rental industry.

1. API integration requires clients, and clients require API integration.

API connectivity requires time and resources from both the PMS provider and the new technology provider. The PMS company doesn’t want to invest valuable development resources into connecting with a new technology provider unless they have mutual clients who want the solution, and clients don’t want to buy a solution that isn’t connected to the PMS. Without client demand for the new solution, the process is slow because there is no urgency for the PMS provider.

2. “Writing to” APIs requires in-depth, working knowledge of the vacation rental industry.

Dozens of new technology solutions for VRMs are being introduced each year, and most of these new tech company founders are coming into the sector from an outside industry. Vacation rental PMS intricacies and eccentricities can trip up the savviest of developers. While the idea of connecting to 10 to 20 PMSs can seem simple at the surface level, the reality of building these integrations requires more than just talent and coding knowledge. Fully understanding how data is entered into and utilized in each PMS requires time, effort, and a certain level of humility that many new third-party developers do not immediately embrace.

One technology startup founder lamented, “The fact that the APIs differ isn’t the issue. The issue is that not all of them agree on the basics, like what a booking actually means—is the booking tied to a property, a person or a group of people? What is a room? What is a property? The basics of the English language don’t match.”

3. Connecting a new solution to a PMS via an API can be costly.

Budgeting and planning for the costs associated with API integrations are often ignored or miscalculated by new third-party tech startups. In the same way that each PMS has its own API documentation, each PMS also has its own fee structure. Although some software companies do not charge new vendors for API connectivity, most report having a mix of fee structures, including flat up-front connectivity fees, revenue-sharing agreements, transactional fees, or per-unit fees. Dozens of new technology companies have failed by not understanding the costs associated with API integrations with software systems.

 

Who Pays for API Access and Usage?

Creating and maintaining seamless integrations requires valuable development resources. Consequently, software companies have different policies for API access and usage fees.

When deciding how to charge vendors, PMS providers consider the demand from VRMs for the third-party solution, revenue models, and the potential that an integration with the third-party solution will help sell more software.

PMS companies typically implement an API fee structure that includes one or more of the following:

  1. Flat up-front fee
  2. Revenue share
  3. Transactional fee
  4. Per-unit fee
  5. Tiered monthly fee

According to HomeAway Software general manager, Ryan Hutchings, “We have various types of integrations and connections with third-party companies and Escapia. We do not have a standard ‘API fee’ for connecting to our APIs. Instead, we have individual commercial contracts depending on how the partner is using our API and services, and we have an initial fee to get an account set up. In some cases, it’s a revenue-share agreement; in others, it is a block plan based on properties accessed. Most of the programs have tiered pricing structures with larger volumes being discounted.”

While most software companies have a partner fee structure in place, some have decided not to charge vendors for API service and usage, including TRACK and Maxxton.

“We don’t currently charge vendors for access to our API. We do this to keep costs low for vendors and our software customers,” said TRACK’s Matt Renner. “We are an API-first software—our architecture is built this way. So whether you are using TRACK for all of your business operational needs or you want to connect with a third-party application, we are open.”

Maxxton’s Chris Connar echoed the sentiment: “We do not charge any fees to third parties connecting to our PMS via API. An open API is essential to exceed the increasingly important IT landscape for VRMs.”

However, Barefoot CEO Ed Ulmer pointed out that the client ultimately pays. “We either charge our clients, the partner, or both. In reality, the client is paying one way or the other, but it is typically hidden by most of our competitors,” said Ulmer. “We try to be transparent. As one of the innovators of API and partner programs in this industry, we continue to look at ways to cover our costs and keep it simple and, most importantly, transparent.”

Ulmer also brought up an interesting point that the entire burden of connectivity currently rests on the PMS provider. “I sat in the VRMA session about open APIs, and we were reflecting how best to move forward. One of the questions I put back to the committee is that these third parties should also have an open API so that their info flows back into our system—so will they do that for free? Also, with this flow, how do we protect for GDPR issues, which are expensive to monitor?”

As more new tech startups enter the industry, third-party providers are pushing back on some of the higher API fees being introduced into the market by software providers.

“Some [PMSs] are trying to charge as high as 20 percent—i.e., their businesses seem to be building their product on the backs of their partners rather than building their own products,” said one startup CEO. “I would prefer to move to a referral program and instead focus on improving the integrations for our clients. Drawing off so much revenue makes for stagnation on the product development side. Who wants to grow a shared product that takes so much and gives so little?”

Virtual Concierge Service founder Dana Young added, “We’re not opposed to the monetization of APIs, but moderate ‘pay-per-use’ models are the way they should be done. Look at the way tech industry leaders like Google handle their APIs—pricing is based on monthly usage of requests, with a certain number for free, and volume pricing at high utilization rates. We think that is fair and the way the VR industry players should be structuring their models.”

 

Challenges Third-Party Tech Companies Face Working with PMS Companies

For emerging third-party technology providers, working with software APIs presents multiple hurdles.

“The challenge starts with the sheer number of integrations, given the fragmentation of the market and number of PMS players,” said Young. “Compound that with no standards in place so every integration is custom. Then throw in the navigation of the policies and approval processes involved before you can even get to the technical work.”

Another technology provider added: “The legacy systems take sometimes three to five times longer to integrate than the newer systems. Their APIs are just rarely, if ever, updated so everything is a workaround.”

There are some security considerations with API connectivity, as well. “Having the ability to make certain API calls has helped tremendously with troubleshooting API-related issues,” said another technology provider. “However, one thing that could improve is accessibility to different API calls and functions. We’ve seen that access to some API developer environments are ‘all or nothing,’ meaning that you either have access to all the tools and info that an API offers or no access at all. Sometimes, certain API calls lead to sensitive information becoming accessible and also the ability to manage reservations. As you might imagine, this access could be risky if someone troubleshooting is not properly trained and tries to use certain API calls, such as accidentally deleting a reservation; especially since there may not be an audit of which specific person [or company] sent the API call.”

Support Challenges

Accessing API support from PMS companies can also be a challenge. ICND’s Brandon Sauls explained that while several PMS companies provide his team phone support for API issues, others require them to use a support email that “just lends to a turn in circles trying to resolve issues.”

“You have to think—you’ve got three parties involved: our web development team, the client, and the PMS,” Sauls said. “The client does not care who the problem is—they just want it resolved. We catch the brunt end of it often because we are always available and here to take the call.”

 

Open API Connectivity Is a Priority, But Software Providers Are Still Looking to Build All-In-One Solutions

Among vacation rental technology providers, there is widespread agreement that the demand for open and accessible APIs will increase in importance for two reasons: 1) VRMs want to use third-party tech solutions to augment their service offerings and streamline their businesses, and 2) much of the current innovation in technology is being driven by emerging third-party providers.

“We look at APIs as a vital part of our strategy moving forward. We do not take the position that we can be everything to everyone,” said HomeAway Software’s Hutchings. “APIs allow third parties to offer alternative solutions for our customers. We also recognize that choice is important to our customers for many services that they use. In many cases, our customers want to choose between multiple options, and we try to offer choice through our API integrations. In order to be flexible for customer needs, we think it’s important to provide API access to your data in order to allow them to customize their business. We want a technology platform that enables growth and innovation. This can come from third parties, too.”

All-In-One Software Platforms

While software providers are enhancing their APIs to provide more choice for VRMs, they are also actively building all-in-one solutions. Their goal is to provide comprehensive functionality that supports the core aspects of the business while still giving clients the ability to work with the third parties of their choice—as long as integration can be accomplished in a way that aligns with their own business objectives.

“At Guesty, we are working on building an all-in-one platform, and yet we still understand we can’t accommodate all types of requests and use cases,” explained Amiad Soto, cofounder and CEO at Guesty. “We want to offer the best products available for our customers but also allow them to choose [a third-party solution] if they prefer or substitute some functionality with external offerings—including their own. We currently offer tools in our marketplace that compete directly with some of our offerings, and that is okay with us.”

Renner told us that most of their clients solely use their system without a need for third-party solutions. “We have over 20 endpoints and over 70 connections currently, and vendors love working with our team and our technology. However, most of our customers—unlike many other so called ‘all-in-one’ solutions—do just use TRACK. They are not typically using core third-party applications.”

According to Connar, “Maxxton believes in the best-of-breed approach; the PMS should still offer most of the functionality and be the center of the organization to decrease complexity versus working with many third-party solutions.”

PriceLab’s Anurag Verma predicts a more open API landscape moving forward. “We think that more and more PMSs will start providing open APIs (it’s already a lot more prevalent than five years ago). It only makes sense, because even if the software is all-in-one, there are going to be power users who require specific functionality that third-party providers can provide to improve everyone’s experience.”

 

Technology Predictions: Software Executives Discuss the Future of Connectivity

When researching API policies, we asked PMS company executives, “Looking toward the next decade, what are your predictions on how vacation rental managers will use their software and third-party tech companies?”

Amiad Soto, Guesty

Our bet is that property management platforms (PMP, and not PMS) will become the key technological piece of software property managers use, and all third parties will need to be accessible from that platform. Staff won’t like to be trained on—and use—20 different tools on a daily basis, so controlling external products and using them from the PMP is going to save hours at a time and create more efficient and successful management companies.

 

Ryan Hutchings, HomeAway Software

In the next decade, we envision more integration and more API usage overall. We also envision software being the “hub of the wheel” in their (PMs’) strategy of working with third-party tech companies. More PMs are creating their own solutions and/or hiring developers to create products that meet their needs. It is still a large investment of time and resources to develop solutions, so individual PMs must rely on a PMS or other third-party tech platforms to provide solutions and options.

 

Matt Renner, Travelnet Solutions (TRACK)

We are seeing consolidation in the PMS space, and this is a good thing. Many just-OK options are being whittled down to a few good, sustainable ones. I think we will see the same thing for third-party middleware providers. The thing about software is, if you provide a great solution that offers true value to the customer and with great service, you should be able to create a niche, and I think it is important for the PMS providers to allow customers to choose the solution that is best for their business.

We do, however, see the PMS handling most of the core functionality specifically in the short-term vacation rental space, with certain disciplines creating opportunities for larger third-party players, such as pricing/revenue management systems (RMS). We’ve seen this in the hotel industry where the PMS handles the core of the business, and the RMS is not just seen as software but as a functional discipline and nonnegotiable for hotels (i.e., certified revenue management executives [CRMEs]). So I think this is one function that could live outside the PMS due to the complexities and the service-level layer.

Where it gets really interesting is in this convergence of hotel-style inventory and key-level (unit vs. unit type) inventory living in the same system. That is what we’ve been working on in TRACK. What you are going to see is more and more vacation rental companies owning hotel-style inventory and vice versa. These companies are not going to want to have two PMS systems. So you are going to see vacation rental software in the enterprise need to move into the hotel world and that will bring an entirely new set of requirements for connecting systems—including points of sale (POS) and other traditional hotel functions.

 

Ed Ulmer, Barefoot

At its core, there will be little change. PMs will always need strong trust accounting and a platform. As there is now, there will continue to be innovation generated by new players. Existing players will try to duplicate success and will struggle to be as good as someone who is singularly focused.

Google, Zillow, and Amazon will all move the industry further and radically change the experience—with even more focus on attracting the individual homeowner because there is more money to be made that way. Asset management by the PMs will be necessary to maintain inventory.

There will also be a need for the PM to focus deeper on niche—which is a trend that occurs as any industry matures. A PM who is the local expert both in managing the property and the full vacation (concierge) will be more trusted and successful. Social media is already swinging toward niche connections. A guest review is no longer trusted, but a review from a friend or a friend of a friend is powerful. Those who sit in or control your social circles will become more powerful. For example, a Netflix subscriber who watches Last Kingdom would be more willing to book a vacation to the English countryside if the offer is provided during the viewing. Add a points program to that offer and it becomes strong. Another example is booking your entire vacation out west through your EPIC, IKON, or Mountain Collective Pass. You trust your pass, and thus you trust its partners. PMs will need to look at their niches and connect with mediums that have similar messages.

 

Chris Connar, Maxxton

We expect PMSs to consolidate to a certain extent and the number of third-party technology solutions to increase and slowly be incorporated into PMS solutions.

These third-party technology companies will be an important driver for innovation.

 

 

 

 

Measure what Matters: Analytics Planning for 2020

By
Amber Carpenter
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We are all drowning in data, and most of us do not want to admit out loud that we aren’t quite sure where to start or even what data matters most. Don’t worry, everyone is in the same boat, and the truth is that there are new data opportunities all the time, so your data strategy should be focused but flexible and constantly evolving.

Web analytics are a great place to start when taking a fresh look at what is going on with your business. Google has many different products these days and has rebranded its platform as the Google Marketing Suite, including both its enterprise (paid) and free versions of Analytics, Tag Manager, Survey, Optimize, and Data Studio.

One of the most powerful sets of data you can analyze going into the 2020 season is your website booking funnel. Hopefully your webmaster has set up a goal in Analytics to track the different pages encompassing an online booking, but even if that is not set up, all is not lost.

On average, most vacation rental websites convert less than one percent of website traffic into online bookings. That is not a typo, and the number becomes even more alarming when you segment mobile traffic to less than .5 percent of traffic that converts on a mobile device.

A great goal for your 2020 website is to double online conversions on both full-size browsers and mobile devices. That may seem like a stretch, but it is achievable and something that your revenue-generating teams can work on together that is measurable and highly impactful for your brand and guest experience.

Here is a list of items to analyze related to the booking process that can get your team thinking about a website conversion strategy heading into 2020. Remember, the booking process starts on your property details page. Given that most vacation rental websites present the full price on the property details page, that is the first page of your booking funnel and probably where you are losing 80 percent–plus of your opportunity.

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  • Do your fees have clear descriptions with tool tips that help explain why they are being charged? No one wants to pay random, unexplained fees.
  • If you show the entire price on the property details page, do you also display the amount required to book online today? If not, then most consumers will assume that you expect full payment when booking online.
  • Are cancellation policies hidden in the terms and conditions? Being clear about your cancellation policy is so critical in driving online conversion that some OTAs even put the cancellation policy for each property in the search results. Burying your policies in a long, legalese terms and conditions box can make even excited buyers hesitate.
  • Are you hiding the company phone number in the booking process to try to drive more online bookings? Stop doing that immediately. Even Google has emphasized that making the booking process as easy as possible will drive the highest conversion. Why do you care if the booking occurs online or over the phone, as long as you get the booking? And for most of you, your phone channel converts at over 30 percent, so if you can get them interested in a property and on the phone with an agent, the likelihood of converting the lead will be much higher than it would be if you leave them doubtful and confused on your website.

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Google has added a lot of functionality during the last year to both Analytics and Optimize. Optimize is a tool that your team may not be using, but it’s free and incredibly powerful! In the past, Optimize was only an A/B testing tool allowing you to measure the effectiveness of different page designs to help measure messaging or design changes that would lead to better landing pages or higher goal conversion.

