VRM Intel Spring 2016 by Amy Hinote

Spring 2016

VRM

News and Information for Vacation Rental Professionals

intel

HomeAway Shifts Business Model

Creating

Listing Site

Independence

Will Google's Changes

Help or Hurt VRMs?

Navigating Changes

in the Vacation Rental landscape

Vacation Rental

Safety

Are Fixed Rent Contracts Really Good for Business?

KPIs for

Inventory Growth Strategies Marketing Regulations Reservations Housekeeping Technology

and More VRM Intel Magazine | Spring 2016

VRM Intel Magazine | Spring 2016

Simplify your guest relations with the new Glad to Have Youâ&#x201E;˘

Contact us for a free demo today (855) 275-4523 | softwareinfo@homeaway.com software.homeaway.com VRM Intel Magazine | Spring 2016

VRM Intel Magazine | Spring 2016

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VRM Intel Magazine | Spring 2016

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VRM Intel Magazine | Spring 2016

Contents On the Cover

32 Vacation Rental Safety Standards 44 Navigating Changes in the Vacation Rental Landscape 50 Creating Listing Site Independence 56 Will Googleâ&#x20AC;&#x2122;s Changes Help or Hurt VRMs? 64 KPIs for Inventory Growth Strategies 82 HomeAway Shifts Business Model 86 Are Fixed Rent Contracts Really Good for Business?

Housekeeping 90 Vacation Rental Linens Everything You Want to Know About Purchasing Linens 92 The Importance of Housekeeping More to Housekeeping than Meets the Eye

Rental Regulations 30 Short-Term Rental Regulations The Need for Statewide Standards 32 Safety in Vacation Rentals Change is Needed 8

Cover photography courtesy of TruPlace, Inc. and Stay In Tamarindo Vacation Rentals, Costa Rica

Business

16 Vacation Rental Road Trip Comes to an End 28 Funding TurnKey Raises $10M 40 6 Hats You Need To Wear Every Week to Maximize Your Growth 44 Navigating Rough Waters Chart Your Path Through Todayâ&#x20AC;&#x2122;s Competitive Environment 47 Brand vs. Identity Conflicting Policies May Be Costing You 86 A Deeper Look at Fixed-Rent Contracts 94 Calendar of Events 96 Vacation Rental Peer Groups

VRM Intel Magazine | Spring 2016

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⬀㄀ ⠀㌀㈀㄀⤀ ㈀㔀㄀㠀㈀ VRM Intel Magazine | Spring 2016

Contents Technology 21 NAVIS: Vacation Rental Technology Can’t Live With It, Can’t Live Without It 24 PointCentral: Smart Home = Smart Business

Marketing 22 LeisureLink: Rising Cost

per Acquisition is Impacting VRMs

56 The Google Factor: How will Changes at Google Affect VRMs?

68 The Power of Lead Management and CRM

60 Google AdWords Say Goodbye to the Right Column

70 IT Policies and Procedures for Departing Employees

62 Bluetent: SEO is Everything SEO is Everything

Customer Service

76 Millennial Marketing and Multi-Generational Travel

20 HomeAway: Should You Have Your Own Mobile App?

Owner Acquisition

26 RealTimeRental: The Importance of the Repeat Guest

64 Key Performance Indicators How to Grow Your Inventory with Data and KPIs

38 Is Your Email Inbox An Untapped Distribution Channel?

80 Business-to-Owner B2B + B2C = B2O

Distribution 50 Diversifying Your Marketing Don’t Put All Your Eggs in the OTA Basket 54 Leveraging the Traveler Fee Fee to Increase Direct Bookings 82 HomeAway Shifts 3rd Party Booking Fees to Renters. Is this a $1.25B Price Tag for VRMs? 10

VRM Intel Magazine | Spring 2016

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VRM Intel Magazine | Spring 2016

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VRM Intel Magazine | Spring 2016

VRM intel Dear Readers.

pring is here! For some of you that means the wind down of your season while others are winding up for what could turn out to be your best summer yet.

Last fall we interviewed Carl Shepherd, cofounder of HomeAway. When asked about his predictions for the industry, he said, “I predict what I call the ‘Revenge of the Property Manager.’ Over the next few years we will see property managers, as we say in Texas, in the cat-bird seat. Screening guests, managing credit card payments, arranging for housekeeping, differentiating properties, all the related tasks and services that travelers expect are getting harder and harder to manage for individual home owners. This is occurring at the same time that new and progressive property managers (PMs) are looking to re-invent the property management business model.” All indications point to the accuracy of Shepherd’s predictions. Homeowners are realizing they can’t do it all, and the new entrants in the market are capitalizing on their frustrations as the largest source of their organic growth is coming from the VRBO sector. In the article “B2C + B2B =B2O” on page 80, we discuss inventory acquisition strategies and ways to leverage your own strengths to capitalize on this industry shift. In addition, as HomeAway and TripAdvisor have moved to a 6 to 12 percent traveler fee for guests, homeowners are in an uproar while property managers are able to redirect bookings to their own sites – finally! And as you will read in “The Google Factor” on page 56, Google is making changes which potentially steer traffic away from listing sites and toward your own website. For vacation rental management marketers, this is the first year we have had good news in quite a while. But the saying, “The more things change, the more they stay the same,” couldn’t be more true in our industry. The vacation rental marketplace remains built on trust. For consumers, it doesn’t require a ton of trust to book a Hilton on Expedia. However, for a family booking a multigenerational vacation in a 5-bedroom home, trust is everything. And as you will read in “Millenial Marketing” on page 76, there is a new consumer group to invite to the table. As a professional property manager, trust is central to your ongoing relationships with your guests, and many of you have spent decades building a company centered on trust. By finding ways to communicate the trust you have earned from your property owners, your guests and your employees will be key to both immediate and ongoing growth for your business. At VRM Intel, we are also focused on earning your trust. We spend the majority of our time reaching out to industry experts, conducting research and presenting material specifically designed to grow your vacation rental management business. And we want to hear from you. If you have ideas, suggestions, topics you would like to see covered or changes you would like to see, please reach out to us and let us know. VRM Intel is evolving with the number one focus on you, the property manager. We hope you find this Spring issue useful and look forward to hearing your feedback. Sincerely,

Amy Hinote Editor

VRM Intel Magazine | Spring 2016

magazine Editor-in-Chief Amy Hinote

Director of Design and Production Donato Berbelja

Contributing Writers Greg Burge Julian Castelli Carlos Corzo Steve Craig Nancy DiRienzo Ben Edwards Brynn Flaherty Justin Ford Andy Gaylord Josh Guerra Bruce D. Johnson

Durk V. Johnson Tom K Doug Kennedy Matt Kiessling Michelle Marquis Kelly Mutual Matt Renner John Suzuki Sherry Tomasso George Volsky Heather Weiermann

Copy Editor Kelly Mutual

Advertising Amy Hinote, amy.hinote@vrmintel.com

Address VRM Intel Magazine

1222 Chicago Avenue, Suite 604, Evanston, IL 60202 To subscribe to VRM Intel Magazine to request additional copies, contact info@vrmintel.com or go to www.vrmintel.com

© Copyright 2016 VRM Intel Magazine. All rights reserved. We cannot accept responsibility for any mistakes or misprints. Reproduction in part or whole is strictly prohibited without written permission from the publisher. We cannot accept responsibility for unsolicited manuscripts or photographs damaged in the post. Material sent on speculation, unless enclosed with a stamped addressed envelope, will not be returned to sender. VRM Intel Magazine reserve rights of ownership.

VRM Intel Magazine | Spring 2016

Live by the code – Get fit with Kaba! Oracode Live lets you remotely issue guest access codes to any vacation property – anywhere in the world.

Send access codes directly to your guest’s smart phone or mobile device — there are no keys to pick up, lose, copy or drop off. Oracode also integrates with the BeHome247 Enterprise Property Control™ system, allowing you to remotely manage and monitor utilities and appliances, as well as get real-time property readiness. Convenient, simple, safe and secure, Oracode Live fits your guest’s vacation schedule – and yours. When you’re on the road, live by the code – get fit with Kaba.

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VRM Intel Magazine | Spring 2016

| Business

The Vacation Rental Road Trip Nags Head, North Carolina

Comes to an End

After eleven years in the vacation rental industry, I finally made it to the Outer Banks! I drove from Gatlinburg to North Carolina’s Outer Banks in March to speak to the Vacation Rental Exchange (VRX) Conference, formerly known as the Big Eight Conference (more on this on page 96). Joined by two of my fellow founding members of the VRM Consultants, we stayed in a

five bedroom, three level home in Nags Head, NC called 6 Ways to Sunday, managed by Resort Realty. Each room was its own retreat with beautiful finishes, coastal colors and upscale furnishings. Complete with a private pool, hot tub and game room, along with three separate master suites, this home was perfect for our VRM Consultants business retreat. Resort Realty’s housekeeping department is top notch, and this home was spotless. It even had that “new home smell.” The location was walking distance from gro-

cery, dining and the beach which made it easy to stay stocked up with everything we needed. We also had some fabulous meals with grilled shrimp and burgers at the Kill Devil Grill, steamed shrimp and crab at the Red Drum Tap House, grilled fish at Lucky 12, awesome lunch tacos at the Bad Bean, and a beautiful steak dinner at JK’s Restaurant. A special thanks to Resort Realty CEO Stuart pack for my gift bag! 18

VRM Intel Magazine | Spring 2016

Canaan Valley, West Virginia

On the way back to Chicago from the Outer Banks, I made my last official road trip stop at a four bedroom, slope front vacation home in Timberline Resort called Snowed Inn, managed by Best of Canaan in Davis, West Virginia. Located only three hours outside of Washington D.C., Canaan Valley is nestled among the higher ranges of the Allegheny Mountains and is defined by Canaan Mountain to the west and Cabin Mountain to the east, and this area of West Virginia is beautiful! The house name was predictive, because over the first weekend, there was a small snow shower that turned into a two-day event, and I truly became Snowed In(n)! Next time, I’ll remember to stock up a little more when there is snow in

the forecast. After the roads cleared, I was able to get to local favorite Sirianni’s Pizza Café, and it was fantastic! Blackwater Falls and Elakala Falls are both stunning. There seems to be great trout fishing here, as well, but I didn’t get that far. West Virginia doesn’t ever fail to surprise me (except in my now defunct NCAA basketball bracket).

After staying in 21 vacation rentals and several hotels for onenight stop overs and conferences, the 17-month road trip has come to an end. I’ve learned a lot about the vacation rental industry, about traveling solo, about people and about myself. The vacation rental industry is fascinating, and I’m glad I had the rare opportunity to take the time to experience it first-hand. Thank you to all of you that were part of this incredible journey. To read more about the trip, go to vrroadtrip.com.

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VRM Intel Magazine | Spring 2016

| From Our Partners

By John Suzuki Vice President of Sales, HomeAway Software

oes it seem like the world is changing faster than ever? Life was different when dial tones and fax machines were commonly used. However, today, productivity comes to a screeching halt when internet connectivity slows.

In 2004, technology in the vacation rental industry looked nothing like it does today. Property management software with integrated websites were considered highly advanced, and people were just learning to spell SEO, PPC, and SEM. Guest reviews and yield management didn’t exist, VRBO was mostly unknown and the value of online bookings was yet to be seen. All of these new ideas were met with industry skepticism. In the years since, these innovations have become necessary for vacation rental management companies of any size to flourish, thus proving the old adage, “today’s luxury is tomorrow’s necessity.” Said differently, “yesterday’s luxury is today’s necessity.” While the industry was behind in 2004, the advancements of the technology sector were soaring. That year, we were introduced to the iPhone, a product that truly defined a new product category. For the first time, you could hold your connection to the world in the palm of your hand, via the mobile web, from your personal contacts and music to the Library of Congress.

Today, one could argue that many people would give up their wallets before giving up their smartphones. After all, you can already store most of what’s in your wallet on your phone. Think about it; you’re almost never without your phone. Everyone you do business with carries a smartphone, including your owners, business partners and guests; they all carry them. Their phones hold their connection to their lives, including their vacation plans. Shouldn’t your company be a part of that? This is exactly why you should have your own branded mobile app. Mobile apps used to be a luxury, afforded only by large scale businesses with huge marketing budgets. But today, mobile apps are necessities for businesses of all sizes, and that is especially true in the vacation rental industry. With off-the-shelf mobile app solutions, vacation rental property managers can have a custom branded app at a fraction of the cost of a customized mobile solution. Even the smallest vacation rental 22

VRM Intel Magazine | Spring 2016

management companies can offer useful, professional mobile information to their guests with minimal effort. While many companies offer custom mobile apps, the key is to find a solution that understands your target market and offers easy customization. Some key features you’ll find in the best vacation rental apps include valuable rental information, local attractions and listings of your other properties. You’ll also want to make sure you have the ability to update the app on your own without the help of a developer. Glad to Have You™ is used by over 450 vacation rental managers and more than 1.5 million guests have used it. Those numbers, if nothing else, help prove that mobile apps are now mainstream. Guests love Glad to Have You because everything they need about their vacation is in the palm of their hand. Property managers love it because it generates more bookings and revenue. Staff loves it because it makes their jobs easier and more productive. Sales teams love it because it helps them sell vacation homes. Marketing loves it because it tracks guests’ preferences and collects guest-of-guest email addresses for future marketing. And finally, communities love it because you can advertise and recommend restaurants, events, activities and other add-ons that can help you generate more revenue to reinvest into your business. So if you’re not mobile yet, it may be time to make the switch before you fall behind the competition. It’s easy, affordable and can even be integrated with your business software. Mobile is already the new normal, so make sure you’re ahead of the pack with a powerful mobile app that puts you in the pockets of all of your guests, all of the time.

John Suzuki has a rich history in the IT and software industries serving professional vacation rental managers for over 30 years. In the past, he’s led sales for IBM, Sun Microsystems and Escapia and now leads sales for HomeAway and Expedia. With a true passion for the professional vacation rental industry, John values the past 11 years serving as a great friend and advocate for vacation rental managers.

Vacation Rental Technology:

Can’t live with it, Can’t live without it By Michelle Marquis, NAVIS Vice President of Sales and Marketing

echnology in the vacation rental industry has evolved a great deal in the last 25 years, and the pace of new technology entrants seems to pick up daily with changes in property management systems, distribution systems, cloud-based solutions, CRMs, lead management and pricing managers. It is yet another sign of the growth of the industry; right now, there is more opportunity for vacation rental managers (VRMs) and their technology partners than ever before. This also means VRMs must be vigilant in assessing which technology partners to work with. Technology is a necessity today; however, technology partnerships can be a love-hate relationship. When the partnership is a good one, you will wonder how you ever lived without it. But when it’s not, it’s really not, and you will likely wonder why you didn’t think more about it (whatever the nagging “it” is) before getting into the relationship. And just like any bad relationship, it can be hard to get out unscathed.

Thinking through issues prior to engaging with a new technology provider will help steer you toward a partner you can’t live without. Here are a few things to think about as you evaluate new technology partners: B How are they funded? What is their long-term plan? There are a lot of entrepreneurs jumping into the vacation rental space because they see a big opportunity, and it pays to be sure that they have the resources for continued investment and development.

gives away your leverage. How will you hold them accountable? And what happens if your partner runs out of money in the midst of your contract year?

F If the price sounds too good to be true, it probably is. Be sure you know exactly what you are getting for your money. Ask about additional charges. Also, ask for references, including those clients who have left. Get the full story. G Will they support you 24/7/365 because the hospitality industry doesn’t turn out the lights? If not, and you have a problem serving guests, who will be there to help you?

C Are they integrated with your other technology partners? This is really important for any solution outside of your PMS. Having data in multiple silos creates tremendous friction for operations, and adding another layer of complexity only creates more inefficiency for your team.

H If they are cloud-based or use several technologies to pull together a point solution, make sure they have redundant partners. Does it affect your business operations if something goes down? This is most critical when the technology under considerations controls the cash register.

E Avoid paying any annual software fees up front. What happens if your new partner falls short of their promises? Paying in advance

To learn more about how NAVIS rises to each of these considerations, visit www.theNAVISway.com.

D Do not sign a long-term contract. This is not in your best interest nor is it consistent with the concept of partnership. With the vacation rental industry changing so rapidly, you don’t want to find yourself in a situation where you can’t pivot when necessary.

Ensuring that the answers to each of these questions are satisfactory — or, ideally, greater than your expectations — before signing on the dotted line will help avoid what can be major technology problems down the road.

VRM Intel Magazine | Spring 2016

| From Our Partners

Cost

Per Acquisition By Julian Castelli LeisureLink CEO

Rising Costs of Guest Acquistion Are Impacting Vacation Rental Managers

he winds of change are upon the vacation rental industry. Consumers are discovering the benefits of choosing vacation rentals and owners of vacation homes are discovering new ways to capitalize on their second homes. This increased supply and demand has caught the attention of the capital markets. Over five billion dollars of capital has poured into this once sleepy industry in the last twelve months, making it one of the hottest categories in travel. This also means that travelers seeking vacation rentals have more choices when shopping and are flocking to the big travel brands that they are comfortable with and know best. Unfortunately, this trend doesn’t help direct traffic for property management company (PMC) websites and phone channels. PMC sites are being pushed down in search results as the big travel brands fill up the crucial top Google search results. Paired with the rising costs of pay-perclick advertising, this creates an environment of increasing cost of customer acquisition.

But it is not all bad news for the PMC. Strong brands like HomeAway, Airbnb and Booking.com are educating consumers across the globe regarding the merits and availability of vacation rentals. The market share of travelers looking to book vacation rentals versus traditional hotel options is growing and presents a real opportunity for property managers who can best exploit the numerous channels available to market their inventory. At LeisureLink, we hear two primary challenges when property managers are trying to work with distribution channels: (1) difficulty of managing multiple channels and (2) cost. Both items represent true challenges that must be overcome to compete in today’s environment. Let’s start with channel management. There is no question that trying to maintain updated rates and availability for hundreds of 24

VRM Intel Magazine | Spring 2016

individual homes across multiple extranets is an extremely difficult, if not impossible task. Hotels have known for years to solve this problem by utilizing “channel manager” tools that automatically sync ARI – availability, rates and inventory between the supplier’s system and the multiple distribution channels. PMCs should find a solution that is proven in the marketplace, that is built for the vacation rental industry (and handles the special requirements of both key-level and representative level vacation rental inventory) and has both the technology and services that handle all of the work involved with third-party distribution. In other words, find a solution that provides more bookings without more work for the PMC. Now let’s tackle cost. Yes, distribution channels cost money, sometimes a lot of money. It is okay not to like that – no one does – but it is not wise to ignore the available channels and the customers they can generate because of cost alone. The smart PMCs that are thriving in this changing environment have learned that the cost of unsold rooms is far greater than the cost of distribution.

Here are three strategies to make the benefits of distribution (more bookings) outweigh the incremental cost of distribution.

