Data can be a vacation rental management company (VRMC)’s best friend. However, it’s only useful if you’re looking at the right data for the problem at hand. Too much data can be overwhelming, but too little can lead to incorrect assumptions and uninformed decisions. There’s no such thing as information overload, only filter failure— so here’s a look at how to best analyze and understand data to avoid potential business mistakes.
Using Data to Drive RevPAR
Imagine the average daily rate (ADR) in your market is up, but occupancy is down. Based on this information, it might be tempting to assume a price drop will lead to higher occupancy. But lowering rates isn’t a decision to be taken lightly; you should have confidence in your understanding, based on data, of what the market can tolerate. Sure, certain markets are pushing back against aggressive rates, but rate resistance is just one of many reasons a guest might not book with you. Understanding why your leads booked elsewhere is essential to driving revenue per available night (RevPAR).
Although dropping your rates may seem like a simple solution to increase occupancy, it will only work if you are in fact losing leads due to rate resistance. But what if rate resistance only accounts for a small percentage of lost nights? If you could see what caused lost revenue, you could make more informed decisions. For example, if the majority of nights lost were not due to rate resistance, you could be lowering your rates for no reason. Besides that, lowering rates would be unlikely to drive additional bookings, meaning your ADR, occupancy, and RevPAR would all suffer.
When looking at the unconstrained demand for rentals in the Outer Banks for July 2019 versus July 2018, we found that although ADR was up and occupancy was down, rate resistance accounted for less than 4 percent of lost nights. Company policies—such as deposit and cancellation rules—were responsible for a much higher percentage of lost revenue. When companies had access to this information, they could alter policies that were discouraging leads from booking. After all, although you can’t control what the market is doing, you can control your policies. You’re never going to know why 100 percent of unbooked guests didn’t book, but if you know a statistically relevant percentage of reasons, it can help you make better decisions.
Considering All Revenue Channels
The previous example is just one of myriad ways in which data can be misleading if not used strategically. Imagine that, when looking at data from your pay-per-click (PPC) campaigns, you notice the online booked revenue for a campaign is barely higher than the total cost. Clearly you should pause this campaign and divert that money to a different one that’s driving more bookings—right? Not necessarily. If you can’t see offline inquiries and bookings in addition to online bookings, you’re not looking at the full picture.
It’s essential to consider all booking avenues when analyzing a campaign’s success. Otherwise, you could pause a campaign that’s driving many of your company’s phone leads and bookings. A 360-degree view of your PPC spends with revenue attribution for all channels allows you to make more informed and more effective marketing decisions. Employ actionable analytics, then act.
Leveraging a Hospitality CRM Platform
Although leisure demand has been strong, it won’t continue to thrive indefinitely, and VRMCs need to be prepared for unpreventable situations such as recessions and natural disasters. All signs say a recession is coming—this isn’t an “if ” but a “when.” Launching data-based strategies now will empower VRMCs to manage this inevitable downturn.