Optimize can now be used to provide a personalized site experience! That’s right, you can segment traffic and show different personalized content on your website, such as specific promotions based on geographic location or marketing source. The code is simple to install, especially if your webmaster uses Tag Manager. Once you have the code installed on your website, your team can get creative with testing personalized content without expensive third-party tools. A 2017 study commissioned by Salesforce showed highly promising results whereby personalized recommendations and content increased conversion by as much as four times.

In the world of Analytics, there is so much more to the tool than the out-of-the-box reports most of us are familiar with when we review website benchmarks. One of the most underused free tools in Analytics is called Custom Dimensions & Metrics. Free accounts can set up 20 custom dimensions and 20 custom metrics.

Here are some examples of what can be measured with Custom Dimensions & Metrics to get your team thinking about what to ask your webmaster:

  1. What are the dates and length of stay being searched on my website?
  2. How many properties am I returning in search results for different queries?
  3. How many different searches/dates do my prospective guests usually search before entering the booking funnel?
  4. How many properties do my prospective guests usually review before entering the booking funnel?

Depending on how high your website traffic is annually or how many dimensions and metrics you want to measure, consider upgrading to the paid version of Analytics so that you are not getting results from a limited data set.

Once you have this data in hand, the questions your team can answer are endless. Instead of only knowing what dates are being booked (conversion data), you will have the dates being searched (demand data) to help you make more proactive revenue management and marketing decisions.

If I had to pick just one thing to tell all of you to implement as soon as possible that would have a huge impact on your business going into 2020, it would be to try shopping cart abandonment (with a twist). It’s called shopping cart abandonment because it was developed in the online retail industry to drive conversion from the high number of “abandoned carts.” In the travel space, we generally just have a booking flow and not a true “cart” experience, but the premise is the same. We want to take the consumers that enter your booking funnel but do not complete the entire booking process and remarket to them to help drive conversion. Considering that more than 97 percent of the prospective guests entering your booking flow probably abandon, this is a huge opportunity to capture lead data that would otherwise remain anonymous, engaging your entire revenue-generating team (revenue management, sales/call center, and marketing) to drive conversion.

The one caveat to retail is that to truly optimize your abandoned cart strategy, you also need to have a property details page abandonment element. Given that we show the full pricing on the property details page, a large percentage of abandonment occurs there instead of in the booking funnel, and if you don’t have a strategy to capture abandonment on the property details page, you are losing a large percentage of leads. Property detail page abandonment performs at 10x or more of cart abandonment in the vacation rental space, although data is limited, based on the small number of managers who implement this solution.

Once you have the abandoned property details page and cart data, your marketing team can set up remarketing email and social media campaigns, your reservations team can perform highly effective targeted outbound campaigns, and your revenue managers will have invaluable data they can use to spot patterns with conversion issues.

Abandoned cart leads in the vacation rental space convert at approximately 35 percent or more when teams are cross-functionally engaged.

Don’t take my word for it on all these suggestions. Do the math on what would happen if you doubled online booking conversion and if you supplied your reservations team with more leads from traffic you are already generating. The return on the investment is huge, and these are all highly actionable strategies.

Opinion: Beverly Serral—I Went to Skift’s Short-Term Rental Summit and Here’s What Happened

By
Beverly Serral
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By Beverly Serral, cofounder and CEO of BESTNEST

Attendee 1: I hope I hear a lot about master leases.

Attendee 2: I hope I hear a lot about tech.

Me: I hope I hear a lot about the traditional resort market and what’s in store for second-home/vacation rental owners and managers.

Two out of three of us were not disappointed.

OK, well, I was not disappointed, exactly. The first-ever Skift-produced Short-Term Rental Summit, held earlier this month in New York City, was nothing if not enlightening. And educational. And heavily skewed toward the urban rental market.

Looking back, I suppose the fact that the conference title did not include the word vacation might have been my first clue. And I will cut to the chase and just tell you that the venture capital money seems to be focused on only this segment of the market—just in case you were wondering.

Unfortunately, the first presentation of the day, provided by the firm Transparent, set the tone and gave a markedly slanted analysis of the urban vs. resort market inventory by stating the number of short-term rental units in “top markets.”

According to Transparent’s Drew Patterson, the number of units in US urban markets—including Los Angeles, San Diego, Atlanta, Austin, Miami, and Seattle—totaled 273,000. In contrast, Transparent claimed there are only 217,000 total short-term rentals in leisure destinations with over 50 rentals.

Right off the bat, the mostly citified audience nodded in approval—as if they were the new (and perhaps only?) game in town.

The problem? There are not more TOTAL urban short-term rental units than leisure vacation rentals. There just aren’t. But you wouldn’t have known any different—especially after slide 2—unless you were a part of the resort vacation rental market, which a handful of us were/are.

But we listened on because, surely, there was more good stuff to come regarding the entire industry. However, because the groundwork had been erroneously laid, the error went forward, and the conference (not coincidentally cosponsored by the four leading brands in urban short-term rentals, Sonder, Lyric, Domio, and Stay Alfred) moved ahead.

Skift is known for gathering and presenting relevant speakers with timely messages, and its foray into the short-term rental conference sphere was no exception. Here are some snapshots of speakers and their missives.

 

Francis Davidson, Cofounder and CEO of Sonder

Buzz: $360M raised so far; 3,500 units with 10,000 in the pipeline; hospitality brand led by tech; takes only days to make a property guest-ready; let tech lead the guest experience and keep things efficient and affordable; master leases of entire properties are attractive to developers; long-term vision; make provisions for economic changes; in-house dynamic pricing; not looking at acquisition of traditional PMs; building a true hotel in Miami; spending 0 marketing dollars—all channels.

Takeaway: Sonder seeks to become a globally recognized brand that operates hotels/vacation rentals/apartments, using all things tech, a master lease or ownership model, and risk management approach to business.

 

Jennifer Hsieh, VP of Homes and Villas, Marriott

Buzz (mostly an answer to why Marriott would enter the VR market at all): 27 percent of Marriott guests are leaving hotels to rent a VR; pain points for travelers include too much choice in VR properties, uncertainty of product, and anxiety from booking to arrival; Marriott will work with PMs (not acquire PMs); three-layer process to partner with PM: (1) look at the PM operations and financials, (2) look at every property, and (3) robust quality audits; backbone of the model is housekeeping and cleanliness; guests can use Bonvoy points; 5,000 properties in the portfolio; property profile is three+ BR, five+ nights; 90 percent loyalty members; poised for growth mainly in beach and ski locales.

Takeaway: Marriott looks to keep its guests loyal to the brand while maximizing the Bonvoy program.

 

TJ Clark, Cofounder and President of TurnKey, and Jordan Allen, CEO and Cofounder of Stay Alfred

Buzz: TurnKey saw a fragmented resort market and uses tech to help ensure a consistent guest experience; uses HomeAway software but built its own digital lock; monitors noise and uses Ring doorbell and iPads with guest info; looks to add inventory in resort markets. Stay Alfred built its own tech; hot on the master lease model; targeting properties specifically designed for VR; seeking more urban inventory; has 31 percent repeat guest rate. Both agree the word luxury is tired (moving to adjectives such as upscale) and see lines blurring between hotel and VR.

Takeaway: Guest-facing tech and consistent experience are the future in all markets.

 

Vered Schwarz, COO of Guesty

Buzz: Millennials are not buying homes and don’t even want long-term leases; business travelers’ needs/wants also changing; guests prefer experience/space/brand; Guesty chatbots soon will do 70 percent of guest communications.

Takeaway: Um, more tech looming as we boomers fade into the sunset?

 

Olivier Gremillon, VP of Global Segments, Booking.com

Buzz: 39 percent of travelers prefer VR over hotel; 70 percent of travelers would be keen to book an eco-friendly accommodation; Booking.com not buying PMs.

Takeaway: No one much wants to buy a traditional PM.

 

Andrew Kitchell, CEO and Cofounder of Lyric

Buzz: STR market shifting from “alternatives” to “new norm”; Lyric investing in quality (space, custom furnishings) and community (partnering with local vendors); don’t hit the guest with tech; 500 current units; keep it consistent.

Big Buzz: Steve Hafner, CEO of Kayak, joined onstage to announce that Lyric will be Kayak’s first partner in Premium Experiences. Guest can use the Kayak app to check in with Lyric. Steve noted that the travel market is big enough to absorb all niches.

Takeaway: A little less on tech and more on guest experience but still high on master lease and urban market.

 

Jay Roberts, CEO and Cofounder of Domio

Buzz: Domio founded to be a branded home manager (72 percent of hotels are branded, while 1 percent of VRs are branded); travel has exploded as it has become more affordable; VR = wild card, inconsistent, larger spaces, and hotel = small spaces, expensive, branded; Domio opened its own apartment hotel in New Orleans, which is ranked #1 in NOLA on TripAdvisor; has moved from 20 to 60 percent direct bookings; adding 1,000 units per MONTH in 2020; started with homes, moved into master leases, and, now, signing only apartment hotels.

Takeaway: Brand, urban, explosive growth.

 

Laurence (LT) Tosi, Founder and Managing Partner of WestCap and former CFO of Airbnb

Buzz (here goes because LT is a fast talker): We are in the late cycle of real estate market; large-scale, multifamily developers weighing STR as a way to fill units; urban market hotter than resort market; urban to be more consistent; resort market will always be fragmented; master leases attractive to investors; STR can be efficient and margins higher than hotels; of the urban STR brands, only a few will remain; lines crossing as Airbnb buys Hotel Tonight; brands must control the guest experience because the marketplace is unstructured; brand that offers consistent product wins; WestCap invested in Sonder; need to integrate guest services such as Shipt, DoorDash, etc.; no one wants to call the “front desk”; most owner hosts are still unprofessional; tech moves the needle; necessary for success are (1) scale, (2) tech, and (3) operations.

Takeaway: Heavy on tech and scale and no mention of actual accommodations or hospitality, but then, again, this was a VC presentation.

 

All in all, the Skift STR Summit was a hugely informative, if somewhat perplexing, day. The first such type symposium I attended was the 2018 Phocuswright Conference, and, while short-term or vacation rental was only a small part of the overall focus there, the industry was represented by and inclusive of urban and resort rentals as well as the subscription-style vacation model; phrases such as “guest experience,” “consistency of product,” “branding,” and “professionalization of the industry” were part of almost every presentation.

And, while all these topics were mentioned at Skift, I must say that, when they were directed at the resort markets, it was almost in a lost-cause sort of way. It got me thinking—how can we in the resort markets, with collectively hundreds of thousands of properties, better tell our own story? And if recession is looming and travel patterns change, which will travelers give up: a long weekend in Austin or a week at the beach?

My personal takeaway? Don’t write off the resort markets. I lived and worked through the worst years in real estate, and what looked to the buyer to be a little “tired” in the glitz and glam of 2005 was suddenly “comfortable, stable, and secure” in 2010.

Go forth with tech and branding, but keep a little historical perspective.

Building for a Niche Audience: Three Vacation Rental Entrepreneurs Purpose-Design Vacation Rentals to Meet Unique Travel Needs

By
Heather Bayer
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0

What do a collection of homes on golf courses in Alabama, a 10-bedroom mansion in Branson, Missouri, and a sun-drenched villa on the island of Cyprus have in common?

Each was purposefully built with a rental demographic in mind.

In 2005, Rick Oster—a former advertising executive—sat down with a blank sheet of paper and asked himself a single question: “If I were to design a home specifically for groups on a golf trip, what would that look like?”

Rick, an avid golfer, had been to vacation houses near golf courses in the past and had been disappointed at the lack of thought that went into their design and presentation.

“They just weren’t set up for the average group that travels on golf getaways—usually six to eight buddies or three to four couples. Instead, we were faced with the decisions—who would have the master bedroom with the en suite bathroom and who got the bottom bunks in the kid’s room. The guy who planned the trip was the lucky one—the others took potluck.”

If they went to a hotel instead, they would be guaranteed an en suite room with two guys to a room but would likely be scattered across the property. Then there were issues with where they could meet collectively to play a game of cards or watch a football game. There was no good way of hanging out together.

It seemed no one had given a great deal of thought to what these groups would do outside of playing golf. On top of all that, the accommodations were expensive. At one property Rick stayed in, the charge was $1,600 per night for average accommodations. Oster mulled this over and figured, “If I combined the two concepts—all the amenities of a hotel built into a custom home—built it twice as big, and charged half as much, I’d have a pretty good business.”

What followed was the blueprint for Oster Golf Houses, a collection of purpose-built homes designed with a specific type of person in mind.

Whereas some golfers travel with their partners, many travel in groups of players; the “guys’ weekend” springs to mind. They have some very specific needs, and Rick outlined these on the back of the proverbial napkin as his first blueprint. He knew his golfing guests would want the following:

  • A large, open-concept living area with a
    large-screen plasma TV and large flat-screen
    TVs in each bedroom
  • A game room with a pool table and an additional
    card table to seat at least eight people
  • Four master suites, each with two queensized
    beds with top-of-the-range mattresses
  • En suite bathrooms with large walk-in
    showers and wide vanities with double sinks
  • Space for storing and cleaning clubs
  • Stainless steel grills

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Two years later, Oster’s first golf house was built on a course in Oregon, and the response was immediate and strong. However, it was fairly short-lived as a business venture. The golf course resort made policy changes that curtailed the benefits to those golfers who stayed in private accommodation and made that choice less appealing than staying in resort lodgings.

Having proven the concept, Rick started looking for locations that were friendlier to private ownership and rentals and discovered the Robert Trent Jones Golf Trail (RTJG) in Alabama. RTJG is a collection of 26 golf courses in 11 locations, which made it a perfect home for Oster Golf Houses. Rick has built five properties with a sixth currently under construction, and they all follow his original design.

He says the development process is not for the faint of heart because it involves searching for land, learning about running utilities, engineering, building driveways, and so forth, before the actual build even commences; he continues to learn all the time.

He didn’t use an architect—he simply took his rough drawings to a designer, who created the plans for around $3,000, then sourced a reliable contractor who understood his goals and ideas.

Rick is rueful about some of the mistakes he made with his earlier projects: “In the first houses, I installed carpeting in the bedrooms and economized a little on furniture. Now I know that the properties get some hard use, so I‘ll put in hardwood flooring throughout and buy more robust pieces that will stand up to rental use.” His advice to anyone looking to purpose build for a niche: “Choose something you are passionate about, something you know and love. That would be the easiest way to guarantee success.”

Making the Mediterranean Accessible

At around the same time Rick Oster was jotting down notes on a napkin, 6,500 miles away, in the tiny village of Maroni on the idyllic island of Cyprus, an ex-firefighter was just beginning plans for his luxury villa.