B Focus on REVPAR, not incremental commission percentage. REVPAR (revenue per available room night) is the industry standard hospitality benchmark and ultimately what you need to deliver to your owners. In other words, you want to maximize the net revenue that you can generate for each home in your inventory (net of all acquisition costs). C Use expanded channel reach and dynamic pricing to grow REVPAR. PMCs can grow REVPAR by increasing ADR (average daily rate), growing occupancy or both. Doing either of these things requires demand. Fortunately, the current distribution environment offers more sources of demand than ever for the typical property manager. Property managers can leverage this demand by dynamically raising prices in peak demand periods to grow ADR and dynamically lowering prices in low demand periods to drive incremental room nights.

D Use third-party distribution for new customer acquisition and retain those customers. Property managers who consistently provide a great experience and reach out to their guests directly to help them book their yearly vacations will typically generate three to five repeat visits from every new customer generated. Now split that 20% cost of acquisition across the multiple bookings and it begins to look pretty competitive. The best PMCs know this. They invest in distribu tion to build their new customer list and then systematically focus on turning those new customers into repeat customers. Keeping guest acquisition costs in check is paramount for PMC profitability and it is becoming more and more difficult as the industry evolves. Finding a balance between increasing exposure to generate bookings and new customers while keeping costs down can be accomplished when you have the right tools and services to link you to optimal distribution opportunities. LeisureLink helps over 1,000 leading property managers maximize REVPAR and lower cost through the smart utilization of distribution channels. The LeisureLink platform provides maximum exposure for customer acquisition and leading-edge analytical tools for price monitoring and revenue management optimization, while handling all of the complexity of contracting, collections and reporting. More bookings equals less cost and complexity. To learn more about how LeisureLink can help grow your bookings while reducing cost and complexity please visit LeisureLink.com and download the full eBook.

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Schedule a Demo Today at LeisureLink.com or visit our booth in the MTS Marketplace VRM Intel Magazine | Spring 2016

| From Our Partners

Smart Home = Smart Business By Greg Burge President, PointCentral

Going Keyless Reduces Your Liability & Improves Guest Satisfaction Mechanical keys are quickly becoming relics of the past. Vacation rental management (VRMs) professionals are unanimous in their dislike for keys. They are difficult to track, expensive to manage, easy to abuse and expose VRMs to unwanted liability and risk.

At each step of the reservation life cycle, keys negatively impact the guest experience, staff productivity and security. Beginning at guest check-in, keys add costs by requiring staff to manage check-in and key distribution. Guests are impacted by being forced to wait in line to pick up a key versus going straight to the property to begin their vacation.

Keys negatively impact guest convenience during their stay. Keys have to be carried and restrict guest flexibility, especially with large parties who need to come and go at different times. And lockouts require a staff response at all hours of the day and night. If a guest reports a stolen item, there’s no audit trail to prove who did or didn’t have access to the property — opening the VRM to potential liability.

At check-out, guests simply want to head home and not make an inconvenient stop to drop off keys. So guests often absentmindedly take keys home, requiring the VRM to cut keys and/or rekey the lock to maintain security. Recovering those costs requires charging the guest for unreturned keys which may impact a future reservation. On turn days, keys reduce staff productivity as cleaners, inspectors and maintenance teams need to pick up and return keys. If one of these team members is diverted to another property, they needlessly waste time by having to return to the office to pick up a key. 26

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Differentiate Your Company, Impress Your Homeowners, Reduce Attrition No two topics receive more media attention today than energy conservation and security. And there are very few consumer technologies being more widely advertised and promoted than Smart Home. This creates the perfect storm for VRMs to competitively differentiate their company and to bolster their image as the technology leader. Guests and owners alike will respond to the message that your properties are “Secure & Green.” Everyone will benefit from the security that keyless delivers and owners will be delighted to see their monthly energy costs reduced by up to 15 percent annually, thanks to smart thermostats.

So separate yourself from the competition and delight your guests and owners by turning your properties into the smartest homes on the block.

Improve Operational Efficiency On those busy turn days, don’t you wish you had real time knowledge of the status of all your properties? Well, wishes do come true…Smart Home automatically tells you when cleaning starts and is completed, when inspection begins and ends, and it will alert your staff to guest arrivals and departures.

Your company’s operational IQ will take a major leap forward without adding staff, tasks or processes. Smart Home events, such as a cleaner opening the lock or an inspector entering a completion code, are automatically uploaded to the Smart Home property status dashboard. The Smart Home dashboard lets you see (at a glance) today’s arrivals that are not clean and/or uninspected. Smart Home also sends your staff property status updates and alerts by text or email. Property inspectors are notified when cleanings have been completed, enabling them to optimize their travel and inspection schedule.

Smart Home is also constantly monitoring your properties so your staff doesn’t have to. The temperature at the property is monitored to alert you of any issues, and any loss of power is immediately reported to staff via text or email. You will never have to worry about a thermostat being left at a high or low temperature in a vacant property or the front door being left unlocked. Homeowners love the nightly Smart Home audit of vacant properties that resets the thermostat to the proper temperature and mode and locks the door in the event it was accidently left unlocked by one of your staff or vendors.

We believe, along with all of our 100+ VRM customers, that the industry must recognize and accept the fact that keys are no longer a viable and acceptable way to manage access to short-term rentals. Going with Keyless Smart Home is affordable, reliable and easily implemented with PointCentral turn-key installation services. The Smart Solution for Early Arrivals

When guests arrive early, they will either wait at the property for the housekeeper to finish or hang around the front desk and badger the staff with “is it ready yet?” With PointCentral’s house-ready-early feature, guests are automatically notified by text and email if their house is ready for early arrival, which activates their door code ahead of schedule.

VRM Intel Magazine | Spring 2016

| From Our Partners

The Importance of the Repeat Guest

RealTimeRental Reports 43% of Total Reservations Are From Repeat Guests

By Sherry Tomasso, Co-Founder, RealTimeRental

ealTimeRental is a Cloud-Based Platform, and it has been since day one. Therefore, the software is able to aggregate all of our clients’ data into a centralized format which gives us the ability to perform detailed analysis on booking trends, travel trends, guest retention, customer lifetime value, owner retention and much more. While we only use this information for our clients in terms of teaching them industry trends, we also have a fully integrated, proprietary trust accounting package that gives us the ability to analyze the financial side of things, not just the booking pace. With so much discussion about consolidation and changes in the distribution landscape, we were curious about the lifetime value of a repeat guest. What is the value of paying for the rental guest’s initial booking via a third-party booking engine? Is it worth it to give up a percentage of the first booking or to pay for a monthly subscription fee? How important is it to keep that guest happy? How do you make their stay unique enough so that not only do they return to your destination, but to your vacation rental agency and not your local or regional competitors? The decision regarding a booking or how much your company is willing to pay is ultimately yours. We pulled aggregate data from over 200 vacation rental management locations across North America and the Caribbean. Here are the numbers from our clients. In 2015, RealTimeRental processed 309,350 paying guest reservations with a total net income of $326 million. It is important to note that this is not including owner bookings, owner guest bookings, holds or non-exclusive bookings. $135 million of the $326 million resulted from repeat guests, as defined as guests who booked more than one reservation with the same vacation rental management company. Roughly 41 percent of the total net income is from guests that came back at least once. In addition, 133,568 of total reservations ‒ or 43 percent of total reservations ‒ were from repeat guests. 28

VRM Intel Magazine | Spring 2016

This is an astounding number to consider, as it indicates that only 59 percent of VRM business was new and not repeat. This means that vacation rental agencies most likely did not have to pay for third-party fees or commissions to secure the $135 million (41 percent) of their revenue from reservations. Let’s dig deeper.

Guests who returned at least twice to the same VRM generated 64,594 bookings with revenue of about $72.4 million, equating to 22 percent of total income and 21 percent of the overall bookings.

Guests who returned at least three times to the same VRM generated 27,614 bookings with revenue of about $35 million, equating to 11 percent of the total income.

We also surveyed our RTR clients, who have traditional real estate offices, alongside their rental operations. They estimated that 30 percent of their real estate sales were tied into either repeat rental guests who were ready to buy or homeowners currently in the rental program who were upgrading or were investing in additional properties, as they were pleased with the rental revenue. The gross revenue reported varied greatly from market to market. You know your market, so do the math! We also observed that with our clients who promote a one-on-one relationship with a reservationist or agent see a much higher repeat guest level than those who did not respond personally to online bookings or bookings from third party channels. About RealTimeRental

RealTimeRental is the premier vacation rental software solution for over 200 rental offices in the United States, Caribbean, Mexico and Costa Rica. As the first web-based vacation rental system on the market in the year 2000, RealTimeRental has consistently provided a comprehensive reservation and accounting system for the past 15 years. As a cloud-based application, RealTimeRental vacation rental software clients have the peace of mind that their reservation management system can be accessed 24/7 via the cloud. For more information about RealTimeRental, the Tenant Portal, or RentalRetreat please visit www.RealTimeRental.com or call 888-828-2303.

VRM Intel Magazine | Spring 2016

| Business

TURNKEY RAISES

10m Austin-based TurnKey Vacation Rentals Raises Series B Funding in Spite of Austin’s Recent Anti-Vacation Rental Legislation

n March, TurnKey Vacation Rentals disclosed that it has raised an additional $10 million in Series B funding from Silicon Valley-based Altos Ventures and Silverton Partners of Austin to expand its vacation rental management service. This round of funding brings the company’s total raise to $20 million. TurnKey Vacation Rentals currently manages 1,000 properties over 24 markets and is home to 140 employees. The announcement of the investment comes on the heels of what has been a volatile year, so far, for short-term rentals in Austin. Last month, the Austin city council voted to ban short-term rentals, even though an estimated 250 employees from Austin-based HomeAway marched on city hall in support of short-term rentals. The new legislation phases out short-term rental permits over the next six years. We reached out to TurnKey’s Chairman, John Banczak, to find out more about the regulatory environment in Austin and about TurnKey’s future plans. 30

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Q: Just last week, Mike Maples of Floodgate, a prominent venture capitalist, tweeted about stopping investment in sharing economy startups in Austin. Do you think the recent decisions will affect how Austin startups will grow? JB: Mike’s got a great point. Anyone who has met him or seen him speak knows that he is a visionary in the tech space. His impression that these decisions from Austin’s city council will put a dampener on innovation and creativity is right. If you are considering locations for a startup, these actions with Uber, Airbnb and even worse HomeAway (a company that employs over a thousand people in Austin) are going to give you pause. Q: Has TurnKey’s vacation rental business been affected by these decisions made by the Austin city council? JB: No, not really yet. The majority of our business comes from outside of Austin. In the short term, if anything, it constrains supply of short-term rentals which helps our owners who are already licensed and renting. It has the potential to have an impact on us several years down the road. We believe at some point folks will look more closely at the recent decisions and realize they are not based on facts. We also believe new programs being offered by HomeAway and other creative solutions will enable a fair balance to once again be brought to the Austin market. Q: We recently heard Flatbook, another sharing economy company, is relocating to Silicon Valley. Do you think the Austin council had anything to do with them relocating there, versus say Austin? JB: I don’t know the folks at Flatbook, and I’m guessing they made their decision for a number of reasons, but it wouldn’t surprise me if this was on their radar. They decided to move to a state with much higher taxes and much more expensive housing and labor over a place like Austin. On the one hand we have large businesses like Google, Apple, Facebook and Oracle all increasing their presence in the area. The question is do you have small, new, innovating companies relocating here as well. Of course not everyone is going to move to Austin, but no doubt a city council that appears hostile to innovative businesses can’t help. Q: Shifting to the TurnKey business model, how do you guys measure success internally at TurnKey? JB: For us, it starts with guest satisfaction. If we can’t deliver a quality home that is exceptionally clean and that a guest is thrilled about, we are not going to be around long. We measure our guests’ satisfaction in several ways. Almost half of all guests engage us with ratings or reviews which we think is an industry best. 96 to 98 percent of our feedback results in 4- to 5-star ratings. We are pretty confident we are delivering a great product to guests and we have the tracking to monitor it. This results in more bookings, and more revenue for owners, which results in happy owners. TurnKey competes with traditional property management firms, charging an 18 percent commission on bookings. With the funding, TurnKey is looking to hire an additional 100 employees over the next year and expand to 100 new U.S. markets over the next few years.

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| Regulations

Short Term Rental Regulations

The Time Has Come for Statewide Standards

ith the first few months of 2016 behind us, presidential primary battles are headed into the home stretch, and state and federal election season is about to kick into high gear. But despite the prevailing wisdom that meaningful legislation falls by the wayside in such a politically charged environment, there is a reason for optimism throughout the short-term rental industry. At the time of this writing, no fewer than half a dozen state legislatures are in the process of considering bills that would implement statewide standards for short-term rentals. At present, Florida is the only state with such a law on the books. Although there are various permutations of these bills, the spirit of each is the same: they seek to create a statewide structure that protects individuals’ property rights by prohibiting local municipalities from pursuing an outright ban of short-term rentals in their community. At the same time, these bills would provide local government the freedom to create any provisions or stipulations such as licensing, registration, enforcement, etc. that they deem necessary to ensuring the safety and well-being of travelers, providers, residents and the community as a whole. In short, they provide a state framework and leave the details up to local government. 32

VRM Intel Magazine | Spring 2016

But why the need for states to delve into a matter that has historically been ceded to localities as purely a zoning issue?

To answer that question, we need to look no further than Austin, Texas. A city that just a few short years ago gave us the gold standard of local short-term rental ordinances.

If you’re not familiar with this particular story, you’ve almost certainly encountered a similar one. Owners, managers and hosts take great care to ensure their properties are rented to responsible travelers who will act accordingly and abide by the guidelines set forth by short-term rental providers. By all accounts, the city’s short-term rental regulations were a success. However, among thousands of positive short-term rental interactions, a few misguided homeowners entered into the market and have resulted in the ensuing “baby out with the bathwater” scenario. Despite overwhelming evidence to the contrary, a few isolated incidents or a “problem property” suddenly became the poster child for short-term rentals. And with that narrative and a few very vocal opponents, no amount of public education, data or anecdotal evidence could successfully stem the tide. The solution offered by the largely newly elected city council was to ban short-term rentals in Austin. Despite the presence of dozens, and sometimes hundreds, of upstanding and responsible

By Matthew Kiessling Executive Director,

Short Term Rental Advocacy Center (STRAC) of the Travel Technology Association

Solution Statewide standards provide a solution solving a variety of problems when implemented correctly. Unlike the various local laws and ordinances that many municipalities have created, a simple statewide standard codifies the practice of short-term renting and ensures both positive economic impact to the community and additional tax revenue generated by these accommodations. But the path ahead is not an easy one.

Delegate Chris Peace of Virginia knows that all too well, writing of his attempt to get a statewide standard adopted this session in the Richmond Times-Dispatch after its defeat:

“Due to the leverage exerted by localities and the hotel industry, Virginia missed a real opportunity to be a leader in the sharing economy and to provide localities with much-needed revenue. That is disappointing. But you simply cannot stop economic innovation and creativity; it will always move forward.” providers and hosts, the small vocal minority has spent countless time and energy painting short-term rentals as the scourge of the local community, making them the scapegoat for everything from safety concerns to affordable housing issues. And with that, the ban passed. The community has been…saved??? In reality, we know quite the opposite to be true. Communities that embrace short-term rentals are simply recognizing the new economy and embracing the future, providing a regulatory environment for accommodations options that travelers are demanding with ever-increasing frequency. And when travelers utilize shortterm rentals, studies show they stay longer and spend more money, not to mention the additional influx of much needed tax revenue for both the municipality and the state. On the other end of spectrum are communities that effectively “ban” short-term rentals through ordinances or local laws that have little hope of being enforced, even less chance of reducing the occurrence of short-term renting and ultimately deprive the community of the corresponding local tax revenue by driving the activity underground.

To be sure, the industry will encounter opposition to statewide standards from a variety of opponents. But done correctly, such legislation has the ability to unify state policymakers, while not usurping municipalities’ ability to govern short-term rentals locally. At their core, statewide standards offer the opportunity to protect the rights of an individual to utilize a home or property as a short-term rental while simultaneously encouraging the positive economic impact of travel and tourism. They also create a stable new tax base while allowing cities and municipalities to ascribe the necessary local requirements to balance the needs of travelers and providers with those of long-term residents and the community as a whole.

This is a common sense solution to an issue that will continue to be fought and go unresolved at the local level. The time has come for state governments to lend a hand to municipalities on this issue, create a framework and allow everyone to embrace the future.

VRM Intel Magazine | Spring 2016

| Regulations

Safety

in Vacation Rentals Change is Needed By Justin Ford, Owner, On the Water in Maine

s vacation managers across the country know, states and towns have been taking a closer look at vacation rental regulations over the past couple of years. It’s in all the newspapers that they are. One of the areas that regulators keep looking at is safety in vacation rentals homes – even though many regulators aren’t even aware of the problems. The problem is that nationwide, there are no centralized guidelines for vacation managers to follow. Many vacation managers are forced to piece together laws and regulations from town ordinances, state laws and even federal guidelines on their own. This is something that vacation managers need to get ahead of – and fast. Vacation managers need to be the experts on home safety – they need to set the standard. Other sectors of the travel industry have had their disasters over the past century. In 1912, the Titanic set sail from Liverpool and hit an iceberg. Everyone knows that over 1,500 people died. What some people don’t know is that as a result of that tragedy, in 1914, SOLAS (The International Convention for the Safety of Life at Sea) was created. Today, everyone sees enough lifeboats for all passengers when on a cruise because of SOLAS. The fire on Air Canada Flight 797 in 1983 lead to smoke detectors being installed in all airplane lavatories. Today, every time you listen through the safety speech on a plane, you hear them mention that tampering with smoke detectors in the airplane lavatory is a federal crime – again, all a result of that one incident in 1983.