Andy and Niki Renals had long dreamed of building in Cyprus, and their goals were finally coming together when they renewed contact with an old college friend of Andy’s. David Croft had been an outstanding athlete when his life was suddenly changed by an accident that left him tetraplegic, and when he heard about the plans for the villa, he told Andy how much he would like to visit.

Villa Carpe Diem, Cyprus

For the Renals, that was a turning point—if they were going to build from scratch, why not
make it accessible for people like David? And not just for people in wheelchairs, but for all those with more complicated needs?

For David, a member of the Spinal Injuries Association, this was the opportunity to share the needs of those with physical disabilities and to explain what a great vacation would look like in a rental property if it were accessible.

The result is a three-level villa with a swimming pool, of which two levels and the outdoor space are fully accessible via ramps, slopes, lifts, and hoists.

On the lower floor, the accessible suite has two bedrooms, a large wet room, and a kitchen. “If you’ve got one person in a group needing accessible accommodation, there will typically be four or five others traveling with them. Most have a personal assistant or caretaker, so it’s important to have a second bedroom closely located to the disabled person on one floor,” says Andy.

The other bedrooms are on the upper level, which is accessed by stairs.

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“We listened to David and talked to others who have visited, and subsequently built up a large range of equipment as part of the overall package,” says Andy.

From electric profiling beds to a manual hoist for access to the swimming pool to a fully adapted vehicle, the villa has just about everything a person with complex disabilities would require to enjoy a great vacation.

Andy recognized early on that to offer accessible accommodation on an island where guests arrive by air, he would have to research the means by which they could get there. He realized that without specific equipment, some of his potential guests wouldn’t be able to disembark from their airplanes at Larnaca Airport. In 2016, after working with a range of stakeholders, Andy was rewarded with the news that an Eagle Passenger Lifter had been purchased by the airport authority. This meant access was opened up to many more guests, and, in a market that Andy says is “surprisingly large and underserved,” it was a boom for business.

Creating a great vacation isn’t limited to providing accessible accommodation. The owners of Villa Carpe Diem partner with other island providers to offer a wider experience of Cyprus for guests with disabilities, and one such experience in particular is dear to Andy’s heart.

Thanks to Andy’s partnership with Freedom Divers Cyprus, guests can visit the island on a diving holiday and experience the perfect combination of accessible accommodations, adapted vehicles, and the means of learning a new activity that few would have thought possible.

Tapping into the large-group market

An understanding of group size in the potential visitor demographic is central to purpose-building a home for a niche rental market. Just as Rick Oster settled on eight as the ideal group size for his golf houses, and Andy Renals had a slightly smaller group in mind, back across the Atlantic, Tyann Marcink has her sights set on far larger numbers.

As community manager for the digital guest guide Touch Stay, Tyann is fully immersed in the guest experience, and the success of her small-town businesses, Missouri Haus and Branson Family Retreats, shows that she walks the walk.

The latest addition to her growing property portfolio is a 10-bedroom, 10½-bathroom house in Branson, Missouri, that should be completed in early 2020.

Branson is a town of 10,000 people centrally located in the United States and easily accessed by car. Known as the live entertainment capital of the world, it hosts nearly 8 million visitors each year and is the second most popular destination in the US for group travel. With a popular theme park, a renowned Christmas lights display, and a major convention center, Branson attracts visitors year round, so Tyann has no doubt her third property will be another success story.

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“When people think about group travel to a vacation rental, they have in mind families of 15 -20. In Branson, a typical group can be 60–100, and every part of the town caters for these numbers, including the restaurants and entertainment venues,” explains Tyann. With the size of the new house only constrained by budget, Tyann has designed the property to accommodate up to 32 guests. This means doubling up on all kitchen appliances, creating enough dining space for all guests to sit and eat together, and ensuring there is ample parking available on the property.

“All the properties in the area are vacation rentals, and building plans incorporate sufficient parking areas outside each home,” adds Tyann.

She’s also considered the access requirements of her typical guest group, which often includes older and less mobile family members, and has installed ramps and wheelchair-accessible areas. Friendliness to short-term rentals is integral to Tyann’s portfolio plans, and her first stop in a new town is the local Chamber of Commerce. In Branson, where tourism is a primary part of any location’s business plan, new building projects are encouraged and supported, and the Chamber also provides a wealth of information about what guests are looking for.

Tyann suggests joining the Chamber early in the process and getting to know the staff.

“Get friendly with the person who meets the travelers who walk through the door—this is the one who is going to recommend your place,” she says.

The target market for the new property is wide, from family reunions and celebrations to church groups, military groups, corporate retreats, and attendees of conferences at the nearby convention center. Tyann is fortunate because her parents and brother own several large properties nearby, so larger groups can rent two or more places and still be close to each other.

Like Rick and Andy, Tyann stresses the importance of knowing what prospective guests want in a rental home. This in-depth knowledge extends to understanding the optimum length of stay.

Whereas a trip to Cyprus usually lasts a week or more, group travelers to Branson and golfers in Alabama tend to book for shorter periods.

From a marketing perspective, purpose-built niche properties lend themselves to booking directly and not relying on OTAs to deliver their guests.

All three owners have comprehensive websites that appeal to their target markets. Villa Carpe Diem provides a lengthy access statement that describes every aspect of the property, from the height of each bed to floor coverings and lighting types. Oster Golf Houses includes drone videos covering every hole on each golf course where the homes are located. And Branson Family Retreats offers information on all the activities and events taking place in the area.

Each drives traffic to its respective site from targeted marketing in niche-specific forums and groups and in partnerships with local organizations.

Building a property designed to meet the needs of a specific niche audience is not done on a whim. Such a project requires thorough research, attention to detail, and deep understanding of the chosen market. Rick Oster, Tyann Marcink, and Andy Renals have achieved success following these principles.

A final word of advice from Tyann: “You have to know the numbers—projected income and expenses plus extra for the things you’ll forget. Know what your definition of success is, and if the numbers don’t get you there, think again.”

Predicting a recession? Historically, vacation rentals in domestic leisure destinations perform well during recession periods

By
Amy Hinote
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1

While no one wishes for a recession, it is hard to ignore multiple predictions that one is coming. As we look at travel sectors that flourish during a recession period, historically vacation rentals in domestic leisure markets have seen notable growth during down markets.

 

Reasons Vacation Rentals in US Leisure Destinations Perform Well During a Recession

 

1. Second home owners who don’t normally rent their homes, put them in the rental pool

With a lack of home buyers in the marketplace and mortgages that need to be paid, owners of vacation properties have historically added their second homes to the rental market to supplement lost income from other investments. In the last recession, US leisure markets also saw an increase in the number of property management service providers and in the number of homeowners deciding to rent-by-owner instead of using a property manager.

 
2. Leisure markets in the U.S. are fed by repeat travelers and drive-to markets

When making vacation decisions during a recession, travelers sought out ease, comfort, and value. Leisure vacation rental markets checked these boxes. Destinations that are familiar, are easily accessible, provide relaxation and comfort, and offer a more affordable vacation option experienced increased popularity during past recession periods.

 

3. Domestic travel upstages international travel

Historically in recession periods, leisure travelers in the US have opted for domestic travel over international travel. As a lower cost alternative, domestic leisure vacations were preferred over overseas travel between 2008 and 2010.

 

4. In the last recession, travelers gravitated to family travel in vacation homes

While the industry hasn’t performed adequate research on the subject, there appeared to be a psychological phenomenon during the last recession that drove vacationers to opt for family travel. One of the largest growth periods in the vacation rental industry occurred between 2006 and 2012 as second home owners entered the rental market, and many turned professional and built vacation rental management companies on their own. Besides the growth in local destinations, Airbnb was founded in 2008, and Vacasa was founded in 2009.

 

5. Vacation rental management companies have asset-light business models

As service businesses, vacation rental management companies in leisure markets do not operate with heavy assets. As a result, vacation rental management companies have the ability to pivot as consumer needs shift.

According to Deloitte, “The hotel companies that outperformed the rest of their industry in the last downturn didn’t ramp up their capital investments in tangible property as the top-performing airlines did. Instead, they embraced an asset-light strategy that made them less dependent on discretionary consumer spending and made their fee revenue more stable and recurring. Other hotels that had a more asset-intensive strategy took the brunt of the financial cycle as asset prices fell, liquidity dried up, and risk aversion tightened.”

 

Will Urban Short-term Rental Markets Thrive in a Recession as Leisure Markets Have?

Are urban short-term rental markets at risk during a recession?

In short, we do not know. It has been over a decade since the last recession, and a significant amount of venture capital has been invested in unproven urban short-term rental providers over the last five years.

For urban rental providers who rely on business travel, historically, business travel activity declines sharply during a recession period; and in 2020, businesses have an increased ability to meet remotely instead of spending on costly face-to-face meetings and conferences. And many of these urban providers are locked into guaranteed lease models which increase exposure in a down market.

In addition, with the rising popularity of city centers, it remains to be seen if leisure travelers will continue to gravitate to major cities for vacation activity during a recession period.

“Leaders whose companies went through the last downturn can take a specific, explicit look at what steps the companies took then and evaluate the results that ensued,” according to Deloitte. “The principle that ‘not every play from back then will work now’ is a strong general case. But the specific case of your own company’s experience can make it stronger.”

VRM Intel Live! coming to Destin, January 23, 2020

By
Amy Hinote
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0

VRM Intel Live! is coming to Sandestin’s Baytowne Wharf Conference Center, January 23, 2020, with 20 educational sessions and workshops for professional vacation rental managers.

The early registration fee for vacation rental managers is $129 ($199 after January 5) and will run all day from 8:00 – 5:00, with a cocktail party sponsored by Beyond Pricing to follow. Space is limited. 

If you are staying at Baytowne, the room rate is $139, and you can book accommodations by contacting the toll-free group reservations line at 800-320-8115 using code 2499PQ for room reservations.

Register Now for VRM Intel Live! Sandestin.

 

VRM Intel Live! Sandestin Sessions (4 more coming)

 

General Sessions

 

2019 Panhandle Performance and the 2020 Forecast

Key Data and VRM intel take a deep dive into actual YOY performance in the region, from the Alabama Gulf Coast to Panama City Beach. Which beaches saw YOY growth? Are we seeing migration of guests across destinations? Did we see notable swings in ADR, Occupancy, and RevPAR? Get the answers to these questions and more as we examine 2019 activity and look at year-to-date booking activity for 2020.  

 

A New Decade in Vacation Rental Management

Across panhandle destinations, vacation rental management companies are witnessing a shifting landscape with an influx of new faces, business models, and customer behavior. Industry leaders will be on stage to discuss regional changes, Vacasa’s purchase of Wyndham, new franchise models, preserving our destinations, and the future of vacation rental management in this new decade.  

 

Marketing Track

 

SEO/SEM Disrupted: Google Shakes Up the Funnel

Changes at Google are disrupting traditional SEO and SEM strategies. How are these changes affecting marketing efforts, and how can VRMs navigate the new search format? Amber will demonstrate what has changed at Google, how channel managers and OTAs are working with Google’s new booking platform, and what strategies VRMs can implement to get in front of the coming disruption. Amber Carpenter

 

Strategically Working with OTAs in 2020

People talk about strategic use of OTAs, but what does it actually mean? This session covers when to use OTAs, maximizing real estate on listing pages, and pricing strategies. Plus, does the billboard effect still exist and, if so, how does a VRM plant brand info into listings. Michelle Marquis

 

Could You be Losing Guests in the Booking Process?

Once a guest finally chooses one of your rentals, are you losing them in the booking process? Identify and create a user-friendly online booking process while keeping guests excited about booking their vacation as they finalize reservations. Analyze abandoned shopping cart activity, examine rental policy formats, and ensure an easy contract signing process. Brandon Sauls and Vanessa Humes

 

Building the Relationship with Guests Before, During and After the Vacation

With more guests going straight to the property, it is increasingly difficult to build a trusting relationship with them that keeps them coming back year after year. Using email and SMS/text messaging, we’ll discuss how to connect and interact with guests, provide information that communicates trust, and ensure that guests’ expectations are set and met.

 

Proactive Homeowner Acquisition

Competition for new homeowners has sharply increased with the influx of new and aggressive multi-destination companies. Pfautz discusses how homeowners are making decisions about choosing a VRM in 2020 and how to tell your story and set your company apart from the competition. With a focus on data and performance, VRMs can identify unique strategies and practices for targeting homeowners with the right message at the right time. Brooke Pfautz

 

Put Your Stamp on It

What do you do for guests that no one else does? What is your USP? Let’s take a look at some unique initiatives that managers in other destinations across the country are doing for guests to set themselves apart from the competition. Amy Hinote

 

Operations and Strategy Track

 

The 2020 Vacation Rental Regulatory Environment

A panel discussion on the market conditions, drivers precedent to and subsequent action behind regulation along the Emerald Coast, Tiffany Edwards and City Councilman Parker Destin

 

Experience and Professionalism: Why it Matters in the Vacation Rental Industry

With new entrants in the vacation rental industry, the level of professionalism has seen a decline across the US. How is this lack of experience and diminished focus on best practices affecting the industry? Edwards will discuss the importance of professionalism and how VRMs can raise the bar to create a higher expectation for homeowners, in our destinations, and in the industry. Ben Edwards

 

Revenue Management Infrastructure

Now that the vacation rental industry is getting destination-level performance data, we have the ability to create data-driven revenue management processes and practices. With a background in hotel revenue management, Saylor will show VRMs how hoteliers determine and implement pricing strategies by combining technology (including PMS software, pricing tools, and data sources), and how these processes compare and contrast with the vacation rental industry. Ryan Saylor

 

Data-driven Business Strategy

VRMs now have access to a ton of data, including destination data, performance data, website analytics, call center data, property data, and more. But how do managers combine all of this data to make business decisions about growth, staffing, pricing, and marketing? Each piece of data tells a small part of the business story, and when taken out of context, it can be misleading. But when the pieces are combined, VRMs can use these data sources to boost performance and maximize growth opportunities. Brise Carpenter

  

Making Safety a Top Priority at Your Agency

It is important to address safety in your vacation rentals to prevent harm to guests, avoid lawsuits and improve marketability. How do you go about doing that? In this session, Ford discusses establishing the role of a safety manager(s) and establishing protocols, procedures and demonstrated best practices that will help ensure your company is doing all it can do to address the safety of your guests. Justin Ford

 

Lessons Learned: Technology, Hiring, Owners, Guests, Laundry, Linens and More

Experience is the best teacher, and some lessons are learned the hard way. Milo will candidly discuss some of these lessons he has learned over the last 15 years in vacation rental management, including implementing technology, hiring, working with homeowners, dealing with guests who want to blackmail you, battling regulations, facing new competition, and more. Steve Milo

 

HR 411: What you need to know in 2020

Description Coming Soon, Sue Jones

 

Key Data Workshop

Become a performance and destination data expert and identify KPIs that are important to your business. Learn to use the Key Data Dashboard to create reports that help drive business decisions, pricing and marketing strategy. Create your own dashboard views, and learn to quickly pull individual homeowner performance. Now that we have the data, let’s learn how to use it. 