So has the vacation rental industry had its big disastrous moment? Some could say so. While more people have died in homes than on all ships and planes combined – one particular incident in Colorado in 2008 has had the greatest effect on safety in vacation rentals. Around Thanksgiving in that year, the Lofgren family, Parker 39, Caroline 42, Owen 10 and Sophie 8, checked into an $8.9 MM, recently built vacation rental property in Aspen, Colorado to celebrate Thanksgiving. When their friends arrived to join them, they discovered all four were dead. A team of four gas and heating technicians determined that a malfunction of the hot water and snowmelt system for the driveway caused extreme levels of carbon monoxide (CO) in the home. There was not one CO detector in the 34

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vacation property, despite that it was recently built and had several CO producing appliances in it. Had there been even one CO detector in the property it is possible the Lofgren’s would have been alerted to the issue and awoken to evacuate the home. What’s interesting in this case is that – despite the contractors were obviously sued for improperly installing the heating system that defaulted – the lawsuits didn’t make any mention of the homeowners or the rental agency responsible for the home. State law in Colorado at the time didn’t require CO detectors to be located in residential homes in that state. That all changed on July 1, 2009 when the “Lofgren and Johnson Families Carbon Monoxide Safety Act” went into effect. Other states around the country

Skip forward a few years to April 2014. A family of 22 people checked in to a vacation rental cabin in Sevier County, Tennessee. This 5-bedroom, 3-story home was recently built, but only had one entry/exit point other than windows. Late at night, when alerted to a fire by smoke detector alarms, many of the family members started to evacuate the house. Unable to get to the front door because of all the smoke, many of the vacationers jumped out windows. A 56-year-old grandfather ended up dying of blood loss after lacerations from jumping through a window on the 2nd floor. State forensic anthropologists were called in to search the rubble of the home for 5-year-old Tyveon. His body was never found, and to this day, his family holds a search through a Facebook page that maybe he somehow made it out alive. While no regulations or laws have been enacted to address what happened at the Sevier County fire, there are many lessons that vacation managers can take away from this tragic event. First, it can come as no surprise that the rental agency that rented this home to the family was not only sued, it is now completely out of business. They closed without notice and left behind devastating financial issues for the property owners and renters that were already working with them. Although the home was protected by smoke detectors and they did work to alert the renters of the fire – the real questions that came into play were why were 22 people sleeping in a 5-bedroom home and why was there only one exit out of the home?

Setting occupancy limits for vacation rentals varies inconsistently around the country, in states and even in towns. Some vacation managers and vacation homeowners have limited occupancy by the number of beds, bedrooms or even by what the septic system rating is on the dwelling. It’s rare, however, that vacation managers take a serious look at a rental home and ask; How many people can safely stay in this home? Would it be easy for people to get out of the home in the event of a fire? Are there enough exits for people to escape the home quickly? As the vacation rental industry grows, vacation managers need to take a closer look at how occupancy is evaluated for a property and ensure they set strict limits that their renters must follow. Several incidents at vacation rentals in North Carolina and other parts of the country this past year have shown that some vacation managers are recognizing the need to be more proactive when it comes to safety. After a 24x12 deck with over 25 people on it collapsed last 4th of July in Emerald Isle, NC at a vacation rental, seven area vacation managers came together to start a mandatory deck inspection program.

While deck inspections are important – several of the collapses bring up the same issue as the Sevier County fire – what were over 25 people doing on a residential deck not made for that many people? quickly followed. It is now law in almost all 50 states, similar to Colorado, that “if it is your personal residence or if it is used as a rental, it must have an operational carbon monoxide detector.” So did the Lofgren incident change the vacation rental industry for the better? Possibly. However, there have still been cases of CO poisoning and deaths in vacation rentals since the Lofgren incident. So why aren’t more vacation rentals better equipped with CO detectors? Unfortunately, although most states have enacted laws, according to the National Conference of State Legislatures, many don’t carry penalties and most states don’t have any inspection programs in place to enforce that the laws are being adhered to.

Other areas of the vacation rental industry can be scrutinized for safety and well-being of renters: HAMMOCKS – Thousands of vacationers are injured each year in hammocks, either by falling out of them, by the hammock breaking or by hooks falling out of trees or hammocks stands.

INEXPENSIVE DECK CHAIRS – Resin plastic chairs, commonly used in many vacation homes because of their inexpensive cost, constantly break at rental homes leading to many injuries, some requiring hospitalization. GRILL FIRES – Each year over 6,500 grill fires result in $27 MM in property losses, many to vacation rental homeowners. VRM Intel Magazine | Spring 2016

KITCHEN KNIVES – Not many people realize a sharp kitchen knife is sharper than a dull kitchen knife. Most accidents in the kitchen are a result of a knife, especially a dull one because they require more force to cut which causes a higher risk of losing control of the knife.

tion to relax; they let their guard down. They become preoccupied with socializing with one another or are just enjoying much needed down time. Children, exuberant with vacation excitement and sometimes unaccustomed to beaches and pools, make bad choices. They wind up getting in over their heads – literally.

The vacation rental industry is known for providing inexpensive and often dull knives in rental homes.

There is an endless supply of safety issues to take into account when renting out vacation homes — the list goes on and on. What about stair safety? According to the AARP, falls with elderly people is one of the number one injuries. How do they fall? Absence of handrails account for a large percentage of falls on stairs that result in injuries. The unexpected locations of steps lead to many falls. For example, stairs of just one or two steps in a hallway or doorway can be especially hazardous.

BURNS – Over 3,800 injuries and 34 deaths occur in U.S. homes each year due to scalding from excessively hot tap water. In most vacation rental homes, any renter with a screwdriver and internet access can quickly adjust a hot water heater to the temperature desired. But what if it isn’t lowered back down for the following renters (who have a small child) when they arrive? AMENITY ITEMS – Vacation renters crash on poorly maintained bikes provided by vacation homeowners at rentals across the country each summer. In the state of Florida, drowning is the leading cause of death in children under the age of four. Many of the children who drown in Florida vacation home pools are the children and grandchildren of tourists on vacation. People go on vaca-

VRM Intel Magazine | Spring 2016

When a person wants to get certified to direct and flag traffic, they go to classes put on by OSHA to get certified. In the vacation rental industry, the assumption has always been that because someone grew up in and now probably still lives in a house then the homeowners are experts on safety in homes and don’t need additional education. As the vacation rental industry grows bigger and hotels, which are heavily regulated to provide safe lodging options, vacation managers are going to need to put together a plan

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VRM Intel Magazine | Spring 2016

to establish safety standards in the industry. While that is a monumental challenge, what is going to be even more challenging is getting the rental-by-owner to also stick to strict safety guidelines since more properties are offered by RBOs than VRMs. Take this situation I encountered in Maine recently. I was contacted by a woman that has been offering a 16-bedroom, 22-room home for rent on VRBO on her own for the past eight years. As many RBOs, this woman had tired of cleaning the home and fielding inquiries all winter and was now seeking professional help. When I walked into the home to consider adding it to our rental pool, the first thing I noticed were several porches that didn’t have railings up to code. As I walked through the house and didn’t see smoke or CO detectors in any of the bedrooms, halls or kitchen – nowhere in the home – I tried to imagine how anyone could possibly find their way out of this home in the dark. If the house were to be filled with smoke – especially when renters would be waking to fire, not a smoke detector, and have little time to escape – how would they get out? By the time I finished the tour of the home – I was terrified to learn that vacationers had been renting this home for the past eight years with none of these safety items in place. When I

asked the woman why there were no smoke detectors in the home, she replied, “Actually I think there is one, but it kept beeping so we removed it.” These types of homeowners in our industry are going to ruin it for all of us and cause so many safety mandates to come into our industry that no one will be able to afford to rent out their homes anymore. That is where change is needed.

What can vacation managers do to address safety in our industry? First, recognize that safety is the most important aspect of renting out a vacation home. It is more important than the advertised rate, the marketing plan, the furnishings, all of it. Vacation managers need to understand that the “buck stops with them.” When a vacationing family arrives in a vacation home at 9pm on Saturday night, after traveling all day with kids screaming in the car, after airline delays, after getting groceries, after unpacking the car – they are doing one critical thing that not enough vacation managers take the weight for – these vacationers are completely trusting the vacation manager and homeowner. When they climb into bed exhausted, ready to begin their vacation, they trust the smoke detectors are all the best that money can buy and have fresh batteries in them, that the railing down the stairs to the bathroom isn’t loose and ready to fall off the wall, that there is a CO detector near the boiler in the basement that will alert them to an issue, that the pool gate is locked so that their early bird riser 3-year-old son can’t sneak out to the pool before them in the morning…the list goes on and on. Everyone at your rental agency needs to be an expert on vacation rental safety. Your reservationists should be helping you by promoting that your vacation homes are safe. Yes, like Volvo has done for decades – promoting safety in your product is good for business.

When visiting homes to decide if they make the cut to be in your rental pool, managers and agents should be evaluating homes for safety as well. Are there smoke detectors in each living space as required by law? Is that dead branch over the deck a hazard that may result in someone getting hurt? Is the uneven walkway up to the front door a tripping hazard? Is the deck on the property attached by nails instead of screws (a big no-no)? One of the best ways for managers to get familiar with what they are looking for is to require that all newly listed rental properties be inspected by a professional building inspector prior to entering the rental pool. Be sure to have a member of your staff join the inspectors on the property tour to not only gain knowledge of items to look for, but to be able to talk to property owners with confidence about safety items that need to be addressed.

Housekeepers are one of the most important staff members when it comes to addressing safety. Your cleaning staff should be encouraged to speak up when they see something that doesn’t look right. Managers need to take action and show the housekeeping staff that their

VRM Intel Magazine | Spring 2016

concerns are important so they continue to speak up. Cleaners should be carrying batteries to replace missing ones in smoke and CO detectors. Renters are notorious for taking batteries out of detectors when they burn food or set them off by letting too much hot steam out of unventilated bathrooms. Every smoke detector in every rental property should be tested after each rental by the cleaning staff – incent your housekeeping staff to do that.

Property owners themselves need to be a part of any safety program you put in place at your agency. Homeowners are going to rely on the agency to guide them in the right direction. Many don’t know what vacation managers should know – that smoke detectors over ten years from manufacturer date should be replaced (they don’t make off-white smoke detectors – when they age to a color other than white – replace them). They don’t know that CO detectors wear out after five to seven years. Many homeowners like to place smoke detectors in an aesthetically pleasing location in their vacation homes rather than where they should go to operate properly. The vacation manager needs to be there to guide them.

Vacation Managers need to reach out to the RBOs in their communities and ensure they are aware of safety protocols. Every incident in every vacation home affects everyone in the industry. Just like the CO deaths of the Lofgren family in Colorado lead to laws in other states – the next disaster in a vacation rental, say, in California, is just as sure to effect change in Georgia.

Every industry has its disasters to learn from. The most important thing that the vacation rental industry needs to do now is come together and learn from past mistakes and find a way forward to promote its industry as a safe industry. Vacation rental agencies can help this by supporting a working culture where safety is a top priority. By creating industry safety standards that exceed any standards that government regulations will create, vacation managers will stay one step ahead of the curve. In the end, all will benefit.

Justin Ford is the owner of On the Water in Maine vacation rentals in Maine. He has a background in safety that goes back to a four-year tour in the U.S. Coast Guard where he participated in fishing vessel safety enforcement in Alaska. Later, he joined his local fire department where he is the training officer. Justin is also the Vice President of the Vacation Rental Professionals of Maine and presents regularly on safety for the VRMA. Justin also produces a Facebook community page on Vacation Rental Safety at www.facebook.com/Vacation-Rental-Safety-811465988927504

VRM Intel Magazine | Spring 2016

| Customer Service

Is Your Email Inbox An Untapped Distribution Channel? B

y now most vacation rental companies have long recognized the potential of outbound email as a marketing tool and have actualized their potential in that area. However, too many companies still overlook their email inbox as a distribution channel worthy of attention. While we might prefer that guests book online or contact us via telephone, many guests prefer to be contacted via email, and they make it known by using the “rentals@...” address posted on a website or by completing an inquiry form on the “contact us” portion of a webpage instead. With that being said, websites can be confusing and phone lines are sometimes busy so email inquiries seem to be prevalent (especially in this era of texting over talking). Perhaps the inquirer is a soccer mom who has only a few seconds between plays to plan the family’s annual vacation or maybe a husband planning a secret getaway while his wife is watching The Walking Dead. Regardless, their motivation doesn’t matter because either way these prospective customers get to choose how to reach us.

VRM Intel Magazine | Spring 2016

By Douglas Kennedy President Kennedy Training Network www.KennedyTrainingNetwork.com

Has your vacation rental company already embraced email sales as a distribution channel or is it in the early stages of recognizing missed opportunities?

 What is the source of the inquiry? Generally, direct channels (such as your website) should be a priority over those arriving via third-party listing sites.

The true measure of your organization’s commitment to email as a distribution channel is exemplified in the reaction of whomever opens the inbox first in the morning. Does the person sigh and say with despondence, “Oh no! How did we get so many emails today?” Or instead is the first staffer to encounter this untapped revenue stream of the correct mindset exclaiming, “Yes! How did we get so many emails today?!” Negative mindset is mostly the result of leaders who have not yet recognized this opportunity nor have reorganized their operations to support it, but it can be corrected. Here are some training tips and suggestions for your next meeting or in-house training session:

 How much information did the sender include in the “remarks” or “comments” fields? The more time the sender has invested in voluntarily divulging his travel plans, the higher priority we, as a team, should place in responding.

Make Email Everyone’s Job. All reservations sales agents should be part of the email sales team especially for smaller companies. Larger organizations who can staff to the skill-set level and maximize the talent of those who type better than they talk should do so; yet all agents should be cross-trained for both voice and email sales. Respond Promptly. By making email everyone’s job, your team will be able to respond well ahead of the industry’s current minimal standard of 24 hours. Better yet, if your team is able to respond immediately or within a few hours then most likely you will be able to maintain the interest of your prospective customer. Budget and Staff for Email Sales and Service. If next year’s budget calls for an increase in email marketing campaigns and other online advertising, plan accordingly so that you have resources in place when the responses you are anticipating arrive. The additional inquiries you will convert will generate an ROI many times over. Sort and Prioritize Responses. It is essential to sort and prioritize responses so that a balance is achieved between the quality of the response versus its timeliness especially for companies receiving a high volume of email inquiries from numerous distribution channels. To sort and prioritize, consider this:

Personalize the Response. Although it is always a good idea to prepare your team to respond with templates, it is important to personalize the templates to the highest extent possible. Again, by sorting and prioritizing according to the above principles, the responder can pick the template which best applies and then personalize it as needed. Personalize responses by:  Opening with a greeting and signing with a name.  Restating the sender’s needs as he has originally indicated to show that we “get it” and to make sure that we have the details correct.  Ending with an invitation to become a guest and a message of fond farewell. Mirror and Match the Sender’s Style and Commitment Level. Just as voice reservations agents are trained to do, email sales works best when the responder replies with the same style and tone of writing as the sender. In other words, if the sender has taken time to send personalized remarks about his plans, the responder should do so as well. Likewise, a longer description of said travel needs and details in the “comments” field calls for a more in-depth and informative response. Be Specific on What is Promised and Be Precise in the Terms. Given all the opportunities with recognizing email as a potential source of additional revenue, it is also important to reiterate the importance of having your team provide accurate information since it will be in writing. So encourage them to err on the side of caution. This means that rather than just saying, “We have received your request for an early arrival…”, make sure your staff adds a friendly reminder such as, “Please keep in mind that we cannot guarantee this in advance.” As a final note, this article is not to say that we shouldn’t pick up the phone and call someone who has sent an email inquiry if their question or concern involves a complex scenario. But, even if your website’s “contact us” form has a mandatory field requiring a phone number, those who don’t want to be called (for whatever reason) typically enter a fictitious phone number, so don’t be surprised if you find yourself unable to reach the inquirer. However, if you do call the inquirer to discuss his question or concern, and are able to reach him, chances are he will be impressed that you care enough to call to clarify his needs. By focusing your organization’s full attention on email as its own unique distribution channel, your vacation rental team will be able to outsell the competitors whom the sender is also contacting during his online search.

VRM Intel Magazine | Spring 2016

| Business

Growing Your Business: 6 Hats By Bruce D. Johnson

You Need to Wear

Every Week to Maximize Your Growth

VRM Intel Magazine | Spring 2016

hen you start planning your week, where do you begin? What’s the first thing you think about? If you’re like most business owners and property managers, the first thing you probably think about is, “What is the biggest fire that needs to be put out this week?” Or maybe, “What projects need to be moved forward this week?” Or possibly a tactical item like, “What meetings do I need to be prepared for?”  Unfortunately, as the person at the top of your business, that is not a great starting place for planning out your week. Why? Because it immediately puts you in a reactive and tactical mindset instead of a strategic and proactive mindset – which is the level where your business needs you to be thinking if you want to grow it.  In order to remind yourself every week to think at this higher level, you need a framework to help you conceptualize what you should be thinking about – and my favorite framework to do that is to think of the six hats you need to wear every week as the person at the top of your business: strategy, marketing, money, leadership, management and you.  While the people you hire can often wear one or two hats (maybe the marketing hat, the finance hat or the management hat), the reality is that if you’re the person at the top of your business or organization, you don’t have that luxury because you have to think globally. As the person at the top, you have to think of the business as a whole. Plus, it’s rarely your strengths that will take a business down. It is usually your weaknesses that will cause you trouble.

Why You Can’t Wear Just One or Two Hats  Let’s say you came up through the sales or marketing function of your business. If that’s true, chances are you focus your time and energy on sales and marketing activities (which, of course, isn’t a bad thing). However, if you are not really paying attention to – or not good at – managing the money, for example, chances are you’ll be out of business. You can’t say, “But I’m not a finance person. I’m just a marketing person. Cut me some slack.”

That won’t work. Nor can you say, “Managing money isn’t my strength, that’s why I hired someone to manage the money.” Again, that won’t work. Your business will still be bankrupt. As the person at the top, you don’t have the option of not paying attention to or getting good at money management.  Similarly, if you came up through the management/operations part of the business and are really good at managing and executing projects, chances are you will focus your time and energy on the management part of your business (again, not a bad thing). However, if the market has changed and your strategy is outdated, no matter how efficient you are and no matter how well your people execute, chances are you’ll be in trouble. You can’t say, “But I’m not good at that strategy thing.” Or, “I’m not a visionary.” Or, “That competitive intelligence stuff just isn’t my jam.” It won’t work. You will still be killed by your competitors.   Likewise, if you are great at the leadership piece (i.e. you like casting vision, building teams, recruiting top talent and inspiring that talent to produce great results) that’s good. However, if you are not great at managing yourself (meaning your mindset, your skill set, your productivity, etc.), then you’ll quickly become the bottleneck of your business and your business will stagnate.  In other words, whenever you’re the leader of a business or organization, you don’t have the freedom or the option of not wearing multiple hats. You don’t have the right to say, “I’m not good at [blank], so I’m not going to do that.” Nor do you have the option of simply thinking, “I’ll hire someone to do that.” Why? Because at the end of the day, you are the person responsible for your business or organization. You can hire people to handle certain tasks and functions (e.g., creating a marketing plan or leading a strategic planning process or producing financial reports), but as the leader of your business or organization, you’re still responsible.

Why You Can’t Hire People to Wear Your Six Hats  Abdication is a poor leadership trait. While you can hire people to whom you delegate tasks (which is a good leverage decision), ultimately you have to own the responsibility for everyone you hire. You can’t just hire someone and say, “That’s not my fault,” when something goes wrong. If you don’t know enough about interpreting financial data so that you miss the errors your accountant, bookkeeper or CFO is making, that is on you.   Now, the good news is that you don’t have to do everything, nor do you have to understand everything in your business, you simply need to know enough about each of the six key areas to make wise decisions – because making good decisions is what good executives do. Just because you do not feel competent or good at one or more of the six key areas of executive attention (strategy, marketing, money, leadership, management and you), does not mean you can abdicate your responsibility and blame someone else for not getting something right. Use Harry Truman’s famous line, “The buck stops here.”  In addition, if you’re the leader and you aren’t good in one of the six key areas, how can you lead the people you hire in those areas well?

VRM Intel Magazine | Spring 2016

For example, if you do not know how to think like a marketer or G You: What do I need to work on this week to improve my prodo not know how to judge what makes a marketing piece good ductivity, mindset, skill set and/or knowledge base so that I’m or bad, how can you effectively lead your head of marketing? You the best version of me to lead this company while doing everycan’t. Or if their marketing campaigns aren’t generating the results thing I can to avoid becoming the bottleneck?  you want, how can you effectively coach them if you don’t have the mental framework for determining what great marketing looks like?  Can you imagine what could happen for you and your business if you got in the habit of asking and answering those six quesAnd lastly, the third reason why you can’t have someone else wear tions every week so that you made sure that you were focused on any of your six hats is because all organizations take on the per- wearing all six hats and not just the one or two that you like or are sonality of their senior leader. If you are not good at something, good at? your business will become weak in that area. For example, if you are not very productive yourself, your employees won’t be produc- It could be a game changer. Not only will you become more tive. If you are not very good at managing people, your managers and more of the kind of leader that your business needs you to will not be very good at managing their people. If you are not in- be. You’ll also end up building a bigger, better, faster and more vesting the time to think strategically about the future of your profitable business.  business, your people will not invest the time to think strategically So, as you look at these questions, how are you doing? Are about the future of their area or department either. you wearing all six hats every week? If not, which ones aren’t For good or for bad, all businesses become a reflection of their lead- you wearing? Why? And what’s keeping you from wearing that er, which is the final reason why you don’t have the option of not hat (or those hats)?  wearing all six hats. You don’t have to do all the work in each of If you want to build a healthy and fast growing business or organithe six key areas, you just have to wear the hat for each of those zation, you have got to wear all six hats. If you feel like you are not areas every week. very competent in one or more of them, no problem. Just make the commitment to become more proficient in that key area of executive attention. Remember, you do not have to be the best in each of these six key areas, you just need to be good enough to know how to make wise decisions in each of these areas. Plus, you need In order to make sure that you are working on your business and to know enough to be able to lead/coach those whom you hire to not just in it, what I recommend is that you start each week (either do the tasks associated with each of those areas.  Sunday evening or Monday morning) by pulling out a piece of paper and writing out the six hats you need to wear that week along While you can and should delegate as many of the tasks on your the left side of your paper. Or if you prefer, you can download a plate as possible, if you want to grow a great business, you need PDF of this from my website at www.WiredToGrow.com. Just to make sure you’re wearing all six hats: strategy, marketing, mongo to “Free Tools and Helps” and select “Senior Executive Weekly ey, leadership, management and you. And if you want to avoid bePlanner”.  ing the bottleneck, you’ll want to make sure you’re growing in each

How to Wear All Six Hats Every Week

If you want to do this on your own, here are the questions I recommend you ask each week for each one of these six key areas of executive attention. Note: The I/we combination is meant to remind you to think of both your responsibility and what you need to hold others on your team responsible for.

of them.

B Strategy: What do I/we need to do this week to better position and differentiate our business and offerings? And what do I/ we need to do to innovate the next iteration of our products and services?  C Marketing: What do I/we need to do this week to ratchet up our company’s ability to attract, retain and/or delight our customers? And is there anything we need to do to increase the average stay value and/or the average lifetime value of a customer?  D Money: What do I/we need to do this week to make better well-reasoned financial decisions that can both fuel and sustain growth?

E Leadership: What do I/we need to do this week to better attract, motivate and leverage the talented group of the people in our company? And is there anything I need to communicate to them this week to keep morale high and for them to feel informed?  F Management: What do I/we need to do this week to make sure we’re executing our strategy effectively, completing our projects on time and/or raising our level of execution excellence?  44

VRM Intel Magazine | Spring 2016

Bruce D. Johnson is the President of Wired To Grow (www.WiredToGrow.com), a business growth coaching, consulting and executive education firm located in Charleston, SC that helps business owners and entrepreneurs grow their businesses faster, generate more profits and reduce their labor intensity by building more scalable and successful versions of their businesses. He can be reached at bruce@ wiredtogrow.com

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October 16-19, 2016 Sheraton Wild Horse Pass Resort & Spa Chandler, Arizona VRM Intel Magazine | Spring 2016

| Business

Navigating Rough Waters T

he vacation rental landscape is changing as multi-billion dollar investments into the industry illuminate our profession. For years now, operating a vacation rental company has been a rewarding experience and profitable business investment. I continue to believe that the industry will always be rewarding, but this year, the way in which you manage your business should change in an effort to ensure your business remains a profitable venture for years to come. This is the year to transform your operation into a more profitable, effective and determined company. Why is this year any different than years past?

Here are four reasons that underscore the need to transform your business:

Chart Your Path Through Todayâ&#x20AC;&#x2122;s Competitive Environment Toward Long-Term Success

B INCREASING COMPETITION C INCREASED EXPENSES

D LACK OF FINANCIAL OVERSIGHT E LACK OF PROCESS

VRM Intel Magazine | Spring 2016

By Ben Edwards President, Weatherby Consulting

INCREASED COMPETITION I often joke that as you cross the state line into Florida these days, there is someone standing there with a login to your new listing site and a “how to” guide for starting your own vacation rental business. While that is not the case, I know each of us feels the increased competition (old and new) in our respective markets. Frankly, I’m glad to see new entrants in the market, that’s not the issue. It is the establishment of a vacation rental company or a current operating company without a focus on standards, ethical operations and financial management that causes concern. I realize there are a number of start-ups and long-standing companies that are grounded in strong business practices, but the majority are not properly focused. By not being properly focused, the operations of that company adversely affect the vacation rental marketplace in a number of ways. Primarily, profit margins decrease as a result of commission negotiation. Inevitably, companies immediately reduce commission. It’s easy to do, which is why it’s offered first when a prospective owner questions it. Imagine if each operation decided to more clearly articulate the services offered and explain the need to make a reasonable commission and ultimately a reasonable profit to have a sustainable business model. Collectively, the market or the industry could begin to focus on service as opposed to cutting commission, to further highlight the attributes of a professional vacation rental manager.

Secondarily, there doesn’t seem to be a boundary anymore relative to solicitation. The competitive environment has changed and will probably never return to the days of old. In years past, general solicitations were sent to prospective owners articulating the value proposition of a company. Currently, reduced pricing and revenue guarantees flood an owner’s mailbox. As it relates to guaranteed revenue, in certain cases, this is tantamount to gambling. I would submit that if a company does not have the financial reserve to effectively guarantee future revenue, then it is considered gambling on the outcome of the property. Of course, the vacation rental manager has the opportunity to make up the difference in what was produced and the guaranteed amount. But what does this say about the industry or the manager. This practice creates a more difficult marketplace in which to operate and may not be a sustainable business practice. Becoming a member of the Vacation Rental Managers Association (VRMA) may be the best way to educate vacation rental management companies, new and old, on better and more sustainable business practices. The VRMA provides an environment of professional learning and a road map to creating a sustainable business

through seminars, networking and access to ancillary vendors and skilled contractors.

Increased competition is good for the industry, provided its good competition. A focused and professional company will always outperform the market and operate sustainably for the benefit of employees, stakeholders, the community and the industry. INCREASED EXPENSES General operating expenses continue to increase, adversely impacting profit margins. From new “must-have” technology to increased booking fees from online travel agencies (OTAs) and distribution channels, vacation rental managers are forced to manage expenses more acutely.

It is important to understand the return on investment (ROI) of every initiative within the business, specifically marketing expenses. In year past, it may have been acceptable to float through the year managing macro cash-flows, but those days are over. Vacation rental managers are now being required to perform an ROI on every program in the business on a recurring basis. Vacation rental mangers not reviewing this information are simply going with the flow, and going with the flow will most certainly decrease profits. Life was good. Utilize a few OTAs, produce some revenue and everyone was happy. Now that traveler fees have been implemented, margins are decreasing over night, forcing vacation rental managers to reassess their marketing plans. I have spoken with numerous vacation rental managers over the past month and all are concerned about the shift in traveler fees for a couple of reasons. First, the obvious takeaway is that by adding an additional percentage to each reservation, general traffic and bookings will decrease. I think this is a genuine concern. Travelers, in the short-term, will attempt to book directly with the vacation rental manager utilizing certain listings sites as a billboard. This is what is known as the “billboard effect.” OTAs know that travelers will use their website to simply survey availability and pricing and will ultimately attempt to curtail that practice. As the billboard effect increases, OTAs will combat this traveler work around, historically, by raising fees, commissions and implementing more onerous restrictions and booking rules. This brings to me to my second concern, associated with increasing expenses. There is a myriad of concerns aggregated into “what’s next” and how that will affect the industry. The next major issue I see is that vacation rental managers will not be able to control travelers booking directly with the OTA or distribution channel. That said, can you blame a traveler for not wanting to save ten percent? This loss of revenue will ultimately force OTAs and distribution channels to demand rate parity. Rate parity is generally a contractual request made by the OTAs or distribution channels to ensure that the rates presented are the same on both sites, providing an equal playing field of sorts for selling vacation rental inventory.

Until this happens, travelers will continue to work around the fee and book with the management company directly. The issue is that rate parity will come as an additional expense to the vacation rental manager. Obviously, managers are upset about the addition of new traveler fees, but this was a matter of time as corporations survive on profits. Until vacation rental managers create a multi-faceted marketing program and decrease their dependence on any one particular marketing channel, they will be susceptible to increases in marketing expenses.

VRM Intel Magazine | Spring 2016

LACK OF FINANCIAL OVERSIGHT

LACK OF PROCESS

Too many managers are going out of business, leaving guests displaced and owners owed money. These issues do not happen overnight and are a result of poor business practices, unsustainable business models and lack of financial oversight. The majority of the vacation rental industry does not have sound financial practices, much less oversight.

Since starting out in the vacation rental business, I’ve always felt that if you cannot measure the business, you can’t effectively manage it. There is a tremendous opportunity in the industry to instill more effective business practices through proven processes. From reservations call conversion to housekeeping management, opportunities exist to further measure the business in a manner to glean more information about a particular practice and refine a process.

Many vacation rental managers focus on macro cash flow or gross revenue as an indicator of performance. In today’s marketplace, that’s not enough. I’m not saying that every vacation rental manager that has little to no financial oversight will go out of business, although there are plenty of examples. More importantly, fundamental financial oversight is needed to ensure sound business decisions are made and a material profit is generated within the business. Sound business decisions and reasonable profits create sustainable operations. Assuming that financial reports are created on a monthly basis, a review is needed to ensure the company is on the right track. Reviewing revenues and expenses as compared to the prior year is a great start. This will provide a baseline of results in which to determine performance, provided the operations and property count are similar year over year. Creating a budget will ultimately provide the best mechanism to manage profitability. Once created, managing budgeted versus actual results is the best way to ascertain the financial condition of the business and further fine-tune the profitability. Having a sound financial process that produces timely, consistent and accurate results will ensure that the business is run at an optimum level, and the lack of these processes remains a growing concern.

As an example, most vacation rental management companies review the revenue produced by reservation agents to determine individualized performance. A better approach would be to determine the number of qualified reservation calls taken and compare that to the number of reservations booked, providing a call conversion percentage. Comparing a call conversion percentage across reservationists will ensure an “apples to apples” comparison of production and staff. In the event conversion for a particular agent declines, certain coaching mechanisms can be implemented to increase performance. Housekeeping inspection management is another process wrought with inefficiency. Each property on the rental program should have a specific inspection form to ensure that all pertinent areas of the property are inspected. This can be done manually or electronically. Either way, these forms should be electronically filed within the property folder. Having this information for future reference is extremely helpful. Furthermore, taking pictures and having those filed electronically will remove all doubt in the event an issue arises. Developing a review process as it relates to property rates is paramount in revenue management. There are a number of tools available to vacation rental managers these days, such as SmartHost, which provides pricing recommendations designed to maximize a property’s revenue and reservation performance. Even without automated tools, vacation rental managers can perform a revenue and rate analysis manually. Monitoring occupancy for future months is crucial in determining whether to increase or decrease the rate. At any point in time, a vacation rental manager should be driving occupancy or rate. Because the two are tied to each other, slight decreases in rate should generally drive occupancy. Knowing this relationship, added to monitoring reservations and booking pace reports will certainly increase revenue. Hoping that certain processes are operating effectively is no longer workable. Further measurement of certain processes across the business will create a more effective operation. Operating a more effective operation breeds efficiency and higher profits. As you can see, the industry is changing. Margins are being attacked requiring vacation rental managers to operate with more purpose. This is the year vacation rental managers are being forced to step up and take hold of the business to safeguard their operations. Many vacation rental managers will take notice of these changes in the industry and chart a new course for their business. Those vacation rental managers will be the new pioneers of the industry, operating profitable and sustainable business operations. Flexibility for the future is vital, and being able to pivot using financial and operational data is imperative. As always, feel free to contact us directly at WeatherbyConsulting. com should you wish to discuss any of theses changes and how to chart a new path for your business. One constant in the vacation rental industry is change, and change always brings opportunity. Good luck charting a more effective pathway for your business in 2016.

VRM Intel Magazine | Spring 2016

ARE CONFLICTING POLICIES COSTING YOUR VACATION RENTAL COMPANY MONEY?

re you a vacation rental manager or are you not quite sure yet? Are you trying to be everything: hotel, lodging, resort and VRM to every traveling guest? Or do you consider yourself to be a professional vacation rental manager in today’s travel environment who focuses on your short-term vacation rental properties and presents that face to the travelling public and homeowners alike? Do your policies reflect that position or do they present an “on-thefence” type of identity that could be either/or?

Brand vs. Identity By Nancy DiRienzo, Red Sky Travel Insurance

While some VRMs have nightly business mixed in with shortterm vacation operations, maintaining a strong booking and cancellation policy is paramount. Doing so only elevates your position with competitors and strengthens your value to homeowners. By collecting a substantial and true rental deposit at first booking with final rent balance due prior to arrival, VRMs have secured rent monies not only for their homeowners, but in management commissions as well. This type of reservation policy is commonplace in the majority of professionally managed VRM companies for a reason. Your guests should expect they will not get “hotel-type” policies with loose cancellation penalties when booking a home, cabin or condo. There is real “skin in the game” now on behalf of the guest. It is more of a well thought out commitment to stay with a vacation rental. There is a serious investment now. Good! That’s the point isn’t it? Vacation rentals provide a unique experience for a very specific period of time. Without the properties there is no business, so don’t leave all the cancellation power in the hands of the guests. After all, the properties are not often owned by the VRM company, but managed for individual homeowners to help maximize their second-home investment. Partnering with a travel insurance company protects guests and works extremely well with true vacation rental policies which allow VRMs to request higher deposits and maintain stronger cancellation policies. Cancellations are going to happen, but when they do, your rental terms will be there to protect your revenue and your homeowner’s revenue while your insurance partner works to protect your guest — now everyone is covered. Let’s not forget the revenue stream this insurance partnership also offers VRMs. Along with protecting your guests, this additional profit center is now working night and day for you and adding directly to your bottom line. It is one of the fastest returns available for very little to no investment.

It is still surprising to see how many VRMs are not collecting final payment until guest arrival and are requiring a very small rental deposit up front along with it. Perhaps they are still holding on to those policies to compete with local hotels. Adding insurance before a real policy change is putting the cart before the horse and the program will not be successful. The guest lacks any incentive to protect that type of low investment. How many uncomfortable homeowner conversations are had when cancellations happen? How does this loose policy keep homeowners in the rental program? Cancellations are part of the business, but the tools are there to offer all protection and minimize loss. Competition is still great between hotels and the VRM market and we are all aware of the hotel markets’ push to invade this space in any way possible. Snowbirds are now booking month-long stays at affordable hotels that offer, not only free breakfast, but dinner every night also. The lines are getting more blurred while we still want to maintain the difference of the brand. Marketing dollars are spent highlighting the experience of staying in a vacation home to create that difference.

Rental policies should match. Many vacation areas are not seeing any additional development. Land is scarce along the coast and competition is tight while mergers and acquisitions continue. More than ever, presenting a strong homeowner friendly policy greatly impacts your business today and tomorrow. Travel insurance coupled with tighter vacation rental policies only adds value to your company. Why not add this in your marketing presentation to attract new homeowners to your rental program over competitors who do not? After all, your rental policies should represent your identity in the market. Be the face that you want to present to prospective homeowners, current homeowners and future guests, and you will be sure to stand apart from the crowd.

VRM Intel Magazine | Spring 2016

Lead Management Xtreme + Integrated Phone Control Trust Accounting Distribution Channels Auto Responders Custom Guest App Housekeeping Mobile App Maintenance Mobile App Owner Mobile App Responsive Websites Website Map Searching Electronic Signatures CRM / Guest Marketing Home & Lock Automation Yield Management Wordpress Plugin / API Dashboard / Advanced Reporting Guest Reviews / Surveys Social Media Automation Search Engine Optimization (SEO) Coupons / Gift CertiďŹ cates Concierge QuickBooks Integration Travel Agent Portal Point Of Sale

www.streamlinevrs.com

VRM Intel Magazine | Spring 2016

| Distribution

DIVERSIFYING YOUR MARKETING EFFORTS

By Heather Weiermann

VRM Intel Magazine | Spring 2016

VACATION RENTAL MANAGERS CAN NO LONGER AFFORD TO PUT ALL OF THEIR EGGS IN THE OTA BASKET

consolidation with a few large players dominating, all with very high rates and potentially poor service (some might argue that we’re already there). There is no denying that vast majority of guests are shopping online. Vacation rental managers now have some choices to make. The result of these choices will determine who holds the power in our industry and your business moving forward.  Where do you invest your marketing dollars – in OTA and listing sites or in your own brand?  When is it beneficial for you to pay a commission fee to secure a booking and when are you just giving away margin? The path of least resistance is always the most expensive. You can put all your eggs in the OTA/listing site basket and rely on them to generate all your business demand, or you can invest in driving consumers to your brand.com to book direct via your website or via phone. If you don’t own the marketing channel you are using, you are beholden to their whims – you not only have to pay the fees the sites are charging, but your business will always have to conform to their policies (cancellation, refunds, payment processing, etc.). You will always be at the mercy of their decision making, which will ultimately be in the best interest of their company, not yours. Growing commission rates, coupled with the fact that many OTAs are bidding on and competing for your property’s brand search keywords, makes the OTAs’ relationship with vacation rental managers anything but a partnership. Granted, for many small companies with restricted marketing budgets it is a necessary lifeline for getting your properties in front of potential guests early in the buying cycle. It is important to keep in mind, that OTAs and listing sites do not create the demand for your business. As we review year over year “lead volume” with VRMs who use OTAs, we aren’t seeing growth in volume but rather lead numbers simply shifting over to a channel that reduces your margin. In other words OTAs and listing sites are simply spending more on marketing that you can and in many cases are inserting themselves between you and your guests.