Owners and 3rd Party Channels: Convincing Homeowners to Pursue New Guests using Expedia and Booking.com

By
Michelle Marquis
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1

The way guests book vacation rentals (VRs) has changed dramatically in the past five years.

One of our Gulf Coast clients with 200 properties experienced this firsthand. Just three years ago, they were booking 60 percent of their guests by phone. This year, they’re booking 75 percent online, thanks to listings on Expedia, Booking. com, Airbnb, and Vrbo.

Why the shift? “Because more people book online now!” exclaimed their operating partner. And he’s right. According to Phocuswright, 70 percent of all VR bookings were expected to be made through online partners rather than directly with property managers last year.

As we all know, Vrbo was the original listing site for short-term rentals, but hotel-style online travel agencies have gotten in on the action. New entrants and changing listing terms at Vrbo (and HomeAway) over the past few years have created five VR marketplaces, each operating in similar ways but each with their own pros and cons.

Vrbo and Airbnb are native VR sites—visitors expect to book at a VR and are the same guests who look for short-term rentals year after year. This is a good market, but much smaller than the audience looking for lodging options on Expedia and Booking.com.

You can certainly fight it out for a bigger slice of the pie, but why not add a newer and much larger pie? There are millions of new potential VR guests loyal to Expedia and Booking.com you need to get in front of.

From my conversations around the United States, I hear property managers acknowledge this trend, but they hesitate because of the higher price the hotel-style channels charge and the resistant homeowners’ voice.

In this article, I’d like to share a few data points to help you convince your homeowners they are missing out big-time by not promoting their homes on Expedia and Booking.com. These crucial points will help you explain to them why paying higher commissions makes sense.

 

Largest Audience

My mom always said there’s safety in numbers, and this definitely applies to occupancy. The key to maximizing rental income is promoting your property to the largest pool of potential guests.

According to SimilarWeb, Booking.com and Expedia have more than four times the number of monthly US-based site visits of Vrbo and HomeAway combined.

 

New Guests are Worth More

Repeat guests are important, but attracting new guests is essential for rental income growth. Without a purposeful strategy to attract and book new guests, your business will unfortunately decline over time through attrition.

Fortunately, now is a fantastic time to be seeking new vacation rental guests. According to Skift, demand for nonhotel accommodations is rising 30 percent to 40 percent faster than for hotels. And for good reason: The value of short-term rentals is undeniable.

Earlier this year, Booking.com released news that only 20 percent of its revenue is from alternative accommodations. However, 35 percent of its bookers say they want to stay in a home. That means millions of potential new guests are looking for a home but have yet to stay in one.

 

Free Exposure

Your home’s exposure is the key to attracting new guests. Listing your property for millions to view costs nothing, because you only pay when it’s booked. And making an impression is the surest way to be remembered when guests begin planning their travel. This is an excellent way to build your brand and awareness of your home with millions of potential guests.

 

Booking Safety Net

Each of these online channels is used by slightly different guests. Some channels cater to those who book long weekends more frequently than week-long stays. Some cater to millennials more than to baby boomers. Some are used more frequently by last-minute shoppers than by those who book six months in advance.

My point is that the surest way to maximize occupancy is to list your home for all these potential guest types to see. Last-minute cancellation? No problem. You’re already visible to other last-minute shoppers. Slower shoulder season? When the weather’s good, and people want to plan a getaway, you’re already there.

 

An Advantage for First Movers Who Get It Right

Expedia and Booking.com built huge businesses as hotel-specific listing sites. As you know, they’ve been adding vacation rentals to their platforms for the past several years. Expedia’s $3.9 billion acquisition of HomeAway is Exhibit A in this market shift.

Although some VRs have been listed on these sites for several years now, many struggle to create listings that perform. Translating the added complexity of a VR home’s additional amenities into these platforms is difficult.

There’s a big opportunity to list your homes on these platforms as traditional hotel guests continue to shift to looking for higher-value homes for the first time. You want these guests to find your homes the first time they look; this gives you the best chance of building lifelong, loyal guests.

 

Acquiring New Guests Costs More

A senior executive at a large VR company recently told me that its PPC costs have increased 190 percent in the past 18 months. Acquiring new guests has never been so expensive, while property manager commissions get smaller and smaller.

The biggest complaint I hear about Expedia and Booking.com is that their commission rates are too high. However, when you evaluate these commission rates in light of today’s true costs of acquiring new guests, many property managers are finding OTAs are in fact cost effective in this new reality.

So, in summary—a quick review of the incremental value of listing on Expedia, Booking.com, and all of their affiliates:

1)  Four Times the Audience

There’s no substitute for promoting your homes to the largest pool of qualified consumers in the United States. Fish where the fishing is good!

2)  New Guests

They’re more costly to acquire, but they’re your source of growth. Shoot for at least 40 percent new guests each year, and you’ll have a very healthy, growing business.

3)  Booking Safety Net

You’ll fill more of your availability by promoting your home to more kinds of potential guests, particularly in shoulder and off-seasons. Neutralize some of your risk by listing on all the major platforms.

4)  Free Exposure

Millions will see your listing, but you only pay when bookings are made. Imagine paying for traditional media ads this way? The “Billboard Effect” is alive and well.

 

Four Options for Handling Higher Commission Rates

If these higher costs still give you pause, property managers have a few options for offsetting the higher commission rates. Here are four I’ve encountered across the United States. I think your risk tolerance is key to selecting the right option for you and your business.

1)  Increase the management fee by x percent.

Adding x percent to your overall management fee effectively amortizes incremental acquisition costs across all bookings. This smaller incremental fee per booking pays for costs associated with actively managing the optimal revenue mix and ensures consistency across your book of business. Competitive pressures in your market may render this option a nonstarter, so please consider the value you deliver vis-à-vis your competitors’ management fees. (And some of you need to stop rolling your eyes.)

2)  Deduct the commission rate before the revenue split.

This is the most common approach I’ve encountered and is what I used as a property manager. A more precise cost attribution model, this method applies the incremental costs to each booking. This ensures you pay the appropriate fee for each booking. In this model, the property manager and homeowner effectively share the acquisition cost.

3)  Add the rental fee (or boost rent) to cover incremental costs.

Increase each property’s rent for any given period by the amount of the incremental commission paid. This is the surest way to recover these incremental costs, but be careful: Conversion rate may suffer if the resulting price outpaces the market rate. At some point, rate parity may become a problem, but as of now, you need to make sure you have rate parity across your channels.

4)  Use a pay-to-play opt-in for homeowners.

A few property managers have offered homeowners the option to list, but with an upcharge for these new external marketing costs.

There’s never been a better time to build your business, as an increasing number of traditional hotel guests look for higher-value short-term rentals.

Our industry continues to flourish, in large part due to this guest migration. Now is the time to get your homes in front of these first-time guests, and the best way to get them there is to list your homes on Expedia and Booking.com.

Revenue Management: Who’s in Your Driver’s Seat

By
Andrew McConnell
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0

At the recent Inaugural VRM Intel Data & Revenue Management Conference in Atlanta, the first day largely focused on “setting the table.” This meant getting everyone on the same page in terms of terminology, focus, past, present, and an exciting-if at times overwhelming-look into the future. With that context, the second day then dug into more tactical recommendations and action items attendees could take with them when they returned to their business later that week.

In this “table setting” exercise, Ralf Garrison was expertly positioned to kick off the conference. Ralf took us all through the evolution of the vacation and short-term rental industry in general and of the sophistication of the data collection and management process as well as revenue management in particular. In discussing what revenue management means and should mean in our space today, Ralf made an analogy to autonomous vehicles. Yes, there is software out there today that allows artificial intelligence to drive your car for you, but as the number of lawsuits against Tesla for driver deaths increases, are you ready to put your life blindly into a machine’s hands?

Revenue performance for your company is as critical as breathing is for you as an individual. If you are not prepared to trust the machine for one, are you prepared to blindly trust the machine for the other? Better understanding what revenue management means, and should mean, is helpful on this front.

To begin, there are many who conflate dynamic pricing with full-blown revenue management. For the former, there are some great technology companies out there like PriceLabs and BeyondPricing, and even some of the larger listing sites have their own tools that can help.

For the latter, when you start to think of revenue management as a discipline rather than just periodic rate adjustment, as was constantly discussed at the conference, no technology alone is a viable option today.

Given where our industry is, and the ecosystem around it, much more manual work is required than many realize or want to believe. On top of that, as Sarah Franzen of Natural Retreats said during a panel discussion I was invited to moderate, “Anyone who is trying to tell me how to price my home—who has an interest elsewhere—I’m probably not going to take that recommendation.”

That being the case, how can and should you as a vacation rental manager navigate this ever-evolving space today and going forward? As with so much else in our industry, every single business is different; but there are many commonalities across companies. My own experience at Rented.com might be informative, and I offer it here to help you avoid the mistakes we made.

Some of you might know Rented.com through our former Fixed Rent Guarantees. This is where we would partner with local managers to offer homeowners a guaranteed, fixed monthly payment on their homes. We would then work with managers, on a commission, to rent the home, in the process splitting the upside between Rented.com and the manager in question. With this business model, revenue optimization is obviously critical—that is where all the money is made. And so as we partnered with more and more managers all over the world, building a portfolio of ~1,000 properties worldwide, we became big proponents of dynamic pricing and the technology companies that support it.

And yet the longer we operated the units, and the more we added to our portfolio, the more we realized that technology alone, and dynamic pricing as an activity, did not offer the full solution. One reason is that while each technology company has its own merits, the quality of each varies dramatically by geography and property type. There simply is no one-size-fits-all answer.

Additionally, as so many of you realize, knowing the right price for a property at the right time is only a small piece of the puzzle. Given our complex ecosystem of property management systems, listing sites, company sites, phone reservations, etc., getting those prices updated to every relevant spot in a timely manner is never easy, and it is sometimes seemingly unfeasible given other priorities of your team.

And finally, we began to see that having the right price in the right place was not even the be-all and end-all we had imagined. Truly managing revenue, and thus maximizing it, means far more than just price. It also has to do with what you are pricing (unit mix and strategy), where you are pricing it (channel strategy), how you are positioning it (listing strategy, listing attributes, minimum stay requirements, etc.), and so much more.

All of these factors ultimately lead to the conclusion that you can only get the price that people are willing to pay for that specific unit at that specific time on the channels it is marketed on, with the attributes of those listings—such as reviews—being paramount to whether someone will book it.

While technology could and can help with a component of this, we found more was needed. At the same time, the managers we were working with simply did not have the internal capacity to take on all of the work that was needed on this front to maximize revenue. And so, given our portfolio size, we began to build it internally. We assembled a team of experts with diverse backgrounds in revenue management—from destination and urban vacation rentals as well as airlines and large-chain hotels in major cities. These experts began holistically performing what we now understand is actual revenue management. They began balancing the relevance of the available data with technology to understand the market and the comparative sets for each property. This team was then able to dig into the nuance of individual unit pricing to account for positive and negative attributes and listing qualities of those properties.

As we put in place a team of experts who were dedicated full time to this practice of revenue management, a funny thing began to happen. The revenue performance on our units went up dramatically. In some cases by greater than 2x, and across the board by 20–30 percent.

This surprised us and the managers we worked with, but in retrospect it shouldn’t have. In most vacation rental markets, the best manager from an owner and guest’s perspective is the manager who knows that market best; the manager who lives in that market and who has for years. It is a very rare owner or guest who asks how many other properties the manager manages around the world, or how much money that company has raised. Even of those few who do, a larger amount is not always the answer they want to hear. That puts the local manager at a distinct advantage when compared to the goliaths of our industry.

At the same time, due to the vast number of properties those goliaths manage and all of the money they have raised, these companies in turn have distinct advantages when it comes to nonlocal activities and services. They have the scale to invest in and build technology and tools a local manager cannot afford. They can hire armies of teams for things, like revenue management, that most managers do themselves or that are just one part of an already overstretched employee’s job. The issue is that there are certain tasks too critical to the success of your business to be part-time jobs. As the lifeblood of your business, revenue performance—and thus revenue management—is one of these.

At the end of the day, equating dynamic pricing to revenue management is like thinking a car’s cruise control is the same as driving. Sure, the cruise control can set the right speed and maintain your momentum, but who is setting the direction? Who is dodging the reckless drivers around you? Who is slowing down as traffic piles up? Yes, maybe one day it will be technology through autonomous driving, but today, like with revenue management, it still requires a focused and dedicated driver.

In a car, your life is on the line. With revenue management, it is the life of your business. In both cases, it is critical to have the best answer possible when you’re in the driver’s seat.

Scaling Your Business: 5 Focus Areas For Human Resource Managers

By
Sue Jones
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0

In the vacation rental industry, we frequently hear chatter about scaling businesses. The topic of scaling is a nebulous idea that may leave some business owners perplexed about where to begin, whereas others are eager to focus their attention on it. The first rule of scaling is this: Business owners must have the desire to scale.

Often business owners confuse the difference between growth and scaling their business. It’s easy to misunderstand. The phone is ringing off the hook, the email accounts are blowing up, and everyone feels the sales growth. The increased revenue certainly supports this story line. At this juncture, business owners have a decision to make: Do we hire another employee to handle more work, or can we afford to wait and design a strategic plan to scale?

The trick is finding the sweet spot between increasing your revenue and keeping costs low with an effective operations plan for staffing. When business owners are prepared to scale operations, they are equipped to handle a growing volume of sales in a cost-effective and efficient method of continuing to be competitive in the marketplace. Scaling your operations with a strategic plan for staffing is a specific component of the process.

 

People Systems

 

1)  Design a Strategic Plan

Good plans have a one-, two-, and five-year strategic outlook with correlating operational tactics. In addition, a strong plan will allow your business to fully utilize technology and automation, identify your competitive edge, draw your attention to the right things at the right times, focus on the right people (homeowners, guests, and employees), and build your network.

If you are in the weeds and practicing a hands-on approach—processing details and managing employees—it can be difficult to zoom out to the 30,000-foot level to think and plan, especially to identify patterns and execute visionary work.

Part of the scaling process is to identify methods for automation to free up your time and that of key staff. Research from the World Economic Forum predicts that 42 percent of workplace tasks will rely on some form of artificial intelligence or automation by 2022. Business owners and employees have opportunities to build trust during this phase through delegation of responsibilities for certain necessary tasks. Focus on how best to use technology to free up your time and build confidence in your employees’ knowledge and skills.

 

2)  Know Your Competitive Edge

Know what separates your business from your competitors and what separates your business in the eyes of your homeowners, guests, employees, and applicants. Take this one step further— know what separates your employment model and culture from your competitors so you are the employer of choice for attracting and retaining talent.