Why diversify your marketing? When considering your strategy for generating leads, you may only think of one thing — how many? However, that’s certainly not the only aspect that matters when it comes to how your leads will convert into bookings and the net revenue generated by each lead. How much will you spend to get the leads? How high is the commission you are paying? Will you have to pay a credit card processing fee? Is upselling ancillary services possible? How high is the demand for the dates you are trying to book? Plus a number of other factors can make the same number of bookings look very different when it boils down to the net revenue generated.

A lot has been said recently about new fees and policy changes implemented by various online travel agencies (OTAs) and listing sites. As the online giants like Expedia and Priceline move further into the vacation rental space, the market is heading toward

Too many vacation rental managers rely on OTA sites for far too much of their booking demand. Even the companies succeeding with in-house bookings could benefit by chipping away at their OTA percentage. There are a few relatively simple things you can do to diversify your marketing and move some of your eggs out of the OTA and listing site baskets. These changes will make an impact on your net revenue, grow your guest database and improve guest satisfaction. Implement these and I guarantee you’ll find your OTA percentage drop while occupancy grows!

f you’ve ever heard the phrase “Don’t put all of your eggs in one basket,” you will probably understand the idea of diversification and why it is so important for protecting your assets. The same concept applies to your source of business in the vacation rental industry – specifically where your guests find you. Diversification is simply the “act of introducing variety.” Although it can be applied to a number of areas within your business, the concept absolutely must be applied to your marketing strategy and generating leads. Just like your financial investment efforts, diversification of your marketing strategy reduces risk and ensures that your revenue goals are not derailed by the unexpected.

VRM Intel Magazine | Spring 2016

Create Value with Exclusive Incentives Collect and Use Guest Information At the end of the day your guest will make the decision that is best for them. As we look at guest sentiment in the hospitality industry, we see a growing desire by guests to book through your website because they feel they can trust your business compared to a large booking engine. Help support this growing preference. If your guests perceive real value or receive an advantage when booking direct, then they’re more likely to do so. This not only reinforces the value to your current direct bookings, but also incentivizes your guests who book via OTA sites to make a better choice in the future. It’s not hard to think of an incentive that’s going to cost you less than the three to ten percent OTA commission while also providing more value to the guest. I have seen the following be very effective at driving direct bookings:

Compete Head-to-Head With Rate One of the most important strategies you can implement to drive direct bookings is to have the best rates. Give your guests a sense of security knowing they made the best choice with a “Best Rate Guarantee.” This can be as simple as a price match or a discount that is less than the commission potentially paid to the OTA. The only way to qualify for the guarantee though is for the guest to book direct. Here’s the most important part…make sure everyone knows about it! Promote your guarantee on your website, in your marketing materials, via social media, in your email messaging and wherever else you are marketing.

These are your guests. If they have a great experience, they are likely to stay with you again and share their personal vacation stories with their network of family and friends. You should be building your guest database, not only with your past guest data, but with the data from every lead you receive. At a minimum, make sure you are collecting a name, email address and phone number from each prospective guest. However, to build meaningful relationships and to truly personalize your marketing messages, you need to collect more than just the basics. It’s not difficult. Your reservations and guest service team members are already learning many things about your guests just by talking to them. However, if you do not have a way to capture this data and record it in a usable format, this valuable information will slip right through your fingers. With no guest data of your own to use for remarketing purposes, you will always be paying for more leads. Why not reuse the leads you already paid for as a supplementary source of direct booking opportunities?

You’d be amazed by how many guests give you the chance to book them direct by calling your business even while they are online perusing listing sites. We hear it day in and day out as we help our clients listen to their call recordings and coach their reservation agents. Make sure your reservations team understands the critical importance of winning business that is contacting you directly, and incentivize your team to help them book direct.

Late Checkout Sure, this may have an impact on operations. But, if you can make it work, adding an hour to the check-out time for direct bookings is a big incentive. You can do this either by extending the check-out time for your direct bookings or by changing the check-out times for your OTA bookings to an earlier time.

Just Ask It’s really that simple. People will do what you ask if you take the time to ask them. Your reservations team, your website and all your email communications should educate potential guests on the value of booking direct. Make sure they see and hear your promise of “Lowest Rates Guaranteed” or “Best Rate Guarantee” each time they interact with your brand. Ask guests to book direct and explain the benefits for them if they do. Reinforce the personal touch and develop a relationship with your guests to demonstrate how important their vacation experience and their business is to you. If you can make it personal and make it genuine, the guest will want to book direct to ensure that same level of service is provided during their stay.

VRM Intel Magazine | Spring 2016

Knowing your guests will make them feel as if they know you. The OTAs are collecting your guests’ data. They use it to remarket their site and your competitor’s homes to prospective guests. Your primary goal when a guest inquires via an OTA site should be to make sure you have the ability to communicate directly with them and develop an ongoing relationship with your brand. You can do this through personalized messages and strategic touch points prior to their next planned stay in your market.

Recycle Leads With Post-Stay Targeting Messaging Keep in touch with every lead in your database regardless if they stayed with you or not. I don’t mean adding them to your newsletter database though. In order to build strong, lasting relationships and earn their business, the messages you send should be personalized based on their interactions with your brand and the personal details you know about them. We have worked with several property managers who have begun targeted email campaigns to “not booked” guests after their stay dates have passed. These guests are sent a special message 60 days prior to their initial inquiry anniversary to convert them to direct bookings on their next stay. This is just one of the remarketing strategies proven to be very effective at triggering OTA guests to change their behavior and book direct.

Know How Each Marketing Dollar Performs, Down to the Penny If you don’t know how each spent marketing dollar performs, how can you make informed decisions about changes needed in your marketing strategy? OTAs use the fees you pay them to bid on your market and brand keywords on the major search engines in order to intercept your guests as they are looking for your homes. It is almost impossible to compete with the enormous marketing budgets of an OTA or listing site. That is, of course, unless you are tracking and measuring your marketing return on investment (ROI) for each marketing strategy you have deployed. It is not enough to know how many impressions, clicks and click ‒ throughs your dollars generate. If your tools and technology cannot track your marketing spend back to the bookings generated, every dollar you spend is just like throwing a dart at a dart board. If you’re going to implement a new marketing strategy, make sure you are able to track results and understand your average cost per guest acquisition. This reveals just how effective and valuable the new strategy is from a business objective standpoint. Based on results, further refinement of your marketing program is possible which allows you to focus on the strategies that perform the best for you. Tracking true ROI requires an inter-connected system that tracks both online and offline (phone) responses and ties actual booked revenue to specific online, e-marketing, social media and traditional marketing campaigns. You should be managing the details of each marketing strategy, recording costs and analyzing conversion and booked revenue to validate ROI and justify your marketing spend.

Invest in Your Reservations Team An exceptional reservation sales team is far and away one of the best investments you can make. By training and coaching your reservation sales team members who directly interact with your guests, you can emphasize how to build a lasting guest relationship, sell the experience of staying with your brand and earn the right to ask for

the booking. By doing so you will achieve higher conversion rates and unmatched guest experience. At a minimum, you should be listening to your reservations calls in order to provide your agents constructive feedback and training to help them improve their skills and assess agent performance. Incentivize your agents on more than just total revenue booked. Encourage and pay them when they successfully build a relationship with the guest and collect more than just the basic guest data. Provide your agents with the tools to perform proactive, personalized and timely follow-up calls and emails with potential guests rather than waiting for the guest to call back.

Summary Yes, the OTAs can, and most likely will, play an important role in your overall marketing strategy. However, ensuring you are diversified and not dependent on just one source for leads is becoming even more important than ever before. To protect your business, your goal should be to convert every guest to a direct booking guest, if not for their initial stay with you, then for all future stays. In short, make the effort to diversify the eggs in your marketing basket. If you are successful, you will not only grow your business, but unpleasant changes by one channel are more likely to be offset by positive results in another. This will deliver a stronger position in the market for your brand and more retained revenue for your bottom line.

After growing up on the beaches of San Diego, Heather graduated from the University of California, Santa Cruz with a Community Studies degree. Heather began marketing and managing vacation homes in 1999 as a favor to a friend who owned a beautiful home in La Jolla, California. Over the course of 14 years, Heather’s business, Southern California Vacation Rentals, grew to become one of San Diego’s leading vacation rental companies. In 2013 Heather sold her company, and after helping with the transition of ownership, Heather knew immediately she wanted to help other vacation rental managers realize the same results she found after implementing The NAVIS Way at her own business. Throughout her tenure, Heather has supported the vacation rental industry and other vacation rental managers by volunteering on local, state and national tourism and vacation rental committees and advisory councils. Heather served on the Board of Directors and as an Executive Committee Member of the Vacation Rental Managers Association from 2010 - 2014. Heather also founded the California Vacation Rental Managers Alliance and the San Diego Vacation Rental Managers Alliance. Both organizations were created to bring a much needed voice and public awareness to the region’s vacation rental industry.

VRM Intel Magazine | Spring 2016

| Distribution

Leveraging the Traveler Fee to Increase Direct Bookings “I

will also remind you that the (traveler) booking fee is something that has been widely accepted as far as Airbnb and TripAdvisor go,” said Expedia CEO Dara Khosrowshahi on Feb 11, 2016, in an earnings call with shareholders. “Airbnb has always had a booking fee. TripAdvisor introduced booking fees last year. Those transitions have gone very, very smoothly. Our pricing is going to be quite competitive. So this is something that has already been market tested, and we feel pretty good moving into this model based on the competition already being there.” However, there has been significant owner pushback, including two class action suits against HomeAway for bait and switch policies. On vrmintel.com, we have received dozens of angry comments from individual homeowners. 56

VRM Intel Magazine | Spring 2016

Heinz H.: “Feb. 18th 2016 – The date that HomeAway has begun the transition to GoneAway, as I, along with many countless others will not renew – or use any site related to Expedia again!” C. Ives: “After listing 2 properties with VRBO/HomeAway for the past 15 years, it is time to say goodbye. One of my listings expires next week, and the other one expires in a few months. I do not trust VRBO/HA anymore. They have been boiling us frogs slowly in their pot of greed for months now and I was too dumb to notice. Now I am faced with the choice of just selling the houses and getting out altogether, or possibly looking into long-term rentals which means I won’t get to enjoy going to our house with my family. Thanks for NOTHING VRBO HA. You are the worst.” Eric: “I renewed my subscription in September of 2015 with no inclination whatsoever to believe what I had paid thousands for would drastically change with little or no warning. I have adver-

Kate: “Renters nor owners are fools. Stop trying to play us, you just want money and it’s SO easy to see. Nobody wants to be your customer anymore, renters or owners. And you own NOTHING. The jokes gonna be on you. Fools.” Virginia: “I had given a customer a few months to book under the price that she was quoted back then. Now she messages me, what is the additional 167.80 service fee. I did some research and found this is an 8 percent fee from HomeAway, in addition to the 900 dollar membership fee that I pay yearly. I am shocked and horrified. I never got a notice or letter about this. I do not intend to renew my membership.” Roger: “Just to be competitive we will have to reduce our rates by the amount HomeAway is requiring as a service fee. It is embarrassing to have to tell our potential customers that the reason the cost of our cabin is so much is that VRBO wants a significant amount of their money. If we can be patient, somebody will take the dissatisfied customers of VRBO and generate a respectable replacement.” Kyron: “How does this help us Owners? I’ve called several times and they say this is to pay for their 24-7 customer service. What a joke. This is about increasing shareholder value for Expedia. How will this generate more inquiries and bookings? They have not told us how this money will be spent on the Owner. They have changed the terms of the contract. I signed up for a yearly subscription. How can they charge my client a fee? I paid an enormous amount of money to advertise MY property on their site. And now they want a fee from my client. Where do I sign on for the class action lawsuit? And guess what, if you read their monthly updates come April they are changing the pricing structure to subscription based owners. This is a BAD business model and only hurts us.” Celina: “I found out about the service fee to our guests only because I was addressing our damage refund policy. Had I not done this I would have missed the new service fee of 5.5 percent. I did not receive notice, HomeAway is not adding any additional services, and this was not part of my contract agreement with HomeAway. If this is not removed I will not renew. I will request payment by check mailed directly to me without charging this excessive fee to my guests.”

Steve: “Saw this was assessed for the first time in a booking request today, not aware of any notice from VRBO or HA this was going to start. I’ve been paying the highest tier for VRBO marketing but my understanding of the listing model was either pay the higher annual listing charge or pay per booking. Sneaky and not above board. As vacation home owners, curious what other marketing channels are people using to extend reach beyond VRBO-HA.” Alexis: “I agree with all the vacation rental owners. This was a shock to me today when I responded to an inquiry. I am livid and DISGUSTED with HomeAway. They have not partnered with us to help us attract potential renters, but rather sneakily imposed this new service fee. For the same cost to a traveler, they could actually stay in hotel instead. In order for me to stay viable I must lower my rental rate so that greedy execs at HomeAway can take a slice of the pie. As soon as my subscription expires I am withdrawing as well. DO NOT USE HOMEAWAY, VRBO, VACATIONRENTALS.” And there are many more. Much to homeowners’ dismay, Expedia was prepared for an initial drop in HomeAway’s revenue and renewals. For Expedia, the long-term goal of increasing HomeAway’s take rate outweighs any short-term losses from a few resistant homeowners. And with their optimized booking path and expanded network, Expedia is confident that they can increase both the supplier and consumer side of the business, making managers and homeowners more satisified with their service in the long run.

10 ways

tised with VRBO and HomeAway for more than 16 years. I am appalled not only at the extent of their greed, but also their total disregard for the potential effect on the property owners as well as the traveler. VRBO and HomeAway have lost my trust and I will not renew my advertising on either site. I won’t do business with a company whose leadership finds it acceptable to pull this kind of stunt on their faithful client base. This company is clearly greed-oriented and I have no doubt they anticipated this type of backlash. Considering the huge profits to be made overnight by taking an additional 9 percent from transactions, the potential loss of several thousand angry property owners was not given a second thought. The move was unethical and I predict the company will fail within the next year.”

vacation rental managers can leverage the addition of the traveler fees to increase direct bookings

B Optimize your listings on distribution sites with breadcrumbs leading consumers to your website (i.e. your company name in photo captions and in descriptions). C Communicate the addition of traveler fees on Airbnb, HomeAway and FlipKey to owners, guests and leads via email, blogs, direct mail and PR. D Offer a “Best Rate Guarantee.” Marriott Hilton are already doing this. E Make sure reservations agents are aware of the changes to the fee structure on FlipKey and HomeAway, and structure a consistent response across voice and email channels. F Implement loyalty programs. G Collect data on every lead and guest received from distribution sites, and stay in contact with them through multiple marketing channels. H Invest in the booking path and usability of your VRMC’s website. I Work with other VRMs, CVBs and associations to create PR campaigns which educate consumers. J Unite with other VRMs to push back on rate parity agreement and data hoarding by OTAs. K Incentivize direct bookings by adding more value added options to your guest experience.

VRM Intel Magazine | Spring 2016

| Marketing

The Google Factor How Google’s

Recent Changes to Search Algorithms Are Impacting the Vacation Rental

Industry

ver the last few months, Google has been busy. With a Panda update last summer, the fall announcement of RankBrain, a Google core algorithm update in January, a SERP display overhaul in February, an imminent real-time Penguin update, and Google’s deeper dive into travel, it has been difficult to keep up. In the travel industry over the last few weeks, search engine marketers have reported that OTAs are seeing a jump in CPC (cost per click) and a downward trend in CTR (click through rate). HomeAway, in particular, was aware that changes were coming to SEO that would negatively impact their traffic. In November of 2015, the Securities and Exchange Commission filing detailing Expedia’s then proposed purchase of HomeAway revealed an interesting statement regarding changes in search engine performance: 58

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“On October 1, 2015, the HomeAway board of directors held a special telephonic meeting in which Mr. Sharples reported on a recent change in the search algorithms of a leading search engine and the potential for such a change to impact HomeAway’s business. The HomeAway board of directors discussed that this change would require an adjustment in anticipated marketing expense in management’s preliminary analysis of the subscription and transaction-based revenue model.” As a result, HomeAway made a number of adjustments to the assumptions underlying their initial projections, including annual visits growth deceleration (due primarily to SEO reduction) in fiscal years 2016, 2017 and 2018. While HomeAway was making downward adjustments related to SEO, Priceline.com’s CEO gained attention for his comment

about SEO during an interview during the Skift Global Forum, “…and so I believe it is a paid world.” As a result, Skift News Editor Dennis Schaal wrote: “With those simple words, Priceline.com CEO Paul Hennessy summarized a development that has become painfully obvious to travel brands trying to get their piece of free real estate in Google search results: Search engine optimization, the science of getting a company to surface high in Google’s organic search results, is basically near death or already a fatality as Google AdWords and Google’s own hotel, flight, local, shopping, and Google+ products shove organic results down the page or screen into Web and mobile oblivion.” (Skift, “Priceline.com CEO on the Death of Search Engine Optimization,” Oct. 20, 21015)

Turning to Expedia, during a March 16 meeting with investors, Expedia executives addressed concerns about Google’s recent changes to their search engine results page (SERP) format saying, “It is early in the game as far as those changes in search. It continues a pattern of Google pushing organic results below the fold.” He continued, “The market hasn’t adjusted to the new search format yet, but there haven’t been alarm bells ringing at the company other than some of the SEO – the organic – folks, where we’ve been very strong. For example the HomeAway folks have felt this a little bit.” With executives from HomeAway, Priceline and Expedia referencing Google’s recent changes, we wanted to dive a little deeper to answer the question, “What are all of these changes, and how do they affect vacation rental managers?” Let’s look at each of Google’s changes separately. VRM Intel Magazine | Spring 2016

Panda 4.2

Google’s Core Algorithm Update

The Panda updates are designed to stop sites with poor content from creeping up on the search engine results. To find out more about the Panda 4.2 roll out, we reached out to Bluetent Internet Marketing. According to Bluetent’s Brynn Flaherty, “Panda is Google’s ‘quality content’ algorithm, designed to down-rank pages that are considered low quality, and reward sites with higher quality and valuable content. Back in July when the 4.2 version of Panda started to roll out (Google said it would take several months to be complete), there was also chatter about Panda becoming part of Google’s core algorithm — and people were right, as that was officially announced by Google just a couple of weeks ago.”

Searchmetrics posted an article titled “Google Core Update 2016: Analysis of Winners and Losers” which said, “High quality, longform content pieces that cover a topic in-depth are the winners in many areas. But the sheer amount of content is not decisive for rankings, rather the question of whether the content is relevant and fulfils the user intention.”

Flaherty continued, “Sites that had been previously affected by Panda updates were categorized as large-scale directories, ecommerce retailers, news publishers, affiliate websites, high-volume blogs, press release websites, and more.”

The update caused ranking volatility, many SEMs remain divided about the reasoning. Forbes contributor Jason DeMers said, “The update seems at least partially related to content quality, including recentness, level of detail, and image/video accompaniment.” DeMers added, “The update could be related to semantic search and user intent, given some of the strange surges in rank.”

SERP Overhaul One of Google’s more significant changes, is the new format for their SERP. To summarize, Google eliminated the right sidebar of ads and added a fourth position at the top for “highly commercial queries” (like hotels and vacation rentals), pushing organic results further down the page, and in most cases, below the fold. For organic search, it was quite a blow, and it has also had a huge impact on PPC for the OTAs. More about this on page 61.

HomeAway.com and FlipKey.com When HomeAway announced that it expected to see a tick down in organic traffic, several marketers looked to the updates to see if changes would affect all vacation rental listing websites. As HomeAway’s organic traffic began to decline, speculation arose that HomeAway. com had been penalized by Google.

RankBrain Google confirmed its implementation of RankBrain in October 2015. According to Search Engine Land, “RankBrain is Google’s name for a machine-learning artificial intelligence (AI) system that’s used to help process its search results.” According to Bloomberg, “RankBrain uses AI to embed vast amounts of written language into mathematical entities – called vectors – that the computer can understand. If RankBrain sees a word or phrase it isn’t familiar with, the machine can make a guess as to what words or phrases might have a similar meaning and filter the result accordingly, making it more effective at handling never-before-seen search queries.” (Bloomberg, “Google Turning Its Lucrative Web Search Over to AI Machines” October 26, 2015) 60

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Myrtle Beach-based Conrad O’Connell, Digital Marketing Director at InterCoastal Net Designs (ICND), noticed changes with HomeAway’s ranking. “Searches in many of my clients’ main areas indicate that HomeAway has dropped out of the search results in lots of popular areas…For many vacation rental owners, marketers and managers, HomeAway dropping out of the Google search results would make a huge difference to their website traffic.” O’Connell did some research to see what had impacted changes to HomeAway’s drop. “After doing some digging, I am pretty confident I have the answer,” said O’Connell. HomeAway.com was not penalized by Google. Instead, the reason for the drop in many search results was something much more simple (and completely self-inflicted). HomeAway told Google to not crawl certain pages.” You can read about the details about O’Connell’s findings on the vrmintel.com, but O’Connell concluded, “Based on my sleuthing,

However, in the process of investigating whether or not HomeAway had been penalized with one of the updates, O’Connell discovered the likelihood that FlipKey had experienced a Google penalty. “If you rely on leads from FlipKey, you may be seeing less of those if your area was impacted by this change,” said O’Connell. “They’ll have to deal with thousands of spammy-looking anchor text links across thousands of domains and websites and even if they do, Google may not return their rankings. A link-based penalty in Google can seriously hurt a domain’s performance over the long term and FlipKey is likely in for a battle.” You can also read more about the FlipKey penalty on vrmintel.com.

VRMs Can Win by Focusing on Local SEO Vacation rental managers have a big advantage with Google’s updates, at least for now, as local companies are able to take advantage of the benefits of Google’s Local SEO. Cyrus Shepard, Director of MOZ and Online Marketer and SEO consultant, explained Local SEO to TravelTripper’s Nancy Huang: “Google actually has a different algorithm for local SEO. And that’s important to understand because you need to optimize a little different for the local SEO algorithm. What is meant by local SEO is any search query, when someone’s typing a question into a Google search box or saying the question aloud to their phone, that’s any query that has local intent. That means they’re searching for something in a specific place, whether it be Atlanta or Stockholm or nearby them.” How can you tell the difference? Shepard explains, “You can usually tell almost 100% what – and where – constitutes Local SEO, is that you’ll get a map back. You’ll get one of the results back with a map and with little pins in it. That’s when you know that you’ve triggered a Local SEO query.” This applies to all of the vacation rental search queries that VRMs are trying to attract. How can vacation rental mangers excel using Google’s Local SEO?

“Those sites like Expedia, Trip Advisor, those are aggregators, said Shepard. “They actually own no properties. So they’re not the ones when you have that local intent, they’re usually not the ones always showing up in that map pack. If you own a local business, you have a street address. You have people coming to your hotel. You have advantages that those aggregators do not with certain types of searches. And you can take advantage of that. You can show up in those map results and you can win searches that those people don’t. So I think there’s a different opportunity for actual business owners as opposed to the aggregators. And if you use that as best practices you can often beat them for many of the queries that they’re trying to go for.”

Here are a few tips on leveraging Local SEO to improve your VRM site performance: l Optimize all the information on Brand.com (i.e. including destination‒specific keyword in your page titles and descriptions, adding your name, address and phone number to each web page, and creating detailed local content and maps, images and videos). l Create and regularly update your Business Page in Google, Yelp, Facebook and Yellowbook. Search Engine Land recommends that if your business has multiple locations, create separate listings for each location on your website to boost the visibility of both your brand and each of your stores. l Solicit and respond to reviews on multiple channels. Be proactive about responding to all types of user reviews. Search Engine Land also warns that you should never post false reviews, as these can cause negative results. l Interact with customers on social media and engage guests via Facebook, Google+, Twitter, Pinterest, Instagram and other popular networks on a regular basis. l Create a valid, relevant link strategy using local sources (i.e. The CVD/DMO, chamber, events you sponsor, restaurants, activities partners, etc.) Don’t try to get links that are not relevant to your business. l Get as much media coverage as you can. Develop relationships with local media and bloggers. Your PR efforts can result in positive articles, videos or other types of coverage that will remain highly visible in search over the long-term and boost your VRM’s reputation.

What’s Coming Up for Google? The new Penguin update is expected to begin soon, which is designed to penalize spammy links and bad links. More important for vacation rental managers, Google announced that it will start adding Mobile Friendliness to its ranking algorithm: “Beginning in May, we’ll start rolling out an update to mobile search results that increases the effect of the ranking signal to help our users find even more pages that are relevant and mobile-friendly.” If you’ve already made your site mobile-friendly, you will not be impacted by this update. If you need support with your mobile-friendly site, we recommend checking out the Mobile-Friendly Test and the Webmaster Mobile Guide, both of which provide guidance on how to improve your mobile site. And remember, the intent of the search query is still a very strong signal — so even if a page with high quality content is not mobile-friendly, it could still rank well if it has great, relevant content. Google’s mobile search results are already factoring in your sites’ mobile friendliness. With this change, all of Google’s search results will be impacted. Now is the time to make sure your website meets Google’s Mobile-Friendly Test. By Amy Hinote

HomeAway was using these links on tons of various internal linking structures throughout their website. As a result, their most popular pages (like to Deep Creek Lake, North Myrtle Beach and tons of others) are getting noindexed and blocked by Googlebot. It appears that HomeAway has since removed their robots.txt rules, but the recovery may be slow as search engine crawlers take a while to reindex results. My expectation is that Google will recover and reindex all of the dropped HomeAway pages within two to three weeks.”

VRM Intel Magazine | Spring 2016

| Marketing

VACATION RENTAL ACCOMMODATIONS BENCHMARKING REPORT

HOTELS HAVE IT. REALTORS HAVE IT.

AND NOW BENCHMARKING REPORTING IS COMING TO THE VACATION RENTAL INDUSTRY. GO TO VRMINTEL.COM/VRAB-REPORT TO FIND OUT MORE.

VRM Intel Magazine | Spring 2016

Joshua Guerra has been actively involved in Internet marketing since 2005 and the vacation rental management industry since 2009. Joshua’s knowledge and passion for Internet marketing has led his business, BIZCOR.com, to become an industry leader predominantly focused on helping vacation rental management companies.

ignificant changes are on the way in the Google Ad Serving marketplace. This week, Google began rolling out its newest alteration to their search engine results pages (SERPs), removing side bar ads while simultaneously displaying four ads at the top of the listings (as opposed to the previous three). Though, seemingly, a relatively innocent change, this newest update has far-reaching implications for PPC strategy and organic SEO alike. Here is what it means for you:

For Google Adwords Users

Google Adwords: Say Goodbye to the Right Column By Josh Guerra

For advertisers using Google Adwords, this has the potential to be a positive change. Historically, the top three ads (top of page) received the overwhelming majority of traffic and quality clicks while the sidebar was a source of cheap, low-quality clicks. The removal of the sidebar doesn’t create much, if any, negative affect for advertisers – from a click-quality perspective – while the addition of the fourth ad spot above organic results will add one more opportunity for advertisers to receive meaningful impressions and quality clicks. However, these changes are not all good.

Though targeted clicks may increase for those lucky enough to display in the top four ads, the overall number of ad spaces will decrease from eleven to a maximum of seven results. This change has two possible effects, both of which will significantly alter the auction dynamics. The first possibility – and perhaps the likeliest – is that bids will increase across the board making it more difficult than ever before for companies to show up in high-value banner locations. However, it is also a possibility that companies don’t change their bids, instead aiming for bottom of page one or page two positioning. In this scenario, bids might not be affected much at all. Either way, by nearly halving the possible amount of ads in the search results, Google has artificially created a tectonic shift that may redefine PPC going forward.

For Organic and Local SEO Though less direct, the implications for organic and local SEO are equally as important to understand. Four top ads mean fewer organic and local listings showing above-the-fold – that is, results immediately viewable before scrolling – which makes reaching that top spot for commercial listings more crucial than ever before.

In fact, in the example shown on SearchEngineLand.com, the above-the-fold results for a standard shopping search displays natural, organic listings only eight percent of the time. Though this won’t be the case all of the time, it does decrease the value of the top ten organic positions even further while vastly increasing the top two positions. In other words, these changes make organic SEO much more competitive which means that the amount of work you have on your hands may have just doubled.

Conclusion So what does all of this mean? Well, if you’re not in a highly competitive search market, perhaps nothing. But, if your company is affected by these changes, balancing your PPC and your organic SEO efforts just became extremely crucial to your company’s success. PPC costs are going up and the dog fight for natural one and two just became life or death. As such, it is time to take a hard look at your campaigns and see what slack can be picked up. Put the work in now, balance your campaigns and make sure all your “I’s” are dotted and “T’s” are crossed – otherwise, you may be in for a difficult couple of months. VRM Intel Magazine | Spring 2016

| From our Partners

SEO

is Everything By Brynn Flaherty, Director of Search and Andy Gaylord, SEM Account Manager

e are surrounded by an increasingly complex and competitive digital landscape, especially when it comes to the vacation rental industry. Search engine results pages are shrinking, users’ search habits are changing, national brands are acquiring vacation rental managers and website visitors demand perfection.

For innovative marketers, these are truly exciting times. As Google becomes more of a “pay to play” space and vacation planning continues to evolve, traditional search engine marketing is no longer enough. Those who believe SEO is all about boosting keyword rankings and optimizing solely for Google will be sadly left in the dust. Modern SEO does not revolve around gaming the system and beating Google’s algorithms. It is about smart digital marketing and focusing on what matters most – channel optimization, search intent and the user experience.

VRM Intel Magazine | Spring 2016

Successful Marketing for the Modern Vacation Rental Landscape

About Bluetent: We are a digital agency and specialize in the vacation rental, resort and travel and industries, providing strategic consulting, brand design, web development, email marketing, social media and search/inbound marketing services. We build the best mobile solutions for the VRM industry, integrating fully with your property management software in a quick and organized fashion. And we’re here to help you create a killer marketing strategy for your vacation rental business.

Optimize for the Web, Not Just for Google

A Quality User Experience is Conversion-Based SEO

While Google is important as ever, and having a technically sound website that can be indexed and crawled by the major search engines is essential, it is not the only channel that matters. Yelp, Pinterest, Facebook and even Instagram, as well as Homeaway, VRBO, TripAdvisor, Airbnb, FlipKey and the like are all search engines with their own unique algorithms and requirements.

In the modern digital era, competition is fierce and users expect more from travel and hospitality websites. While improving relevant traffic is an important aspect of SEO, more traffic does not always create more revenue. SEO (in 2016) is focused on user experience, optimizing traffic for conversions and improving ROI.

In today’s digital world, we must identify where users are likely to find our brand and optimize appropriately. Understanding how to optimize each channel gives VRMs the opportunity to increase brand exposure, grow their digital footprint and show up in key places.

Focus on User Intent and Content That Lasts Forever Search engines have become much better at recognizing quality content. An authentic article or landing page addressing a particular question about a place or service can rank higher than a national brand’s homepage. According to Hubspot, 70% of search traffic comes from long-tail keywords. So rather than stuffing your website with vague keywords like “Best Vacation Rentals in Timbuktu” and trying to outrank big brands for expensive terms, try creating content that shows you are the local vacation authority. Providing the right content for all stages of the guest journey can pay off immensely. Offer users what they need in the moment whether they’re planning, researching or buying. Write about your destination as only a local can. Capture candid photographs and weave together video clips that tell the area’s unique story. This type of smart outreach may, in turn, bring relevant inbound links, social shares and quality traffic which is an important and essential opportunity to set yourself apart from OTAs and create a lasting impression of your brand.

By using data from Google Analytics, heat mapping and session replay tools, we can closely research user behavior. User data provides insight to address cart abandonment, fix broken elements, simplify conversion paths and provide content that meets the travelers’ needs.  Where are people dropping off in the funnel?  Are the call-to-action statements clear?

 Why do certain pages have a high bounce rate?  Does your site load quickly?

 Are you providing users with content they need?

If a user finds your website informative and easy to browse, they will more likely sign-up for your eNewsletter, share properties with family, save activities for later and ultimately book a vacation.

Into the Future The truth is, it’s been several years since SEO tactics solely focused on optimizing for singular keywords and creating content for search engines. Vacation rental managers who create content based on user intent and optimize their digital presence across unique channels will convert more users into guests, thus excelling in 2016. Peter Caputa, VP of Sales for Hubspot, said it so eloquently in a tweet, “SEO is not something you do anymore, it’s what happens when you do everything else right.” In the modern world, digital marketing tactics change daily. It’s important to not only pay attention to these changes, but to change how you implement important marketing strategies like SEO.

We hope this article has helped clarify what good SEO means in 2016, and we wish you great success in continuing to grow your vacation rental businesses in the future. VRM Intel Magazine | Spring 2016

| Technology

How To Grow Your Rental Business With Data And KPIs By Matt Renner | VP Sales/Partner, TRACK Hospitality Software and ResortsandLodges.com

Test Your Knowledge Quick test, see if you can answer these acronyms without Googling them. What is your CAC? LTV? ACV? ROR? ROA? Negative churn? CHS? Do you know these for your B2B business as well as your B2C business? Do you know how they directly impact your top and bottom line revenue? Can you pull up a dashboard and share it with your entire leadership or executive team right now? If you know what these acronyms stand for and why they are important then you are already one step ahead of your competition. If you do not know what they stand for, why they are important,

VRM Intel Magazine | Spring 2016

why you should pay attention or how they directly affect your top and bottom line, well…I would say, “Houston, you have a problem.” Of course, if your name is Houston, then I would just say that you have a problem. But if your name is Houston and you know all of this, then I apologize. More on acronyms later.

Know Your Situation In any business, smart decisions are driven from having a clear vision and mission, experience, discipline or operating system and data. Today, business owners have access to more data than ever before (thanks Captain Obvious) and sometimes this can be paralyz-

ing. It is amazing to me how many business owners and operators do not know critical data points regarding the drivers of the biggest revenue channels in their businesses. They don’t know their internal core Key Performance Indicators (KPIs) to determine the health of their own rental portfolios and things of this nature.

business arena and I think they parallel each other. After all, if you land a homeowner and that home is worth $30,000 a year to your business and if you keep that homeowner from leaving your business for ten years, 90% of your revenue is going to be made after the first year.

When I hear this, I will sometimes challenge them a little bit, asking why they don’t focus on these things and if they feel their business deserves better. Then they’ll start to open up and ask what data they should focus on, which KPIs are most important, what levers should be pulled and how to align compensation with the most important KPIs or objectives.

The same can be said for marketplace and SaaS business. After all, aren’t they all subscription businesses? Isn’t the owner subscribing to your services?

To that I would say, “It’s not about how many, it’s really about which ones you choose and how often you review them.” What’s important is you do actually choose your KPIs, create a repeatable operating system and review them with extreme focus and discipline.

An Idea Maybe you have been running your business for many years and you’ve done well, but are now under attack by the onslaught of startups, guarantees, technology, marketplaces, platforms and changing consumer behavior...or the sheer energy of the millennial and next generations. Or maybe you are the next generation millennial (myself included here) and are trying to compete with those who have been there, done that and figured all this stuff out. Whoever you are and whatever your situation is, I think a smart idea to consider is to model your KPIs off an industry that has significant benchmarking data and proven success metrics in place and publicly available. Just an idea, but what if you started thinking about your business KPIs like a SaaS business? SaaS stands for Software as a Service. Think Salesforce, Box, TRACK. These are SaaS. Cloud-based software delivered via the internet. Why should you consider this?

Try This Experiment Go to Google and type “acceptable churn rate of vacation rental homes” or something to that effect. I did this and I couldn’t find anything in the top ten results that even had a graph or a chart of relevant, up-to-date data on this. There was nothing. Does that mean no one is talking about it? That’s what it signals to me. Now go to Google and type “acceptable churn rate of SaaS.” There are at least three pages of acceptable benchmarking, up-todate studies by numerous SaaS companies and thought leaders who share the acceptable churn rate of SaaS businesses. In fact, the only thing I saw in the SERPs that was remotely close to property management was a Quora question that was asking what the acceptable churn rate was for property management SaaS companies. Yikes! I don’t know what your numbers should be. I don’t know what’s good or bad in your area. I am, in fact, not an expert at retention of homeowners at a property management company. I am, however, somewhat of an expert in the subscription marketplace and SaaS

So why not model yourself after an industry that clearly has the customer acquisition and churn model figured out? Couldn’t you apply these concepts to your business to get clarity around which levers you need to pull and how to prioritize the most important tasks or objectives in your business to focus on…like reducing owner churn? I think the answer is yes. Now let’s talk about how to do this in a practical, methodical way. Remember, these things don’t change overnight, but with thoughtful reflection, detailed planning, dashboarding and transparency, and a willingness to hold and be held for an accountable, testing and selective focus, you can create repeatable systems – with great data – to improve your business and achieve sustained growth.

Select Your KPIs Think of your mission, vision and core values as the destination. Think of KPIs as the GPS to that destination. If you choose the wrong route, data and KPIs to focus on, you will have to recalculate more frequently. Choose the right route and you will arrive at your destination faster, with less wear on your tires and with more gas in your tank. (I feel my metaphor game is strong right now.) As the chief sales hacker for a marketplace (ResortsandLodges. com) and SaaS company (TRACK Hospitality Software) for the better part of eight years, I’ve had the privilege of working with many of you, as well as many resorts, hotels and lodging companies outside of the VR space — 99% of which I would say are independent small businesses. There are some common things I typically see in the best run independent companies and vice versa — commonalities I see in companies that are struggling to survive. One of the main commonalities of top performing companies is they identify the key KPIs that are core to the success of their business, they align their objectives around them and they display them and review them with ferocious discipline and tenacity. Here are some KPIs around which you might want to build your internal operating system. You may want to change the actual nomenclature of the acronym if it doesn’t make sense for you, but I think the concepts are the most important pieces to take from this. I’m focusing on B2B, which in your case is your business relationship with your inventory suppliers, aka your homeowners.