Growing and scaling are both exciting and stressful times for employees. When you understand the core strengths of your business from multiple perspectives, you are ready to build your plan while keeping your competitive edge top of mind.

Define your service brand and roles for each functional area of your business and how they relate to business owners, employees, homeowners, guests, and vendors. Your business will need functional and structural organizational charts for each year of the strategic plan.

The functional chart is your road map: where you’re going and how your plan will work broadly. This living document may change every year or more during the scaling period. Your structural organizational chart shows how you’ll get to your goals through process workflow. It allows you to plug in position titles, build roles and responsibilities, create supervisory and direct reporting systems, and develop current and future job descriptions.

Being flexible and dealing with growth simultaneously can prohibit your ability to see the big ideas. Use organizational charts, flow charts, and other organizers to get out of the weeds. Going back and forth between graphical organizers and visuals, writing and reading documents, and talking in small groups can support a team that is stuck or indecisive. Be cautious of rigid thinking or a sticking-with-the-plan attitude.

The strategic plan needs to be replicable and agile enough to be responsive to changes in real time. Businesses that are successful with scaling are flexible, responsive, and realistic as time goes by.

 

3)  Manage Performance, Not Behaviors

Why is performance management important? It’s simple. Happy employees mean happy owners and guests. When reflecting on your performance management process, evaluate the answers to these key questions:

  • Are your performance reviews driving the behaviors needed for your employees to succeed?
  • Are you focusing on past performance or coaching toward future performance?
  • Are your employees meeting and exceeding their goals?
  • Are your employees provided with timely and relevant information regarding internal promotions and succession planning?

Managers and supervisors in all industries need to become more agile when managing performance. Agility allows you to rethink your company’s process. In the past, performance management has been a planning-based approach governed by goals and a scoring system that rates performance with a score or sometimes on a scale. And it has happened annually—once a year.

Research tells us that this performance model has become antiquated in some ways. The structure and results are fine, even helpful. The issue is that employees desire to grow. They crave real-time feedback on performance. They want to know when something was off or if their work produced erroneous results.

Employees have accountability when given the chance to correct performance sooner rather than waiting for an annual review. Involving your employees in managing their performance will drive their accountability, ownership, and engagement. They also want to know when they did well, so be specific and accurate.

The truth is not all of your employees will be on board with scaling your business. That’s OK. Don’t be afraid to let people go with integrity. People who are not behind the changes and your vision will harm your company with negativity. They will affect internal morale and attitudes. Some of this negativity could reach your guests or affect your brand. Employees, especially leaders, must be aligned with the company vision and serve as cheerleaders of the strategic plan and its tactics for scaling.

 

4)  Invest in Training and Development

When rolling out scaling plans internally, inform your staff of your mission, and gain their trust and support in advance. It takes time and doesn’t happen after one or two big group meetings. Making time for consensus-building conversations and planning meetings, be they company-wide, in department groups, or one-on-ones, is critical to managing change. Don’t rush this process. When you are open, transparent, and honest with your employees, they will appreciate your approach to keeping them informed and will work with you to support your plans.

Your organizational culture becomes critical at this point. Ensure your culture, processes, and communications are consistent across all touch points—from employees to homeowners and guests and from existing employees to new hires.

Focus on the right people. As the unemployment rate in local markets challenges employers to find talent, start focusing on the talent you have in the workplace today. How can you best invest in their training to develop their skill sets to meet future business needs? How do you invest in transforming employees into managers and leaders?

Developing talent from within your company will free up entry- to mid-level and seasonal positions to attract new talent. At the same time, current employees have opportunities to grow their careers and develop their knowledge and skills.

Retain your talent. Find ways to engage and retain those employees who know your systems and internal processes, understand your brand, and represent key competence in the following areas:

  • Adaptability—can they maintain focus and a positive attitude under pressure?
  • Customer service—how well do they interact with homeowners, guests, and their internal customers (employees)?
  • Emotional intelligence—how well do they manage their emotions and the emotions of others?
  • Problem-solving—how adept are they at assessing situations and fixing small problems?
  • Communication skills—how well do they express themselves one-on-one or in groups?

Train your leaders on expectations and operations, and then train your people. Consistency through this procedure during the onboarding of new hires is critical. Pair a new hire with a mentor; mentors will grow while reinforcing their own rediscovery of the business and gain confidence from being a mentor through the scaling period.

Develop a strong, consistent, and documented onboarding experience for new hires. Have the first day of employment planned well—seriously. Write out a task analysis for the first day, and identify key indicators to gauge the onboarding process for the first week through the 30-, 60-, and 90-day benchmarks. At 90 days, conduct a stay interview. Find out what you’re doing well and not so well. Adjust the new hire process based on information gained, and ensure adjustments are aligned with strategic goals.

 

5)  Focus on Team Building

A cohesive team will meet or outperform your expectations consistently. When you train your leaders from within and recruit for company culture and fit, your guests, homeowners, and employees will experience stellar customer service and feel valued within your business model. You are creating a win-win situation for all parties.

Core employees execute their essential duties flawlessly most of the time. But when employees make mistakes, teams can pick up the slack and correct the errors with almost no detection from a customer. Every guest service touch point is important; if your employees make mistakes, let the team correct the situation. It’s an opportunity for the employee who made the mistake and the team member who corrected it to learn more about your brand and delivery of services and products. Let them learn together, and avoid micromanaging the small stuff.

Find opportunities to be together as a team outside of work. Some business leaders take their employees to a local favorite establishment for happy hour, whereas others plan small hikes and pack picnic lunches to show appreciation for employees’ contributions. Whatever you choose to do, keep it lighthearted and appreciative.

 

Keep Your Company’s Soul

Scaling a business is complicated. Keeping the feeling of your company—its brand, service style, business model, intent, and mission—needs much thought and planning.

You’ve already identified what your company does well and your competitive edge. You have the right people and systems in place to support scaling. The elusive piece of the puzzle is how to do this while keeping your company’s soul.

The truth is that you’ve done most of the work. Your brand, systems, and people are the soul of your company. Your brand can scale, and your systems are responsive to growth and demand. Your employees have scaled by learning new software and building new processes. You’ve attracted, recruited, trained, reskilled, and retained employees. You’re working smarter rather than harder.

What’s the first rule of scaling? Business owners must have the desire to scale. The fact that you’re concerned about the soul of your company shows intent. Follow your instincts. Although you might not be able to maintain the exact model of your company before you scaled, you can maintain its soul with instinct, intention, and effort.

Brands are not static, and you should expect your company to evolve over the years. As your brand matures, be the architect of customer service and culture. Be accountable for internal and external forces that pull your company in the right or wrong directions, and make corrections quickly. Keep your company’s core values visible and practiced. Not only will you increase your revenue and ensure repeat guests; you will retain your talent and the soul of your company.

18 Months in Review: A Look at Actual ADR, Occupancy, Length of Stay, and Booking Window Across Key Vacation Rental Markets

By
Amy Hinote
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0

While the concept has taken time to catch on, vacation rental managers and DMOs are beginning to value and utilize comparative data platforms that provide source data originating directly from property management systems. Until recently, benchmark data platforms only provided self-reported data from property managers or “scraped” data displaying data points from third-party websites such as Airbnb and Vrbo. Now, with source benchmark data platforms through which data are compiled and aggregated in an apples-to-apples manner, the vacation rental industry is beginning to get a clearer picture of actual performance over time.

The data and KPIs displayed were provided in partnership with Key Data Dashboard and provide a look at the average daily rate (ADR), available occupancy, average length of stay, and average booking window.

We pulled together data a few key markets, including:

  • Mountain markets (Jackson Hole, Park City, Telluride, the Lake Tahoe region, and the Gatlinburg area)
  • Beach markets (Hawaiian Islands, Hilton Head, the Florida– Alabama Panhandle, and North Carolina’s Outer Banks)
  • Charleston, SC
  • Orlando, FL

As you comb through these KPIs, some interesting points jump out.

Across markets, ADRs are generally higher in 2019 than in 2018 with a few interesting exceptions. The ADR in April 2019 was lower across all the mountain markets we examined. However, in April, occupancy in these same mountain markets was considerably higher, averaging 25 percent across the markets.

In the stateside beach markets (Hilton Head, the Florida–Alabama Panhandle, and the Outer Banks), March brought a drop in ADR and an increase in available occupancy for Hilton Head and the panhandle, but the Outer Banks still saw a 14 percent decline in available occupancy.

We often hear industry experts say, “Stays are shorter, and guests are booking more last minute.” But are they?

As we look at the average length of stay and the average booking window over the past 18 months, that theory starts to fall apart. In the mountain markets the average length of stay was either higher or the same year over year with a few exceptions. Jackson Hole saw a slightly lower length of stay in the winter, whereas Park City and the Lake Tahoe region experienced a more significant drop in stay length in the summer.

In the beach markets, the average stay length was also either higher or flat over 2018 with the exception of the Outer Banks, which saw a notable year-over-year drop in length of stay from January through April. Looking at the booking window, while there are mixed results among destinations and across seasons, when we look across markets, the average booking window did not change significantly year over year—with a handful of exceptions in 2019; in Telluride in January (down 28 percent), in Park City in April and May (down 27 and 37 percent), and Lake Tahoe in January (down 25 percent). In all these cases, available occupancy during these months was up 9 to 39 percent.

NOTE: if you hover over the image, you can scroll through and zoom in on all the data presented. 

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Now that we are seeing actual aggregated transactional data coming directly from professional property managers, we are able to challenge theories and analyze actual performance locally, nationally, and soon globally, to better understand vacation rental performance.

Looking for that special family Christmas gift? 5 reasons to give the gift of time with a family vacation (plus booking tips)

By
Amy Hinote
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6

Choosing the right Christmas presents for family members can be challenging. We look for gift ideas that are meaningful, create joy, build lasting memories, build us to be better people, and make us stronger as a family. To cover all these bases, consider giving the gift of a family vacation this year.

There are significant advantages to choosing a vacation as a Christmas gift, and while this is not an exhaustive list, here are five reasons to give the gift of a family vacation (plus travel planning tips).  

 

1. Vacations Provide Quality Time with Family

If one of your 2020 New Year resolutions is to spend more quality time with family, giving the gift of a vacation is a great way to force yourself to do it.

A study of 2,000 parents with school-aged children across the country found the extent to which hectic routines take a toll during the work week with the families polled managing less than 45 minutes all together on a typical weekday (“American families barely spend quality time together,” New York Post).

A family vacation provides dedicated, quality time with the family that builds relationships and creates stronger family units.

 

2. Vacations Create Lasting Memories that Children Cherish Throughout their Lives

Think about your own favorite childhood memories. If any of these include vacations with your own family, it is easy to see anecdotally why family vacations build memories children will take with them throughout their lives, but research proves it. Multiple studies affirm the power that family vacations have in creating lasting, positive memories.

“Family holidays are valued by children, both in the moment and for long afterward in their memory,” psychologist and best-selling author Oliver James explained to The Telegraph. “It’s all about talking nonsense with your parents, sharing an ice cream and moments of time in which your interests are genuinely taken into account.”

What kind of memories with you are your family members taking into the future? 

 

3. Vacations improve childhood and adolescent development

Traveling with children is also beneficial to brain development. “An enriched environment offers new experiences that are strong in combined social, physical, cognitive, and sensory interaction,” says child psychotherapist Dr. Margot Sunderland. “Think: family together in the pool, walking together through the forest, touching long tall grasses waving in the wind, toasting marshmallows on campfire, hanging out together under warm sun, feeling sand between the toes.”

 

4. Connecting across generations and miles

Christmas gift ideas for familyThe advantages of giving vacations as gifts are not just limited to parents. Grandparents, aunts, uncles, and cousins find vacations to be extremely valuable in deepening connections with family members across generations and across geographical distances. As difficult as it is to build in quality time with our nuclear families, it is even more difficult to plan for time with extended family members; and maintaining these connections is critical in building strong families. According to AARP, “With so many grandparents living hundreds of miles from their grandchildren, some are turning to a fun way to bridge the distance: vacationing together. About 40 percent of grandparents say they travel with their grandchildren, according to a new ‘Grandparents Today’ survey from AARP Research.”

The survey also found that 75 percent of grandparents had traveled with three or more generations in the past year, while others chose “skip-gen” travel—vacationing with the grandkids alone, minus the middle generation. About one-third of grandparents have taken their grandchildren on skip-gen trips.

 

5. The Joy in Anticipation

The upside of a giving the gift of a vacation is that the happiness it brings starts well before packing. According to Healthy Set Go, “Research shows the biggest boost in happiness comes from planning the vacation. A person can feel the effects up to eight weeks before the trip.”

Having something to look forward to with the family provides weeks of fun before the trip actually starts. “Those who are waiting to go on a holiday are much happier with their life as a whole, experience less negative or unpleasant feelings, and thus enjoy an overall net positive effect or pleasant feelings,” according to David Gilbert and Junaida Abdullah of University of Surrey.

“The holiday-taking group are also happier with their family, economic situation, and health.”

 

Tips for planning a Christmas vacation gift

When considering giving a family vacation as a Christmas gift, here are some tips for getting the most bang for your buck.

 

1. Leisure destinations can offer maximum connection for less money

While planning a trip to a major city has a lot to offer in sightseeing, staying in vacation rentals in beach, mountain, lake, and recreational areas provides more space and time for family groups. Hotels are great, but in vacation homes—with living rooms, kitchens, outdoor spaces, and everyone under one roof—families have more space to gather for family time while still having separate bedrooms. Plus, the full kitchens provide additional savings by not having to eat each meal out, and not having the big sightseeing admission costs lowers the overall expense of the vacation. 

 

2. Visualize where your family can connect, and think about what they like to do

Can you see your family splashing around the ocean and spending evenings relaxing on a beachfront deck listening to the waves crash? Or skiing, snowboarding and sitting in front of the fire at night? Or boating, kayaking around the lake, and singing and telling stories around the fire pit at night? Visualizing where your family will be most relaxed can help you decide where to go.

 

3. Save by choosing destinations within a day’s drive or look for direct flight specials

Flying can be expensive for large groups, and when adding in the cost of a rental car, the total bill starts to quickly rise. By driving, you can save money and plan in some quirky side stops along the way. 

 

4. Book directly with the vacation home manager or owner

The big sites like Vrbo and Airbnb have additional traveler fees, so you can often get a better deal when you book directly. Plus, you have a one-on-one contact that will make sure that everything goes smoothly. In addition, the managers/owners can help with any individual needs you have, things you want to do, or gifts you want to add in the home to make things even more special. Vrbo and Airbnb are great sites to explore to get ideas, but booking directly has a ton of advantages. 