ROR (Renewal of Revenue) Renewal of Revenue (ROR) tracks the retention of your revenue. It is arguably your most important metric if you have traction in Monthly Recurring Revenue (MRR). If you only have five homes, retention may not be as important a factor as new customer acquisition. Think of it this way, if you retain 80% of your revenue per year, you are churning $2 million on every $10 million. It should

VRM Intel Magazine | Spring 2016

be easier to close a contract renewal than to close a contract for a new customer if you are doing your job right in customer success. Put a keen eye on ROR and put repeatable processes in place to be able to predict the health of your revenue base. Then track your ROR like a hawk. This really goes hand-in-hand with bookings, of course, but you can apply it in multiple ways when thinking of your owner renewals and repeat guests. Tips for ROR Reporting and Dashboarding  Segment the revenue channels of your business.  Determine your baseline goals for ROR.  Dashboard and review daily, weekly, monthly, quarterly and annually.  Align compensation with your goals and objectives.  Perform frequent performance reviews with your Owners.  Develop a process, train your people and stick with it for best performance. If you can, force compliance.

ROA (Renewal of Accounts) In the SaaS business, we look at, not only ROR, but also Renewal of Accounts (ROA). This metric means different things for different businesses. For example, we work with a company that purposely shed several hundred homes and condos that were not very profitable, drove down their Average Daily Rate (ADR) and were problem owners. But once they got to the number they wanted, they focused on driving higher revenue and expansion on this smaller number of homes, retaining these accounts (owners/homes/condos) and acquiring new owners with similar properties to the highly successful ones they wanted to retain. Too many whales, not enough fish...An ocean needs a healthy mix of both. So do most businesses. You can add new properties and big earners to your inventory — a great idea. But if you add one home that brings in $40,000 per year and lose ten homes that collectively bring in $40,000 a year, you have decreased your inventory quite significantly even though you maintained the $40k. You might think “no big deal, we didn’t lose any money.” But If you fail to retain the one property for $40,000 the next year, you no longer have the ten to make up that revenue. Having a good mix of whales and fish is generally a good idea. Again, it depends on your objectives, but if your goal is to not churn your owners, then you need to make ROA a core KPI. Tips for ROA Reporting and Dashboarding  Segment homes/owners and report on them together and separately.  Determine your baseline goal for ROA.  Dashboard and review weekly, monthly, quarterly and annually.  Consider making this a selling point with new owners if the results are outstanding.  Align compensation to your goals and objectives (not just for your executives).

ACV, CAC and LTV What is your Average Contract Value (ACV) today? If you’ve been in business more than a year or two and have over $1 million in Annual Recurring Revenue (ARR), you likely have found your ACV sweet spot. Get focused and go after it…or change your model if it’s not working and go upstream or downstream. If you know your ACV, and you know with predictability the following KPIs, your Customer Acquisition Cost (CAC), ROR and ROA, then you should be able to predict with some level of confidence what the Lifetime Value (LTV) of your customer is and how long it will take to payback a new customer acquisition. This will guide you in making compensation decisions with your sales and customer success teams who will be aligned with these goals and numbers. It all works together. If you can pay back your customer acquisition cost in SaaS in twelve months, you generally have a scalable business that you can grow organically. If you pay it back in six months, you are going to grow faster, and if you can pay it back in three to four months, then you should be in hyper-growth mode. What are these metrics for your business?

VRM Intel Magazine | Spring 2016

Again, set goals, benchmark, report, review and align compensation across your company to these goals and objectives. If you want to know more about these things, I recommend following @saastr on Twitter. While you’re at it go ahead and give me a follow too @socialmattr.

CHS (CUSTOMER HEALTH SCORE) Do you know if your customers are healthy? How do you know? How do you proactively find out? Is it a system that can be trained and repeated by your people? One idea you should consider is creating a Customer Health Score (CHS). An owner with a low CHS is less likely to renew. Wouldn’t you want to know if four months into a one-year contract, an owner is experiencing issues with one of your customer success agents? Or if they don’t think their expectations are being met? Of course you want to know this, but it can’t be done ad-hoc. You need to create a system around this and drive compliance. It’s to everyone’s benefit, both internally and externally. Tips for Creating a CHS  Identify what a healthy customer looks like. What are the factors?  Review all the reasons customers haven’t renewed in the past.  Rank the reasons in importance.  You can apply weight to these factors if some are more import ant than others or keep them all equal in weight.  Perform regular account reviews and record the CHS in a software program like your ERP/PMS or CRM.  Find out what CHS score leads to the highest retention and lowest churn rates.  Set your goals for where you want the customers to be health-wise.  Identify customers with a low health score and perform tasks to increase these.  Dashboard, review and report on this daily, weekly, monthly, quarterly and annually.

Negative Churn

If you don’t have negative churn, your business is contracting. Businesses are like beautiful flowers (harp playing in the background). If they’re not growing, they’re dying. We don’t want that, so get your numbers figured out, establish a baseline of where you are today and where you want to go tomorrow. Tips for Creating Negative Churn  Set your growth goals.  Identify your key KPIs…I like the ones I’ve just described.  Each KPI should have very specific tasks that need to be exe cuted consistently and at a high level to come together and achieve the ultimate goal of negative churn, or in other words, growth. Use tasks like account reviews, product reviews, in-person meetings, performance reviews, etc.  Dashboard, review and report on this daily, weekly, monthly, quarterly and annually. The more you review it, the more it be comes a part of your daily routine. If it isn’t visible, then your people won’t be thinking about it and executing on it.

Conclusion These are some ideas for KPIs based on what we track and report on daily, weekly, monthly, quarterly and annually in our own business. They are the same KPIs used by some of the largest, most successful SaaS companies in the world. Since implementing these key KPIs, internally, to achieve our goals several years ago (along with aligning our compensation plans, job descriptions and seats on the bus), we have seen over a 20% net increase in our own retention rates and have been experiencing record growth. Perhaps these concepts will work for you and help you keep more of your owners, grow your relationships and confidently invest in new objectives. Maybe they’ll help you launch your rental business like a rocket into hyper growth! Houston. Rocket. See what I did there? See how I tied that back together from the beginning? See how I pointed out the obvious again? Aren’t KPIs a little obvious too? Well, in that case, I think we all need to be captains. Ahoy.

This might sound bad, but it’s not. It’s actually good. If you have negative churn that means you’re growing more than you’re shrinking. (Captain Obvious strikes again.) The way you achieve negative churn is quite simple. Here is a brief math equation: $1,000,000 Gross Revenue Business $100,000 Revenue Churned

$300,000 New Revenue Acquired

In this case your Negative Churn is 20%.

In layman’s terms you grew $200,000, because even though you lost $100,000 you added $300,000 in new business. (For more information on negative churn and why it is a powerful KPI, I would recommend following @ttunguz on twitter.) What you want to do is track negative churn on gross revenue, cash and accounts. You may want to apply this KPI to your B2B and your B2C business.

VRM Intel Magazine | Spring 2016

| Technology

The Power of Lead Management and CRM

By Carlos Corzo CEO | Streamline Vacation Rental Software

s a property manager, chances are you’ve utilized a CRM system and lead management/marketing systems in the past. With mountains of past contacts, leads, emails and phone numbers amassed in your database and across the web, it’s only logical to use those that give you some type of advantage. However, one of the most difficult tasks that every property manager has to deal with is not just utilizing this information, but utilizing it correctly. Even if you are collecting emails, sending out correspondence and keeping tabs on your customers, it’s very easy to squander the potentially massive improvements that can be gained through properly managed leads, creative marketing and a powerful CRM. Fortunately, with a few tips on how to harness as much information from your leads as possible, as well as an intimate understanding of what a lead is, you can take your lead management to a new level – and your business along with it.

VRM Intel Magazine | Spring 2016

Types of Leads First, let’s start by examining the types of leads you will encounter and how each lead should be treated from a priority standpoint. For all intents and purposes, there are three major types of leads. LEADS GENERATED BY YOUR WEBSITE

Leads generated by your website are the most direct leads you’ll receive and, thus, are potentially the most useful to you and your business. This is a person who found your website on a web search, went through your website and had an interest in your property; in other words, they are ready to talk and discuss the possible options for their vacation. In most cases, leads generated from a first-party (i.e. your) website are approximately four to five times more likely to close when compared to external lead generation. That means, if you are treating these leads the same way as your other leads, then it’s time to make a change; this should be your number one priority. LEADS GENERATED BY A THIRD-PARTY WEBSITE

Though integral to any property manager’s business model, leads generated by a third-party website are – in most cases – much less of a sure thing. An individual who has come across your property via a third-party site (such as Homeaway or VRBO) most often has requested information for other properties on that same website. And, like an online gold rush, the race is now on between you and other salesman to convert that potential lead. In most cases, these are the worst converting leads that companies receive even though many companies put these above the inquires generated by their websites. With that in mind, make sure to look at your analytics before prioritizing these leads over the others in this list. Metrics will be your best friend in these cases. USING EXISTING RESERVATIONS AS LEADS

Using existing reservations as leads are oftentimes going to be your highest converting leads. However, when you truly take a look at it, it’s not that surprising. If you pull out all the stops with your customers, make their stay memorable and mine your first-hand experiences with them, it’s easy to have a veritable gold mine on your hands. With these customers, you know when they like to travel, you know how many days prior to their stay that they have booked their va-

cation, you know how long they stayed during previous visits and you know the prices they paid during previous stays. And, if you are personable and help them throughout their vacation experience, you may even know more personal characteristics on these existing guests (such as their hobbies or what activities they enjoy). With all this information at your fingertips, existing lead reservations are truly your golden goose – and should be treated as such.

Tips for Lead Conversion INFORMATION GATHERING

At the end of the day, having a lead and knowing where that lead came from is great, but making that lead convert is always going to be the main goal. Of course, maximizing your conversions isn’t always as easy as replying to an email or property inquiry (though we will go over that more in-depth a bit later). First, you need to lay the groundwork with analytics and trend spotting so you can truly begin to maximize your conversions. Fortunately, the leads via your website and other avenues have all the information you need to do precisely that. USER INTERACTION Though many webmasters do not realize it, even users who haven’t contacted you can be considered leads, and watching how they interact on your site can be instrumental in making those leads convert. With that in mind, it’s important to utilize your analytics software and site statistics to answer some very important questions: What are people searching when they are booking properties? What webpages are they landing on? How far are they searching in the future? And after what pages or actions are users leaving your website? All of these questions can give you valuable insight into why people are using your website and even why they aren’t booking. For instance, if you find that users are converting more on last minute searches – when prices are down – or if you find that users are leaving once they see the costs, it might be a good time to look into possibly yielding your rates. TREND SPOTTING Another question that you must ask when looking at unconverted leads is what trends there are among your already converted ones. Are you having an unusually slow month? Why not create a special to send to guests that have stayed with you during that month in the previous years? Do you have active specials that seem to convert better than others? Even just noting the average length of stay that you book and how long it takes for you to convert a lead to a booking can be integral information that you can utilize to increase booking rates. Just remember to take action as soon as possible with whatever information you glean from these trends and user interaction. The longer you wait to make the changes you need, the more likely your leads will become another company’s bookings. Time is of the essence and it is your company’s profits that hang in the balance. RESPONDING TO LEADS

Once you have the groundwork in place and your inquiries begin flooding in, your work is still not done. In fact, regardless if your lead is from your site, a third-party site or even a previous customer, one of the most important factors in improving your conversion

VRM Intel Magazine | Spring 2016

rate is response time as well as how you respond. This brings up the famous debate of auto-responder versus no auto-responder. Do you want to be fast or do you want to be personable? Both have their pros and cons, however, I believe in taking a hybrid approach. In other words, when your team is working and online, don’t use auto responders – this is the perfect time to ingratiate yourselves with incoming customers, and let’s face it, the in-person strategy is going to convert at a higher rate. However, there are going to be plenty of times when your team is swamped or simply not online or in the office (after hours, for example); it is these times you will need an auto-responder, as you never want a lead to wait too long. The second part of this is doing what you can to make the auto-responder as personable as possible. For instance, program it with the standard response (“One of our agents will be with you shortly,” etc.), but then follow this with another auto-response that has some personality and an automated custom quote. Though you won’t be able to infuse all of the personality of a dedicated response team (and you are certainly losing that human interaction), this, at the very least, makes first contact and moves them further along the conversion chain. From there, you can answer any questions they may have while feeling confident they’ve been helped to the point where there is less of a chance for them to abandon ship.

Customer Service for Higher Conversion Rates One of the best ways to improve your lead conversion rates is to simply offer the best customer service possible. Keep the people who are already staying with you happy and there’s always a good chance that they’ll use your services again. Fortunately, there are some simple tips to make this goal a reality and all of them involve active contact throughout your guest’s stay: TIPS FOR TURNING CURRENT GUESTS INTO HAPPY GUESTS (AND FUTURE CONVERTERS)

 Always email guests a few days prior to arrival with four to five small things that they should remember to bring on their trip. Don’t use this as a sales email. You can include “review us” messages and links to items you want to sell in the footer of your email.

ized company like True Touch Solutions (www.truetouchsolutions.com) to take over these tasks. This boutique vacation rental services company can help you with focused retention, sales and even reputation management which can help you attract even more leads. Reviews are key to final booking decisions these days. Don’t let someone impact your reputation, be proactive with post visit follow-ups. Of course, however you fill these needs, simply remember that when you go above and beyond the norm you make yourself stand out over your competition. Don’t let customer service hold you back. Improve what you offer and watch as your conversion rates begin to skyrocket.

How to Generate More Leads At the end of the day, not all property management companies are made equal, and not everyone has a full stable of emails, phone numbers and past customers to reach out to (and even if you do, you always want more). But worry not. There are plenty of ways to improve your flow of leads, and they all start with three things: constant contact, a creative marketing strategy and true blue customer service. Here are just a few tips that you can use to turn your property and website into a lead building machine:  We all have our newsletters (and if you don’t, you definitely should), but make sure you make the commitment to send the newsletter regularly. Nobody likes a company that randomly comes out of nowhere when it is busy season. This is a relationship.  Create text campaigns to reach out to past consumers; remember, these will often provide you your highest conversion rates. Who doesn’t read their texts?  Fun competitions or games over social media can be a fantastic way to drum up engagement on your site and maybe even snag a few reservations along the way.  Did you know Instagram is one of the best converting social media platforms available? It’s cheap too.  Implement an SEO campaign to improve your site rankings and increase brand visibility.

 Automate a text message to let them know when the room is clean. For example, “Mr. Smith, your room is ready for check-in.”  Offer a courtesy call on the first day of their stay so you can give them all the care they desire.  Set up courtesy calls or emails during their stay so you can catch any potential problems before they’ve gone home and have let a festering issue ruin their trip.  On the afternoon of their last day with you (or the next morning) send one more text or email and ask them if there were any problems…can you imagine going on a vacation while knowing that you have someone there ready to help? Unfortunately, not all of these calls can be automated – and they shouldn’t be – meaning providing this level of service will require a lot of overhead. To offset that, you may want to hire a special-

VRM Intel Magazine | Spring 2016

Combine all of this with flawless customer service, a quality relationship with your owners and your guests and an intimate knowledge of where your leads come from and how they convert. You may find yourself on the fast track to the top of this competitive industry.

THE OPMA DIFFERENCE Constant focus on the future and the shaping of the lodging industry Controlling our own destiny through leadership initiatives and not simply relying on advocacy and secondary support roles Targeted growth and strategy: Aggregating the most condo hotel rental inventory in the most popular vacation destinations. REPRESENTING

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VRM Intel Magazine | Spring 2016

| Technology

Departing Employees? Policies and Procedures for Processing Them Gracefully and Securely By Tom K TomK Consulting

departing employee can be a nightmare, but if you have predefined policies and procedures in place, it can be a simple inconvenience. While the depth of those procedures and policies can change depending on the employee’s position on the organization chart and on whether the employee is leaving with blessings or in handcuffs, there are specific key policies and procedures you should have in place to ease the challenges of a departing employee.

Predefined Policies Your company will greatly benefit from predefined polices that simplify the Departing Employee (DE) process. These policies should: l Define your rights to access the DE’s emails and files l Prohibit the DE from deleting any emails or files l Prohibit the installation of remote access applications on company resources l Define the structure and use of a digital company document filing system l Limit employee data access to files and resources necessary to their job function l Limit access to core administrator (admin) account credentials l Establish a rigorous data backup strategy 74

VRM Intel Magazine | Spring 2016

First, Create an Employee IT Use and Abuse Policy Your IT resources are valuable tools used to operate and propel your business. If you want these tools to be respected, you need to ensure your employees understand “Acceptable Use” and sign off on this understanding. Unacceptable use can lead to wasted resources, reduced productivity and, if no Use and Abuse Policy is in place, lawsuits directed towards you and your business.

3 Reasons You Need an Employee IT Use and Abuse Policy B To educate your staff as to what constitutes “Acceptable Use” of company IT resources, as well as what is considered unacceptable. You can have no compliance expectations if you don’t educate.

C To make the best, most efficient use of your IT resources (once you have established companywide understanding). If your staff complies with the policy you’ll be able to stretch your resources (no storage wasted on iTunes and personal photos), reduce your expenses (no need to increase your internet bandwidth if they stop downloading movies and stop streaming radio) and increase productivity (eliminate non-company emails, Facebook and Twitter). D To provide the basis to be able to discipline staff who refuse to comply, and to protect your business from lawsuits arising from illegal or immoral activity originating from within your business IT environment.

Elements to Include in Your IT Use and Abuse Policy The policy should begin with an introduction describing the purpose of the policy and the employee’s responsibility to comply with the policy. The policy body should specifically state what is “Acceptable Use” of your company’s IT resources, as well as what is unacceptable, in easily understandable and unambiguous language. It should also discuss the user’s expectation of privacy (there is none) and explicitly state your rights as the owner of the resources. The policy should close with a clear message that non-compliance will result in disciplinary action. Topics that should be discussed in terms of both acceptable and unacceptable use include: l Company email l Personal email l Social media sites l Instant messaging l Internet browsing l Internet downloads l Internet streaming (audio and video) l Using a secure password l Divulging network credentials l Installing unauthorized applications on computers l Installing remote access applications on computers l Storing personal data (pictures, music, etc.) on PCs or servers l Downloading software l Connecting any personal device (laptop, PC, tablet, phone) to the private business network l Connecting any device (laptop, PC, tablet, phone) to the private wireless network l Unauthorized transfer or copying company proprietary or confidential information l Connecting any personal storage device (USB drive, thumb drive) to a company computer l Copyright infringement l Manner and content of all communications originating on company devices l Running, authorizing or assisting with security scans on the infrastructure l Any form of harassment or illegal activity The policy should also include the very clear statement that all IT resources are the property of the company, and all things stored, processed, transferred, received or transmitted by these resources are the property of the company. The company reserves the rights to access, inspect and monitor all information stored or processed by their resources. As such, an employee should have no expectation to privacy regarding this information. Additionally, the policy should clearly state that all company data and information is the exclusive property of the company and is considered very confidential. Copying it, removing it from the premises or divulging it in any way to non-company persons is strictly prohibited. This should be reinforced through the use of non-disclosure agreements (NDAs), signed by every employee.