 

5. If possible, book in off-peak times

If the children in your family are not in the 10-18 range, you may have a ton of flexibility in when you go on vacation. Avoiding the major peak seasons can help save money and avoid traffic and big crowds. Each destination is different. For example, in US beach vacations, avoiding the three weeks before and after July 4th can significantly decrease the cost of the vacation.

 

In today’s environment, for many of us, giving more devices, video games, and more ways to disconnect from each other can feel a little shallow. So if you’re struggling to find the right gift, a family vacation may be the perfect present for your family this year. It sounds cliché to say that you will “build memories that last a lifetime,” but it is cliché for a reason. Your future family will thank you. 

Check out some Christmas vacation specials in the comments below. 

Calculating Occupancy in the Vacation Rental Industry: Should Owner Stays and Maintenance Holds Be Considered for Vacation Rentals?

By
Hannah Wheeler
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2

Occupancy has consistently been used as a staple indicator of performance for hoteliers and rental managers.

Because occupancy rates are one of the most useful metrics for a revenue manager, and a tool adopted from hoteliers, we tend to pursue high occupancy rates. The fewer vacancies we have, the more money we make, which, in turn, means happier owners. However, this is not always the case. Let us examine the differences between hotel and vacation rental occupancy, methods for calculating occupancy, and why maximizing occupancy should not be the final goal.

Hoteliers are decades ahead of vacation rental managers in terms of revenue management. As a result, vacation rental revenue managers have borrowed many strategies—including measuring the occupancy rate—from hotel revenue managers. But, as we now know, hotels and vacation rentals are different industries. Vacation rentals deal with more nuanced booking windows, a variety of inventories, and a traditionally different clientele.

Perhaps the most obvious difference is that hotels do not have owners booking stays in their rooms. These stays, typically non-revenue-producing except for the occasional cleaning fee, sometimes dramatically reduce the number of days available for booking. Factoring in vacation rental owners alters the occupancy rate in an essential way: They change the number of nights a property manager is able to book.

The traditional occupancy rate is measured by taking the total number of nights sold and dividing by the total number of nights in the period. If we manage 10 units during September, and have sold 100 nights, the calculation would be as follows:

 

Occupancy Rate

100 nights sold / (10 units x 30 nights) = 33% occupied

 

In other words, on an average night during September, we filled one third of our properties with guests. This method of occupancy calculation is typically how hotels track performance and vacancy. It may appear to be the best way to determine how well a revenue manager performed during a given time, but it fails to take those important owner nights into account.

Now, if these 10 owners are staying for 50 total nights in September, those nights are unavailable to guests. If owner nights are included in the nights available to book, it is not a fair assessment of how well the property managers performed. We prefer to take them out of the denominator, which brings the rate closer to an actual representation of available nights.

 

100 nights sold / ([10 units x 30 nights] – 50 owner nights)

= 40% occupied

 

If owner’s stays are excluded from the occupancy rate, the percentage changes drastically—from 33 percent to 40 percent. Suddenly, it seems as though we are doing a better job of filling our properties. At Key Data, we take this a step further; if owner nights are excluded from available nights, maintenance holds should also be removed, because they detract from the nights available to guests. When maintenance holds are considered, the occupancy rate continues to grow.

 

Adjusted Paid Occupancy Percentage

100 nights sold / ([10 units x 30 nights] – 50 owner nights – 25 holds) = 45% occupied

 

This occupancy rate is called the adjusted paid occupancy percentage, because it only includes paid nights and adjusts the denominator to consider only nights available to guests. Although that traditional occupancy rate may be helpful for the KPI to consider, adjusted paid occupancy percentage allows property managers to look at occupancy from an angle that excludes factors beyond their control. Because the rate of owner stays and maintenance holds varies greatly from property to property, the adjusted paid occupancy percentage is useful for comparing similar inventories and is essential when benchmarking performance against competitors.

It is difficult to determine when a competitor’s properties are unavailable to book because they are already reserved or whether there is an owner stay/maintenance hold. Removing owner stays and maintenance holds allows for a true apples-to-apples comparison.

No matter the calculation method, revenue managers generally aim for a high occupancy rate. However, extremely high occupancy leads to unit wear and tear and leaves a small window for cleaning, maintenance, and larger updates. Property managers also risk leaving revenue on the table, because high occupancy can indicate that prices are too low. Thus, when combined with other KPIs, the occupancy rate becomes a more valuable tool.

By combining occupancy and average daily rate (ADR) revenue managers can calculate their revenue per available rental (RevPAR), which is arguably the most powerful KPI in the business. occupancy alone answers the question, “How many nights are booked?” ADR answers the question, “At what rate were my nights booked?” Answering only one of those questions fails to reveal the whole picture. After all, what if you could make more money by charging more for your rentals, even though you had fewer guests? This is where RevPAR comes in.

 

Revenue Per Available Rental

Occupancy x ADR = RevPAR

Scenario 1: 90% Occupancy Rate x $150 ADR = $135 RevPAR

Scenario 2: 75% Occupancy Rate x $200 ADR = $160 RevPAR

 

Even though occupancy is higher in Scenario 1, RevPAR is lower, indicating that additional revenue can be made by raising prices. When calculated using adjusted paid occupancy percentage, this becomes a vacation rental-specific KPI: Adjusted RevPAR. This KPI is a step above hotels’ idea of RevPAR and accommodates the intricacies of vacation rentals. A critical KPI for measuring revenue performance, adjusted RevPAR accounts for both ADR and the paid occupancy percentage. Adjusted RevPAR will usually be higher than RevPAR because owner stays and maintenance holds are considered, making it ideal for comparative purposes.

 

Adjusted Revenue Per Available Rental

Adjusted Paid Occupancy x ADR = Adjusted RevPAR

 

Adjusted RevPAR versus RevPAR

 

Adjusted Paid Occupancy = 40%

ADR = $150

Adjusted RevPAR = $60

Occupancy = 33%

ADR = $150

RevPAR = $50

We work in a dynamic industry and are building the playbook as we go. As we continue coming into our own we should consider adopting the calculations and data sources that best set up our industry for success. Seemingly small differences, like changing our occupancy calculations, can have large impacts; as we continue sharing our ideas, we will find how to best measure performance. The decisions property management companies make about pricing are fundamental to their success. As we continue growing in our space together it is critical that decisions are not just data-driven but driven by high-quality data, calculated using methods optimized for the industry.

Overcome Direct Booking Obstacles with a Best-In-Class Booking Engine

By
Jennifer Perez
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0

Your booking engine is the beating heart of your vacation rental website. Simply put, it’s the foundation that supports the success of your online business. There are many different ways to add a booking engine and direct booking functionality to your website, so how do you know if the method you’re using is the best?

A software-integrated booking engine—one capable of plugging into any website—can address a multitude of the direct booking needs that vacation rental professionals express. A prime example of this type of booking engine is Bluetent’s Rezfusion Hub. Below, we’ll discuss a few common situations for which Hub is the perfect solution.

 

You love your current website but want to add direct booking functionality.

Your brand is how you represent yourself to the world and how you prove your value to potential guests—building it takes time and money. If you’ve already invested in a website that perfectly conveys your brand identity, you don’t have to abandon it and start over to add direct booking. Instead, choose a booking engine that can be easily added to your current website’s code.

Hub effortlessly integrates with your existing website, allowing you to match the booking experience not only to your brand but also to your site’s design. Because you know your guests and properties better than anyone, Hub’s search widget is fully customizable. Just select the search fields you want to include—highlighting popular amenities, features, and locales—and it’s a breeze for travelers to find the perfect property and click “Book Now.”

 

You’re having a new website designed, but booking engine development is outside of the scope of work.

In this case, your company is committed to building your brand online. You’re poised to take the leap to either launch your first website or revamp your outdated website. You’ve found a design company that fits your style and needs, but they can’t provide you with a booking engine. Other firms that can develop a booking engine are out of your price range. Deciding to add a stand-alone booking engine solves the problem—your website design isn’t tied to your booking engine provider in any way. You can maintain complete creative and feature control and still offer your guests direct booking.

When choosing a booking engine for your new website, keep in mind that many options link to a subdomain, hurting your SEO. Because Hub becomes part of your website’s code, users stay on your branded URL—optimizing your website’s visibility on search engines like Google and making your investment much more valuable.

 

You’re changing property management software providers and want to keep your direct booking functionality.

In the rapidly transforming vacation rental landscape, switching to a new property management software is a real possibility for many companies. If you find yourself preparing to migrate to a new PMS for any reason, you’ll want to mitigate any effects the software change will have on your website’s visitors. With the right booking engine, the transition will be seamless for your business—and potential guests won’t even know the difference. Regardless of software providers, Hub maintains uninterrupted booking.

Further enhancing the guest experience, Hub connects to an exclusive secure payment server so that your website’s checkout process will be both PCI and GDPR compliant. Travelers can trust that their confidential information is kept safe.

 

You’re looking to implement a microsite strategy and want direct booking on each site.

A microsite strategy is a great way to get the right properties in front of the right guests—you can target different markets by featuring your properties on multiple websites. Maybe you’d like to divide your properties into separate sites that feature luxury versus budget rentals. Maybe you’d like sites to highlight each region you represent. Maybe you manage multiple HOAs that require distinct sites. Regardless of how many microsites you develop, with a booking engine like Hub, every site can feature online booking capabilities that you can easily and quickly manage.

 

The list could go on.

We’ve identified even more ways that the right booking engine can make it simple, efficient, and affordable for vacation rental managers to put more “Book Now” buttons online. If this article has made you curious how Bluetent—and Hub—can help your company drive more direct bookings, give us a call at 970.510.5615.

The Pricing Technology Process: How hoteliers combine data, pricing tools, software, and revenue management services.

By
Ryan Saylor
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0

What Can VR Revenue Managers Learn from the Hotel Industry?

With more and more emphasis being placed on vacation rental revenue management, what do we stand to learn from the hotel industry? Seemingly, a lot. Most of what the vacation rental industry is currently experiencing and will experience in the future regarding revenue management has already happened in the hotel world. The data, tools, and processes are and will be fairly similar, and there is an opportunity to learn from the past to keep the vacation rental industry on an efficient pathway to success and innovation.

 

Data Sources

When it comes to data, hotels use similar data points as vacation rentals: historical and future occupancy, average daily rate (ADR), and revenue per available room (RevPAR) are the three key metrics for measuring hotel performance. Internal and external data is stored in various places, but most commonly in property management systems (PMS) and in revenue management systems (RMS). Internal data commonly includes historical and future occupancy, ADR, RevPAR, market segmentation, channel segmentation, and more. Older hotels have extensive stored data to use, and often this internal data is the most valuable to use when developing a revenue strategy.

External data in hotels points us to trends in the market and the competitive set but isn’t as readily available as internal data. Third-party sources like STR Analytics and TravelClick provide paid reporting for hotels to gauge historical and future market performance and can be highly valuable in setting future strategies. Within the vacation rental industry, there is one key external metric that is widely available that is not as available in the hotel world. Forward-looking market occupancy is commonly used in vacation rental revenue management to gauge prospective availability. This data is harder to come by in the hotel world because many hotels do not disclose their future “on-the-books” occupancy data, and you can’t easily get this information by going on a hotel’s website and checking availability. Hotels also often compare their daily rates to their competitive set and need to utilize a rate shop to pull at least 365 days of pricing data for each of their competitors. Competitor price shops are important for hotels because guest rooms between hotels are often of similar value to potential guests. Vacation rentals are obviously more unique; therefore, competitor rate shopping is not as necessary when determining strategy.

The importance of good, clean data is as vital to vacation rentals as it is to hotels. Having reliable sources to count on while making strategic decisions is important because that data is the groundwork for any and all decisions made. Understanding the importance and capabilities of different data sources is also key when using advanced pricing and revenue management systems.

 

Systems & Software

Hotels use property management systems just like vacation rental managers to keep track of bookings, guest information, and more. The hotel industry has also been inundated with a lot of RMSs over the past few years. These systems primarily take on the role of dynamic pricing as well as yielding for hotels. Starting with rates, hotels can often have hundreds of rates available to be booked for any given night, in addition to their rack rate (best available rate or nightly rate) that is typically referred to as a hotel’s main rate for any given day. Other rates include corporate account rates negotiated by companies, discounted rates like AAA and AARP, package rates, OTA rates, and many more. These rates are either flat or dynamic (discounted off of rack) and often have different net rates after considering channel distribution costs, commissions, and more. An Expedia rate is very different from a direct-booking guest in terms of cost, and a hotel may not want to offer lower net rates on high-demand dates. So how do hotel revenue managers decide which rates to allow for a specific night? Yielding.

Building rates and setting prices is really only half the battle for hotel revenue managers. With the cost of distribution on the rise, hoteliers had to find a way to control distribution based on net rates. Yielding solved this problem, and hotel revenue managers now focus on their distribution strategy in addition to pricing.

One of the most common techniques for yielding is by using a “hurdle” price. By setting a hurdle rate in addition to the rack rate, hotel revenue managers are able to tell their revenue management system the lowest acceptable rate they want to take across all rate plans for a certain night, similar to a minimum price. The revenue management system works with the rack rate and hurdle rate set by the revenue manager to open and close inventory on certain channels. To better illustrate this, here’s a graphic demonstrating how a hurdle rate may affect a guest’s booking process on an OTA website versus a big-brand hotel’s website using the exact same nightly rate.

In this example, the revenue manager has set a $100 rack rate that is offered to the guest on both channels, but in the background, the revenue manager’s hurdle point rate is restricting the Expedia rate from booking because the net rate is below that hurdle.

While property management systems are vital to a hotel’s operations, a revenue management system is key to implementing a successful revenue strategy. While most vacation rental managers rely solely on third-party distribution channels, yielding can and will be an effective strategy for minimizing cost and maximizing revenue.

 

Revenue Management Services

So who is responsible for revenue management? Lately, this question has come up in the vacation rental industry along with more advanced discussions. Twenty years ago, hotels began to ask that same question as well. Now, most hotels in the United States have some form of a dedicated revenue manager responsible for implementing a revenue strategy. How did the hotel industry get there? There are three common ways that hotels designate a revenue manager.

The first option is also the easiest: hiring someone or promoting a reservationist to expand the role. Over time, this happened at many hotels, but only at larger, urban properties where it made financial sense to have at least one person in charge of revenue management for one hotel.

The second option fits better for smaller hotels—mostly midscale-branded properties—that have a harder time finding the money to dedicate to revenue management. As the larger hotel brands began to understand the importance of revenue management, franchise agreements began to include the requirement of a dedicated revenue manager. Large hotel brands then began to offer an additional service to franchisees in the form of third-party revenue management. Hoteliers pay a flat fee to the brand and in return have a revenue manager for their hotel that is managed directly by the brand. Imagine large call centers packed with revenue managers who have portfolios of 10–20 franchise hotels.

The third option spawned after this, once hotel owners with multiple properties grew reluctant to pay the big brands even more money for a revenue manager, and a dedicated revenue manager was financially out of the question. Third-party companies like Kriya RevGEN were formed to address this need. If a hotelier owns three hotels across Hilton, Marriott, and IHG, for example, they would have to pay each brand for a remote revenue manager and have multiple people handling their portfolio’s strategy. Third-party revenue management service companies offer one dedicated revenue manager who is responsible for an entire portfolio, making life easier for the hotel owner and also meeting the brand’s franchise requirements.

In light of that breakdown of how hotels determined responsibility of revenue management, we can apply the same logic to vacation rentals.

Large management companies can afford a full-time revenue manager on the payroll, similar to those larger hotels. For smaller management companies and vacation rental managers, how can you outsource revenue management responsibility to be both simple and financially sound? The answer there lies in third-party revenue managers, similar to what evolved in the hotel world. Most vacation rental managers with more than a few properties will need someone responsible for revenue management in some way. Pricing tools and more advanced revenue management systems that the vacation rental industry will likely see in the future will require attention and will not be fully automated. There are human inputs that will still be needed, so every vacation rental property owner and manager should already be thinking about their next steps when it comes to revenue management.

 

Vacation Rental Industry: What’s Next?

While we’re not able to predict the future, we do have the opportunity to learn from what hotel revenue managers have done over the past 20–25 years. First, hotels use similar data points as vacation rental managers to manage hotel revenue, which will help align strategic practices across both industries. Second, hotels (and airlines) have evolved their technical tools to include the use of a complete revenue management software solution, similar to a PMS. These RMSs take care of dynamic pricing, yielding, channel management, and more in one place. Hotels have also been battling third-party channels over the cost of distribution for years, and yielding strategies in hotel revenue management have become as important as dynamic pricing. With OTA and third-party sources already prominent in the vacation rental industry, the cost of relying on such channels has already become a topic of revenue management discussions. Vacation rental revenue management is likely heading toward a combination of both dynamic pricing and yielding as more and more owners and managers opt to use dynamic pricing and more advanced revenue management becomes necessary. Finally, hotels have realized the importance of having dedicated revenue management teams responsible for implementing strategy. The hotel industry also figured out, over time, how to efficiently ensure that dedicated revenue management is feasible for hotels of all sizes.

There are quite a few key differences between hotels and vacation rentals that make both industries unique. Revenue management practices are prevalent across the board in the travel world, but hotels have already recently worked through regulation, changing markets and economies, technological advances, and more. Insight into the history of hotel revenue management can help vacation rental managers anticipate similar hurdles and adapt their strategies to remain successful.

Expedia’s stock tanks as company looks to bypass Google and increase direct bookings on Vrbo

By
Amy Hinote
-
12

Expedia’s stock is down 26 percent today after the company posted Q3 2019 results showing underperformance. According to Bloomberg, Vrbo posted another decline in revenue growth last quarter, leading to a lowered profit forecast for the year. The company is citing SEO headwinds as one of the reasons for missed earnings and is investing in higher cost marketing channels to make up for lost revenue resulting from organic traffic coming from Google. Now, Expedia is focused on obtaining more direct traffic and direct bookings on Vrbo.

According to one analyst, “When it comes to these business models that are built around SEO, we have to be very careful about how exposed they are.”

In early 2019, Expedia began referencing SEO headwinds related to Vrbo (then HomeAway/VRBO) saying, “. . . the platform consolidation and brand streamlining related to making Vrbo our primary global alternative accommodation brand contributed to continued SEO headwinds. That, along with tough comps in performance marketing channels, were the primary drivers of the deceleration from Q4. We expect the slower gross bookings growth trends to persist in the near term as we work through these changes and lap the elevated performance marketing comps. We have good visibility on what we need to do to optimize our SEO profile on our new platform and expect Vrbo’s gross bookings trends to improve later this year.”

However, by the end of Q3, the struggles have continued.

“We continue to be happy with the trends we’re seeing at Vrbo,” said Expedia CEO Mark Okerstrom. “Unfortunately that is swamped by some of the SEO impacts and some of the re-platforming work and sort of pulling spend away from some of the regional brands.”

When asked to expand on Vrbo’s SEO challenges, Okerstrom replied, “Again a lot of it was around either different modules that they (Google) were introducing into search results that were putting traditional SEO links down the page and then in some cases just steering more queries over to the hotel ads module or to the Google flights module than they had been doing historically which ultimately just resulted in a traffic shift and as we were prominently featured in the Google hotel ads product of course we were the recipient of that traffic. Again pretty pleased with the returns that we see in that channel but not as good as they were in the place the traffic was coming from.”

CFO Alan Pickerill added, “If you’re just thinking about the Google platform to the extent that SEO is pushed lower on the page and people who normally maybe would have transacted through those links are moving to paid links. You’re looking at SEM and Google hotel ads. And as Mark said, it’s good we see good returns on those volumes except for the fact that volumes through SEO are essentially free to us. And so, going from free to anything especially the other Google paid placements can create a sizeable headwind for us.”

 

Expedia is Investing in More Direct Traffic to Vrbo

Expedia is actively investing in alternative channels to decrease its dependency on Google, including TV, video, social, and event sponsorships.

“I mean we’re actively spending more in digital video, we’re spending more in traditional television,” said Pickerill. “I mentioned experimenting with some of the influence or type things on Instagram and other social channels. As I think you know we’ve got a sponsorship for Champions League in Europe which we’ve been pretty happy with so far. So, the goal here is to help start basically accelerating our direct business and we were happy with the growth in our direct channels in the quarter. And overall, our strategy is to continue to actually differentiate the product and build more direct business over time. So, I think you’ll see us continue to find new channels that are more branded in nature to help build our direct business.”

Okerstrom added, “In terms of SEO headwinds for Vrbo, listen I think the key is here is that we are really putting our weight behind the Vrbo brand and as a result of that it’s done a bunch of platform consolidation work. Really we saw the step up in the headwinds from SEO really start at the beginning of this year and I think we’re into the end of 2020 before we see those types of things lapping, but I think SEO is a headwind for everyone. In the internet I think you saw us call it out and that’s why Vrbo has been pretty focused on defining a real differentiated value proposition, being smart about their brand spend and exploring more digital video type advertising against the Vrbo brand itself which is growing double digits. We like the progress we’re seeing there.”

 

Vacation Rental Owner and Manager Impact

As Vrbo looks for more direct traffic, rental home owners and managers can expect to see the company more heavily focus on increasing its take rate and eliminating leakage from the site. For example, Vrbo posted approximately 20% growth in transactional revenue, which represented more than 90% of Vrbo’s revenue for the first time.

Eliminating Leakage

Vrbo has been actively looking to reduce the number of guests coming to Vrbo to search and then booking directly with vacation rental managers and owners. As we reported last month, the company began removing all supplier branding from its listing pages, taking out vacation rental management company names and logos. Managers and homeowners can expect to see additional initiatives at Vrbo to incent on-platform bookings and to discourage guests from attempting to transact directly with the supplier.  

 

Taking a Cue from Vrbo’s behavior

As Google continues to roll out its direct booking module for vacation rentals and looks to further monetize its users, Vrbo isn’t the only site that is seeing organic results plunge. Google’s changes also negatively affect or will soon affect organic SEO traffic for individual property management companies.

According to Okerstrom, “The trend is that Google does continue to push for more revenue per visitor and I think it’s just the reality of where the world is in the internet and the importance of Google at the top of the funnel.”

As vacation rental managers consider how they are going to utilize Google in their 2020 distribution strategies, increasing dependency on Google can lead a company into dangerous territory in the future.

Email Overload: Train Your Vacation Rental Team to Overcome Flooded Inboxes

By
Doug Kennedy
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1

Not so long ago in the lodging business, a long meeting or a day off would mean returning to a stack of handwritten notes scribbled on pink message pads. Then came the age of voicemail, and the pink slips were replaced by the flashing light indicator on our phones and a computer voice announcing, “You have 19 messages.” These days we find ourselves overwhelmed with digital messages coming at us 24/7 from multiple channels and devices. Yes, there’s still the occasional old-school handwritten message, and now and then we get a voicemail, both of which are usually from someone who has also emailed and texted about the same issue.

Too many lodging leaders and even frontline staff members are now victims of their email inboxes, which is where notifications from apps and platforms arrive. For example, most of us have cloud-based phone systems that forward voice messages to our email address, and web or app-based platforms like Airbnb and Vrbo send us email notifications of in-app messages that await replies. As I make the rounds providing on-site sales and guest service training to VR management companies, I often get a peek at how they handle the flow of both internal and external emails. From what I see, most are struggling and could benefit from reengineering their processes. Here are a few training tips and suggestions that can be applied to a greater or lesser degree according to the size of your company (in terms of staff and homeowners).

 

Create multiple email addresses for each team and executive.

  • With so many messages streaming in, it is helpful to set up multiple addresses for different purposes. For example, homeowner relations and reservations sales staff at large companies could benefit from having a dedicated email address for their prospective customers and a separate one for internal communications.
  • Similarly, executives should have one email address for non-urgent correspondence. For example, I maintain a separate email address for my subscriptions; correspondence with non-urgent vendors; financial, legal, and travel companies (airlines, rental cars); and conference registrations. Can you guess which email inbox I check first each morning?

 

Keep Your Inbox Clean.

  • The most organized executives I know obsess about having a clean inbox, yet most people use the inbox as a storage folder for all their messages. Having a clean email inbox is especially important as we read incoming emails on multiple devices, because an accidental swipe on the wrong message can delete an unresolved task.
  • Don’t attempt to resolve each new message as soon as it is marked as read. The challenge here is that most messages require multiple action steps, often involving other colleagues or departments. Instead, put all required action steps on task lists and then move the messages to email folders. Or create an email folder labeled “Action Needed” or “Unresolved.”
  • This concept is especially important if multiple staff members are sharing a single inbox. For example, with a shared inbox for booking inquiries and app notifications such as reservations@companyname.com, I have found inquiries that were missed because one staffer marked it as opened but did not respond.
  • A final tip: Do not wait for the day when you finally have time to clean out your inbox, because it will never come. Instead, create a new folder labeled “Old Emails through Today’s Date,” and move everything into it so that you can start fresh.

 

Create a uniform, logical folder system.

  • Most companies seem to leave it up to employees to create their own email folder system. It is better to agree on a logical filing system so that employees can more easily search their own emails and colleagues can cover the work of others who have stepped out or left the company. Certainly, email applications have improved their attribute-based search options, but often searches return too many emails and the searcher wastes time scrolling.

 

Use a Customer Relationship Management (CRM) system to manage owners, vendors, and guests.

  • Too many people try to organize their business relationships through their email applications by flagging emails, leaving them in the inbox until resolved, and using basic appointment/meeting scheduling options in systems such as Outlook and Gmail, which were never designed to be CRMs. Many VR companies recognize that email is a very effective distribution booking channel and have invested in lead-tracking tools such as those provided by TravelNet (TRACK Pulse), NAVIS (Narrowcast), and some PMS systems. However, in the VR space we have another set of customers: homeowners. We also have our key vendor-partners as internal customers, and we rely heavily on them also. These relationships should be managed by using one of the many cloud-based CRMs. Most readers will think of Salesforce, and a Google search will reveal dozens of other options. Personally, I use Zoho because it is robust and
    affordable, and it integrates with Gmail.

 

Here are some additional training tips.

  • Personalize rental inquiry replies by introducing yourself by name as an on-site specialist, then paraphrase and restate what you observe from the remarks/comments received, after which it is fine to use a template.
  • Include headshots and direct-contact numbers to personalize exchanges and humanize your company.
  • Change the subject line when the topic of the email message changes. This will make it easier for your recipients to find email documentation too.
  • Discourage excessive internal emailing. Use restraint when cc’ing colleagues and using “reply to all.” If resolving an issue requires more than two or three exchanges, it should have been resolved via a phone call in the first place.
  • Train staff to avoid emailing colleagues and instead make a “talk to Chris about” list. Then they should simply call him, or even better, pass by his desk and resolve all issues via a quick meeting.
  • Use the time saved from internal emailing to send more personalized, proactive emails to guests and owners.

Vacasa raises $319M to ramp up global expansion

By
Amy Hinote
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1

Vacasa, today, announced a $319 million strategic investment round led by tech investor Silver Lake, along with existing investors Riverwood Capital, Level Equity and NewSpring.

With this month’s acquisition of Wyndham for $156 million in cash and $10 million in Vacasa equity, Vacasa now manages more than 23,000 vacation homes. The most recent raise brings Vacasa’s funding total to over $525 million. 

“Vacasa has spent the past decade bringing innovation to the $100 billion global vacation rental industry,” said Joerg Adams, managing director at Silver Lake. “We believe Vacasa, with its differentiated technology platform that’s already the market leader in North America, has the potential to become a global brand that stands for superior financial returns for homeowners and exceptional experiences for guests.”

With this new financing, Vacasa plans to further enhance its industry-leading technology platform, accelerate expansion into new markets and grow new offerings, including Vacasa Real Estate, which has evolved from an agent network into a robust service model that includes brokerages in key vacation rental markets throughout the country.

“The opportunity that lies ahead of us is enormous, on both the property management and real estate side of the business,” said Eric Breon, founder and CEO of Vacasa. “We’re seeing an increased number of buyers looking to purchase vacation homes as an investment, with the intent to rent the property. We’re uniquely positioned to assist our homeowners through the entire lifecycle of their vacation home and are dedicated to continued advancement of our technology to meet the needs of our customers.”

“Vacasa’s revenue has grown almost seven-fold since our Series A investment nearly four years ago and we expect growth to accelerate in 2020,” said Ben Levin, founder and partner of Level Equity. Jeff Parks, co-founder and managing partner of Riverwood Capital, added, “It is exceptionally rare to see this type of growth, and rarer still at this scale. As the market leader, Vacasa is distinguishing itself as the standard for quality and innovation in an industry with tremendous opportunity that is being fundamentally reshaped by technology.”  

 J.P. Morgan acted as sole placement agent, and Wilson, Sonsini, Goodrich & Rosati served as legal advisor to Vacasa. Ropes & Gray LLP served as legal advisor to Silver Lake.

LiveRez founder and CEO Tracy Lotz out, Inhabit IQ exec to lead internal transition

By
Amy Hinote
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7

Today, Inhabit IQ announced to its LiveRez customers that founder and CEO Tracy Lotz and CFO Rich Cook are leaving the company. The email stated, “After more than 20 years of shaping the face of the vacation rental industry, LiveRez CEO, Tracy Lotz, has decided it’s time to step away from his role at LiveRez. Rich Cook has also decided to step out of the VP of Finance role and will be working with Inhabit IQ to transition his finance and accounting responsibilities by the end of the year.”

Joy Ritter will serve as VP of Operations, working “closely with Alayna Hix, Director of Product, to drive strategy and execution of the [LiveRez] product roadmap.”
According to the email, Inhabit IQ EVP Scott Butler will be “assisting with the transition of leadership responsibilities to Joy Ritter, who will serve as VP of Operations, empowering the LiveRez team to ensure we are meeting the needs and challenges of our partners. Joy will work closely with Alayna Hix, Director of Product, to drive strategy and execution of the product roadmap.”

In May 2019, LiveRez joined the Vacation Brands portfolio, a rollup of short-term rental technology companies led by Knoxville-based private equity firm, Greater Sum Ventures.

In early September, GSV combined Vacation Brands with its multifamily proptech portfolio Property Brands under a new umbrella named Inhabit IQ.

On September 10, LiveRez announced to its clients that it was doubling the cost of its software from .5% to 1%  of reservations. Two weeks later, the announcement was followed by a  mandatory change to the Terms and Conditions saying that if customers did not accept the company’s changes, LiveRez could turn off access to their software with short notice. 

According to one user, “On September 24, 2019, they locked many LiveRez users out of our systems and forced us to agree to a 9-paged Terms and Conditions document before we could continue operating. The document recommended us to review it with an attorney, but did not allow ANY time to even read or review, we were locked out of our system . . . what kind of company behaves this way? And this was after announcing a 100% increase in our rates, with a 30-day notice.”

On September 30, LiveRez  walked back that policy changing the time period to 120 days. 

Related: Inside Inhabit IQ: Interview with CRO Chad Scott and EVP Scott Butler

In a recent VRM Intel interview with Chad Scott and Scott Butler, we asked about working with company founders. Scott said that Inhabit IQ retains the leadership teams in its investments: “Our operating thesis has been to buy these companies and make sure that the entire leadership team stays—which is why we don’t do full acquisitions. These are investments because we want to be aligned going forward with the CEOs and management teams within these companies, all striving for the same thing, which is continuing to drive growth—just more quickly with access to more resources.”

We also asked, is there a point that Inhabit IQ would remove a CEO? According to Chad, yes. “I can speak from experience that this happened twice on the multi-family side when we did do that. They were making decisions for their business that were disruptive to—not only to their business—but to closing down integrations, not wanting to partner. You can’t do that.”

He added, “We are looking to grow and expand these companies, and if the leadership discontinues doing that and is not aligned in that effort, then we will make a change.”

The annual LiveRez Partner Conference begins on Monday, October 28, in Memphis, Tennessee.

Vacasa Finalizes Purchase of Wyndham Vacation Rentals at $162M

By
Amy Hinote
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0

Vacasa has finalized its acquisition of Wyndham Vacation Rentals from Wyndham Destinations (NYSE: WYND) for a purchase price of $162 million. Vacasa financed the acquisition of Wyndham Vacation Rentals through a combination of cash and equity. After customary closing adjustments, Wyndham Destinations received $156 million in cash and $10 million in Vacasa equity.

Now that the deal has closed, Vacasa will immediately begin to migrate the Wyndham Vacation Rentals portfolio of over 9,000 homes in 50 destinations into its platform. 

Vacasa will integrate Wyndham Vacation Rentals signature brands including Corolla Classic Vacations, Hatteras Realty, Kaiser Realty, Oceana, ResortQuest, ResortQuest Whistler, Smoky Mountains Property Management and Vacation Palm Springs onto its platform over the next 12 months. The full integration is expected to be complete by the fall of 2020. Vacasa will manage more than 23,000 homes across North America, Europe, Central and South America, and Africa.

“The Wyndham portfolio has a lot of great inventory, but also a lot of great people,” said Vacasa CEO Eric Breon. “A lot of the leading management talent in the [vacation rental] industry is within Wyndham, along with so many people that we are excited to bring onto our team and get them disciplined with our technology to take things to the next level. In general, we are more about hiring post-acquisition than firing. In the markets where we overlap—where we now have significant presence—you will see us merging those operational structures where appropriate. But at the same time, there is plentiful need and opportunity on the talent side.”

In addition to acquiring Wyndham Vacation Rentals property management contracts, Vacasa will absorb management of 140 homeowners associations (HOAs), which will fold under Vacasa Community Association Management. Short-term rental-focused HOAs in Alabama, Colorado, Delaware, Florida, South Carolina and Utah will transition to Vacasa, bringing the total HOAs under management to 156.

“Throughout the past few months, our team has worked closely with Vacasa leadership to establish a path forward for Wyndham Vacation Rentals, our shareholders, our homeowners, our guests and our associates,” said Michael D. Brown, president and CEO of Wyndham Destinations. “We believe this transition will maximize the value and strengthen the long-term success of all entities. Our confidence in this strategy is reflected in the equity interest we have retained in Vacasa, and we look forward to the evolution of this thriving business.”

Inside look at Inhabit IQ: GSV combines commercial, residential, and short-term rental technology under proptech umbrella.

By
Amy Hinote
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9

Greater Sum Ventures (GSV) began making waves in the vacation rental (VR) industry late last year as news spread that the long-term equity firm was making majority-stake investments in several VR technology companies, including Streamline Vacation Rental Software, Virtual Resort Manager, Rental Guardian, Bluetent, and BizCor.

In 2018, the company appeared to come from nowhere, and leaks of talks with dozens of other notable VR technology companies led to significant buzz in the industry, with property managers (PMs) asking who GSV is, what its plans are for these companies, how much of the VR tech industry will it roll up, and who will it acquire next.

In 2019, GSV added LiveRez, Lynnbrook, LSI Tools, and the VR franchise model iTrip. The addition of iTrip to the portfolio was particularly concerning for the VR industry because iTrip is technically a PM company. Was GSV trying to purchase the technology platforms to build a super-brand of property management franchises?

Related: LiveRez CEO Tracy Lotz and CFO Rich Cook out, Inhabit IQ to lead internal transition

Throughout its investment process, GSV kept a tight lid among media outlets about its plans, leaving the industry to speculate and its portfolio’s leadership teams to field questions that they were unable to answer, except to say that nothing had changed: their road map was still intact, and they were still in control of their own companies.

 

Who is Inhabit IQ?

GSV is not new to investing in industry-specific technology solutions; the equity firm had accomplished two similar initiatives in ministry technology (Ministry Brands) and residential/commercial rental technology (Property Brands). Mirroring its investment strategy in these industries, it initially labeled the expanding VR portfolio as Vacation Brands.

However, GSV’s leadership quickly began to identify synergies between the Property Brands and Vacation Brands collectives (more below). As a result, it created a new holding company—Inhabit IQ—which merged these two brands into one.

Inhabit IQ named a fresh leadership team over the newly formed holding company—including CRO Chad Scott and EVP, Vacation Division, Scott Butler—who recently reached out to VRM Intel to share the company’s plans, operating thesis, and vision for the future.

 

Company Structure

According to Inhabit IQ’s website,

“Inhabit IQ is a unique collective of tech-forward companies serving the vacation and property management industries. Our brands’ strategic partnerships deliver best-in-class software solutions and services while fostering innovation and collaboration with like-minded entrepreneurs and industry leaders. We believe that property managers should have the opportunity to choose platforms that best support their business goals and benefit from strategic partnerships across our ecosystem.”

Diving deeper, Inhabit IQ is a holding company providing an umbrella for 33 commercial, residential, and short-term rental technology companies.

Early in our conversation, Chad Scott bristled at the term “rollup” and explained that when he thinks of a rollup, he thinks about what other proptech companies have done when acquiring new platforms, including integrating all support systems, cutting staff, putting a halt on innovation, and forcing cross-selling of the customer base.

“Our entire investment and operating thesis is based around doing the opposite,” Chad said. “When we think about our operating thesis, we are buying good companies, helping them pour gas on growth and pour gas on innovation, and sharing technology across companies. Over time, we will ease fears [among customers] that innovation doesn’t stop; instead, it speeds up in our operating thesis. Platforms do not get sunset. They continue to drive forward. Leadership teams aren’t removed. They will continue to be supported and have access to more resources where they were previously bootstrapped and growing out of their own balance sheet. Once [customers] see that things are not going to change, and not only that, but there is innovation, new opportunity, and new tech, that will eventually alleviate their fears.”

 

Inhabit IQ Isn’t Looking to “Flip” the Portfolio

We asked, “Do you intend to run these software companies in perpetuity?”

“Absolutely,” Chad replied. “And that is true for any of our portfolios. We have never packaged up and sold a portfolio.”

Upon hearing that we had heard rumors contrary to this position, Chad explained that confusion around this may result from a misinterpretation around future funding. In the company’s growth strategy, Inhabit IQ is likely to recapitalize the holding company as more resources are warranted to grow the whole.

“We are having to pay up for these companies, especially some of the more mature ones. Occasionally, what we will do when we need capital for investment is bring on a new capital partner or fund through which we can advance the portfolio. So I understand the technical misunderstanding.”

“Our entire operating strategy—and this is very clearly articulated as we are sitting down, post investment, with the companies that we are partnering with—nothing should change,” Chad continued. “They are still steering the ship, making the decisions, and driving the overall business strategy. We are here to support and provide resources where they need it. On the multi-family side, for example, we have 24 companies that we have invested in. They are all making the decisions, and they are all making pricing increases and decreases as they would normally do.”

When asked about the potential for rogue decisions by platform leaders, Chad offered a caveat, “If we see anything that is going to disrupt business—for example, if there are proposed price increases that we have found out about at the 11th hour—we are going to go out and stop. We don’t make any investments based on the requirement to raise or lower rates or to cut half of the staff for head-count synergy. That flies in the face of our operating strategy. We continue to support the leadership teams to make decisions for the business that they feel are the best ways to move forward. If we think [these decisions] might adversely affect the client base of otherwise, we will step in.”

 

Synergy between Commercial/Residential and Short-Term Rental Technology Platforms

Inhabit IQ added a CTO to its team, which is somewhat unusual for a holding company. As Chad explained, “The CTO is a critical piece that we didn’t have initially. Once we invest in a company, our first question is ‘What do you need—how can we help?’ 95 percent of the time, looking at their road maps, there are many things they want to do, but they are just scraping the surface. In the multi-family sector, we started building up tech resources that our companies can use to continue driving growth. When we saw these same opportunities in the VR space, we moved over and executed the same playbook—find the cool companies with great leadership teams and great product sets, and partner with them to figure out where they need gas.”

He continued, “There are also products in the multi-family space that have the potential to work well in the VR space and could plug in for VR clients. We didn’t have the ability to share these resources without being affiliated, which led to combining the portfolios.”

Scott added that they are seeing many of their clients pick up a mix of rental properties—including single-family homes, apartment rentals, and short-term vacation rentals—which require a unique product set to manage multiple types of rental activities.

 

With the Addition of iTrip, Is Inhabit IQ Looking to Compete with Its PMs?

According to Scott, the iTrip purchase was about the proprietary technology platform that iTrip had built, not about its property management services. “There is no plan to buy property management companies,” Scott said. “We buy technology, and iTrip has the technology to power those franchises; but the interesting play there was not the property management companies themselves; it was growing that franchise model.”

Chad added, “We couldn’t [acquire PMs] if we wanted to because the funds with which we are investing are technology funds, so we would have to go a totally different direction on the capital raise to even be able go down that road.”

Scott addressed concerns that PMs have about data sharing. “We are not in the business of using PM’s data for anything other than they have agreed to, so we have to be really careful.”

 

Is Inhabit IQ Still Looking to Add VR Tech Companies to its Portfolio?

The team at Inhabit IQ is continuing to search for companies to round out the technology ecosystem in the VR industry. “Our investment and operating thesis has always been to find very cool companies, innovative products, something that is almost disruptive—or that we can get disruptive—and then invest in them and help them grow faster with our support than they have alone,” Chad said. “That’s why, with all of our investment to date, these companies have never taken large seed rounds or Series A rounds; they don’t have institutional investors because our assistance isn’t as impactful.”

He added, “It is about product—more importantly, not current state of product, but future state of product. That is attractive to us. When we see products that aren’t quite where they need to be, but we know they can get there, those are the ones we are looking for. So if there is a target, it is those companies that maybe aren’t run super professionally or efficiently, or their product sets are kind of rounding first and heading to second base, and we can get them around to third and headed home. That is what we are looking for, and that’s why we don’t mess with the institutional-backed companies or the companies that have taken on cash because that is usually not them. We want the rough. That is what we are looking for as far as a profile.”

“We don’t invest in companies just to invest. We want to be able to help and step in and provide some assistance. If we can get a polished, great company in which everything is perfect and they are not asking an arm and a leg for it, we will do that deal, but that is not the profile that we are proactively looking for. We are looking for really cool, innovative products that we can help build out.”

 

Leadership Teams Remain Intact

Inhabit IQ retains the leadership teams in its investments. “Our operating thesis has been to buy these companies and make sure that the entire leadership team stays—which is why we don’t do full acquisitions. These are investments because we want to be aligned going forward with the CEOs and management teams within these companies, all striving for the same thing, which is continuing to drive growth—just more quickly with access to more resources.”

Is there a point that Inhabit IQ would remove a CEO? According to Chad, yes. “I can speak from experience that this happened twice on the multi-family side when we did do that. They were making decisions for their business that were disruptive to—not only to their business—but to closing down integrations, not wanting to partner. You can’t do that.”

He added, “We are looking to grow and expand these companies, and if the leadership discontinues doing that and is not aligned in that effort, then we will make a change.”

 

Future of VR Technology

When asked about the future of technology in the VR industry, Chad and Scott were clear that Inhabit IQ believes in broad connectivity through open APIs and integrations.

Although the company is looking for platforms to add to its portfolio to round out its VR technology ecosystem, it was clear throughout our interview that the paradigm at Inhabit IQ centers around ensuring its customers have choice in the products they want to use, whether or not those products are under the Inhabit IQ umbrella. The duo spoke at length about the importance of open APIs and connectivity with third-party platforms.

“When we think about all-in-one solutions, the future is tight, seamless integrations; and while it is the future in this space, it is the present in commercial real estate and in multi-family housing,” Chad said. “Whether that is between our products or—as is the case 99 percent of the time—between multiple products, it is a requirement among the largest property managers to have plug-and-play solutions with seamless integrations.”

He added, “Ultimately, and we learned this in the multi-family tech side, property managers drive the decision about who they are going to use. That’s why all our companies have open APIs. The goal is to drive the best user experience and not force-feed them a product they don’t want to use.”

 

The Future of Inhabit IQ’s VR Portfolio

Despite significant pressing in our discussion, Chad and Scott were unwavering that they are not looking to sunset any platforms, in contrast to other technology rollups we have seen in the VR industry. Chad pointed out that they have a history of not retiring platforms: “Of the 24 multi-family companies we’ve added, we have never sunset a platform, and we have no intention of doing that now.”

Chad added, “The ultimate objective is to be able to provide leading-edge technology to all asset classes. We want to be able to service the entire ecosystem of technology for all real estate classes.”

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