Finally, the policy should highlight that all IDs, passwords, electronic keys and codes are business confidential and must be kept private. Divulging any of these to unauthorized persons is strictly prohibited and will result in immediate termination.

Have employees sign a statement that they have read and understand the company’s published IT Use and Abuse Policy every year, and file this statement in each employee’s personnel folder. Annual signing precludes the “I didn’t know you added that” defense. We advise our clients to include the IT Use and Abuse Policy as part of their employee handbook, and have every employee sign off on reading the handbook as part of the annual review process.

We’ll often add a “Frequently Asked Questions (FAQ)” section to the end of the policy to clarify the topics and to help simplify the topics. One really nice thing about the FAQ is that it is a simple matter to add new questions and answers as your staff presents them.

Implement a Properly Designed Company Filing Strategy If you have a properly designed company/department/user document filing strategy in place, very few documents will end up in a user’s private storage space as most documents should belong to a department and will be filed within the department’s storage space. This will greatly reduce the number of files in the DE’s private space that would need to be reviewed and refiled. See “Simplify Data Organization and User Management” on tomkconsulting. com for more details. This article also discusses simple methods for setting user permissions within the filing structure so users only have access to documents and resources they need to perform their job. If they can’t access it, they can’t damage or delete it.

Limit Access to Administrator (Admin) Passwords No staff should have knowledge of core administrator account passwords unless absolutely necessary. If you ever have to change the administrator (admin) password, finding and updating all the associated instances can be a challenge. Anyone requiring administrative level access should have their user account rights elevated by making the user a member of the appropriate administrative group.

Full Backups That employee leaving in handcuffs may have already trashed a few select files or everything he could hit with a delete key. A solid backup system will mitigate this potential destruction. See “Backup the Company Jewels” on tomkconsulting.com for an in-depth discussion of backup systems and strategies.

Predefined Procedures These are some of the procedures you should have in place to simplify the DE process. These procedures should be documented, and should be summarized in a “Departing Employee IT Checklist.” You should have a similar set of procedures and checklist for HR. VRM Intel Magazine | Spring 2016

USER ACCOUNTS Change the DE’s network password immediately, but keep the account active. This will retain all the DE’s email and documents for review, but locks the DE out of all company resources, including her email and documents. Log her out of all network resources to deactivate her old password. VPN ACCOUNTS VPN systems often use account IDs and passwords independent from the network ID/password systems. Ensure the DE’s VPN accounts are deleted. ADDITIONAL ACCOUNTS Depending on the DE’s position (and policies) in your company, he/she may have access to administrative accounts and passwords. If so, you need to determine which accounts he/she has access to and change those passwords. As noted above, you will need to track down all instances where these credentials are used for underlying support and management functions and change them for every instance.

tribution lists, as this could greatly reduce the amount of new mail that needs to be reviewed. You should also set up the DE’s Outlook to send an out-of-office message to all senders advising them that the employee has left the company and all correspondence is being forwarded to “Mary.” If the DE is leaving under good terms, you may consider including her new contact information in this message. FILES Assuming you have an employee IT Use and Abuse Policy in place, assign someone to review all the documents in the DE’s personal storage space on your servers and on her PC. Transfer those important to your business or belonging to departments to the appropriate directories. As noted above, if you have a properly designed company/department/user document filing system in place, this will be a simple task. PHONE AND VOICE MAIL If the DE has multiple replacements to cover varying responsibilities, set a voicemail message on the DE’s extension advising callers that the DE has left the company along with instructions to dial another extension. If the DE has only one replacement, it is simplest to just forward incoming calls to the replacement. Don’t forget to remove the extension from all calling queues. AFTER A MONTH We would expect that the DE’s important emails and files have been reviewed and transferred within a month. Additionally, the DE’s incoming email should have fallen to a trickle. At this point, I recommend you delete the DE’s network (AD) account. This will also remove the email account, and is undoubtedly the cleanest way to proceed. Anyone emailing to this account will get a non-delivery message stating the user no longer exists. If the senders were using this account to contact your company, they can easily find an appropriate alternative contact address via your website if they haven’t already been introduced to their new contact.

USER PCS & LAPTOPS AND SERVERS Check for any installed remote access applications and remove any remote access applications found. If the DE had access to servers, be sure to check these as well. CUSTOMER AND VENDOR CONTACTS Have the DE’s replacement call and reach out to the DE’s contacts ASAP to introduce himself/herself and provide new contact information. This is a very valuable touch point, and this communication will redirect most of the DE’s incoming business email and phone traffic to the correct staff. EMAIL Assuming you have an employee IT Use and Abuse Policy in place, assign someone to review the DE’s existing email and forward mail important to your business to the appropriate staff. The designated staff can access the email by logging into the DE’s PC (using the new password) or from any PC/browser. You can either have all new email forwarded to another staff inbox or have the staff reviewing the old email be responsible for new email. In either case, new mail should be checked and responded to daily. Don’t forget to remove the DE from all internal email dis-

VRM Intel Magazine | Spring 2016

Tom K, President of TomK Consulting and Founding Member of the VRM Consultants, has been a senior level Business and IT Consultant providing exceptional solutions to business leaders for more than 30 years. His last thirteen years have been focused on the Vacation Rental and Real Estate industries. He has built strong relationships with all the major systems and services providers in our industry, regularly working with their principals and most senior personnel.

President, Hatteras Realty.

C CO ONNSSUU LL TT II N N GG GGRROOU UP P TomK

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VRM Intel Magazine | Spring 2016

| Marketing

By Kelly Mutual, VRM Intel

MARKETING AND MULTI-GENERATIONAL TRAVEL:

Tapping Into the Buying Power of 83 Million U.S. Millennials

VRM Intel Magazine | Spring 2016

illennials are taking vacations now more than ever. According to MMGY’s “Portrait of American Travelers,” millennials spent 20 percent more on travel over the last year, surpassing the 12 percent average year-over-year gain of all U.S. households. The report also showed 25 percent of millennial travelers used sharing economy accommodations on at least one vacation during the past 12 months, a significantly higher proportion than Gen Xers, Boomers or Matures. And 80 percent indicated that they would book again. Let’s take a look at who these millennials are and how vacation rental managers can better reach America’s biggest travel spenders. WHO ARE MILLENNIALS?

Millennials have been told from childhood to follow their dreams. As a product of the acceptance of cultural integration, millennials are the most ethnically and socially diverse generation, thus making them “special.” With millennials there are no barriers. They are confident and optimistic about life and feel that they can do anything. The extreme increase in technology throughout their adolescent years assisted them in creating their view of the world. Instead of only dreaming that they could watch the Northern Lights or scream into the Grand Canyon like earlier generations, technology provided them a way to do so without even leaving their homes. This made the world more attainable. If they could discover the Seven Wonders of the World from their bedrooms, who’s to say they couldn’t do it in person? Because of this, millennials are traveling. A lot. With technology, they are able to always remain connected to the internet and social media, so they spend more time away from conventional offices and go more places. They want to live like locals and escape their day-to-day, but they also want to be able to work and maintain that social network connection. Millennials seek out instant gratification. As a result, they tend to be more impatient than older generations because advances in technology made it possible to avoid having to do things like waiting in line at the

bank. They want to book vacations when they want, how they want and on the channel they prefer, and they want to do it in a quick manner without having to dig for the best deals.

Do’s and Dont’s for Marketing to Millennials Do make your website concise and simple to navigate. Vacation rentals managers can start by identifying what elements should and should not be displayed on their company websites. You have about three seconds to make your first impression with potential bookers, so make it count without overdoing it. Everyone knows that millennials know what they’re doing when it comes to anything internet related, but millennials are also deemed the most Attention Deficit Disordered (ADD) generation as well, causing them to be impatient. In order to not lose millennials in the booking process, it is probably a good idea to make your website concise and simple to navigate. You don’t want millennials to get an Instagram alert and leave your site because you weren’t able to capture their attention in enough time. Millennials may have ADD, but if you can grab their attention from the get-go then they’ll become hyper-focused (the upside of being ADD) and read through everything that you have. Don’t include sales videos. Speaking as a millennial, please do us all a favor and stop placing so many lengthy videos on your websites. Most people don’t watch them, and if they do, they are rarely finished. Also, they take up a lot of space on your pages which could be used for a more productive form of information. Contrary to popular belief, millennials may spend most days watching videos online, but when it comes to videos of virtual tours, sales pitches or endless information about a property building, they don’t want to watch them. Give us more fast-loading pictures, static floor plans and more information about the units or homes. Heck! Give us a comparison tool that lets us plug in different rentals that your company offers and compares them side-by-side for us! Those comparison charts are extremely beneficial to both your company and the person who books your rental. Do make your website user-friendly across multiple devices. So, now that we have the video thing out of the way, let’s talk about usability. In order to reach the maximum amount of potential vacationers possible, you need to make sure that your company’s website is compatible on all devices: desktops, laptops, tablets and cell phones. 76.7 percent of millennials will use their mobile phones to plan their travel, while only 14.2 percent will download a mobile travel app. (Statista.com, “Travel planning methods of Millennials in the United States as of July 2015). We, as millennials, like apps, but if they are not easily accessible then more than likely we won’t download them. What if you made a “Download our app!” pop-up on your mobile site? Don’t ignore mobile search. According to a 2015 Virtuoso study, currently 90 percent of millennials book travel online, and 87 percent use online travel agencies (OTAs) for research and rate comparisons. Google is beginning to penalize your site in its algorithm if it’s not mobile-friendly. The thought may arise for a millennial that he wants to book a vacation rental, but he only finds OTAs and not your company, and because it’s in front of him at that moment, he will book the rental through the OTA. Not being able to find a vacation rental management company in mobile search only harms you and may be keeping your pockets emptier than you realize (more about this on page 56 “The Google Factor”). VRM Intel Magazine | Spring 2016

Multi-Generational Travel Baby boomers and millennials both like to travel for leisure and do so regularly. They also travel together. More and more families are partaking in multi-generational travel and there has been a tremendous increase in the last few years (USAToday.com). Why? What is it about vacations that attracts two generations with an almost 50-year age gap? Although this seems like an unlikely combination, the two generations have a lot more in common than you’d think. Baby boomers are retiring which leaves them plenty of time to spend their golden years relaxing and exploring new sites. Millennials have turned from the mentality of Generation X by shifting gears to the mindsets of countries like Spain or France where enjoying life is more important than working yourself to death in an office.

Millennials make up the biggest group of multi-generational travelers. 19 percent have taken one or more vacations during the past 12 months with parents/in-laws and children, according to the “Portrait of American Travelers.” Multi-generational groups book large properties and have a higher average length of stay than other types of vacationing groups and offer significant potential for vacation management companies to profit for years to come. In many cases, baby boomers will leave the booking decisions up to their millennial relatives to navigate the booking experience. According to The Street, “While the grandparents are funding the trips, it’s the millennial generation making 77% of the destination and 65% of activities decisions because they do all the research and use social media as a tool in that process. Social media exerts more influence than ever because the millennials do 70% of their research that way.” (The Street, “Multigenerational Travel the Fastest-Growing Segment in $7.5 Trillion Industry,” June 6, 2015) In an Entrepreneur article, “8 Shopping Habits of Millennials All Retailers Need to Know About,” author Peter Gasca identifies millennial buyer traits, including, “Smartphones are a primary means to connect to the Internet, social media is number one for shopping information, millennials are sensitive to price, and millennials embrace loyalty programs.” Gasca added, “While millennials are much less likely to be loyal to a brand, 69 percent belong to a retail loyalty program, and 70 percent of those are happy with their programs. While the preferences of millennials are changing, requiring entrepreneurs to examine brand loyalty in an entirely new way, retailers can still drive return sales by creating a transparent and value-added loyalty program.” Millennials appreciate comfort and value-added options. For example, in a Boston Consulting Group (BCG) study, millennial travelers were 60 percent more likely to report buying flight upgrades like extra legroom and in-flight entertainment during business trips. In fact, BCG found that millennials spend 13 percent more on airline tickets than non-millennial business travelers. When your multi-generational group arrives for their stay, make sure that your company makes each generation feel as satisfied as possible with their experience. This will create a sense of trust between you and your renters which will, in turn, cause them to vacation with your company again and again for generations to come. Millennials and baby boomers are traveling together, and they want to book rentals that they’ll love while enjoying their lives to the fullest. They also want the booking process to be easy. Hone in on these two generations of travelers and give them what they want. Your bottom line will thank you. As a Millennial herself, Kelly Mutual is the copy editor of VRM Intel. Kelly has been in the hospitality industry for over 14 years, worked in the vacation rental industry in Gulf Shores, AL and currently resides in Knoxville, Tennessee.

VRM Intel Magazine | Spring 2016

Decades of experience Hundreds of success stories Industry-speciﬁc consulting services for your toughest decisions. Software Selection  Buy/Sell Transactions  Marketing Technology  Management Consulting 

VrmConsultants.com VRM Intel Magazine | Spring 2016

By Amy Hinote

Business-to-Owner

| Owner Acquisition

VRM Intel Magazine | Spring 2016

Acquire New Inventory by Combining B2B and B2C Selling Techniques

s new companies and business models launch in the vacation rental industry, the competition for inventory is heating up, and marketing for these properties is getting aggressive. As Ben Edwards described in his article on page 44, “Currently, reduced pricing and revenue guarantees flood an owner’s mailbox.”

Many of the emerging multi-destination vacation rental management companies were founded by people with a technology background. These business leaders are bringing their experience to the vacation rental industry and applying Business to-Business (B2B) lead generation and sales techniques to the vacation rental industry. With teams of incentivized lead generation specialists tasked with identifying properties and property owners and commissioned sales teams with sophisticated sales pitches, several new companies have been able to sign hundreds of homes in a very short time using a B2B approach. On the flipside, when interviewing established property managers in our Under the Hood series, we have found that traditional companies typically approach owner acquisition in more of a Business to Consumer (B2C) way, focusing on the more emotional, trusting side of the relationship.

The Agency Post article “10 Differences between B2B and B2C Marketing” identifies how messaging to businesses and consumers differ.

Here are a couple of excerpts:

D Choose your Marketing Channels

 The B2B purchase process tends to be rationally and logically driven, while consumer choices are typically emotionally triggered.

 B2B clientele want to be educated and provided with expertise. B2C customers just want to enjoy themselves, be happy with their purchase and have it adequately fulfill their needs. While neither approach is wholly right or wrong, the optimal inventory acquisition strategy will likely incorporate both B2B and B2C techniques.

You have several options in deciding how you are going to reach prospective owners. Direct mail, email, PPC, display advertising, social media, in-person marketing, events and more. You may also want to add channels more common to the B2B arena, such as whitepapers, LinkedIn or SlideShare with content showing your thought leadership, the effectiveness of your rental program, video testimonials, etc. These channels serve to establish credibility in the marketplace. Make sure to add an easy workflow for capturing information from inbound leads resulting from your marketing efforts. Where possible, connect your inbound process to your CRM. E Messaging

B2B + B2C = B2O The relationship with the homeowner has both business and personal elements. It resembles a B2B relationship in that the property owner is looking for fiduciary responsibility, marketing expertise, property management experience and revenue optimization.

Working with homeowners is challenging because they often view the relationship with the property management company (PMC) in both a business and personal way:

However, the relationship with the homeowner can also be very personal. Their home means more to them than a P&L, and they are looking for a trusting emotional connection as well.

Business: The homeowner views himself as the CEO and wants the PMC as the manager to be fully accountable for increasing revenue, maintaining the quality and cleanliness of the property, achieving maximum rental rates, providing top notch accounting/ reporting services, etc.

UC G A S CESSF TIN

Craft your B2O messaging to highlight the advantages of your program and appeal to the homeowner in both a professional and personal way. (Tip: both B2B and B2C marketers utilize testimonials.)

ANALYSIS

2O STRATEGY

TARGETING

B UL

FO TEPS R CRE S A 7

For owners, choosing a property manager is both expertise-driven and emotionally-driven. Therefore the strategy should connect on both levels. A healthy Owner Acquisition Strategy combines the Business to Business (B2B) and Business to Consumer (B2C) sales and marketing techniques to create a Business to Owner (B2O) plan.

CHANNEL IDENTIFICATION MESSAGING DESIGN IMPLEMENTATION EVALUATION

B Analysis The first step combines an analysis of the market/destination, owner acquisition strategies and programs utilized by the competition within the destination, the unique selling proposition of your homeowner program, and an in-depth look at your existing inventory (including any losses of inventory in the relevant past). In the analysis stage you will identify any impacting trends within the market, compare your competitors’ offering with your own, articulate the reasons why your company is uniquely positioned to be the best choice, and analyze which properties bring you the most revenue with the least headache. C Targeting

Based on findings during your analysis, you can collaborate with your rental team to identify a set of criteria used to target new inventory (e.g. property type, amenities, location, specific buildings and communities). Using techniques from B2B lead generation strategies, identify “leads” in your marketplace. Utilizing a CRM for your B2O strategy will help your team to automate and track communications, identify a sales cycle and measure sales performance.

Personal: The homeowner also wants the PMC to act as a babysitter, making sure nothing is broken, monitoring who is coming in and out of the home, staying in close communication, understanding the home’s uniqueness and personally and lovingly caring for the vacation home.

In a successful B2O Strategy, a portion of your B2O messaging will be directed to the VRBO market. Whether it is a chart showing how your services save time and money or an introductory program with scaled down services, tapping into the VRBO market in your destination is likely necessary to affect your market share in a material way. F Design Compelling Marketing Materials

Designing effective B2O marketing materials requires the use of both B2B professionalism and B2C appeal. For example, email and direct mail pieces can include B2C customer-facing images designed to promote family vacations and strong relationships, and Facebook posts can show team members going above and beyond to care for homes. In contrast, projection folders and contracts should be designed more formally to appeal to the B2B nature of the relationship. G Implementation Once the above elements are completed, articulate your strategy and identify tactics in a written plan. Include a budget and plan for evaluation. Get buy-in from stakeholders and begin to thoughtfully execute the plan. H Evaluation The B2O should be evaluated on an ongoing basis identifying the ROI for each marketing channel. Metrics will vary based on the marketing channel, but full reporting is key to monitor performance and maintain momentum. In addition, Matt Renner’s article about KPI’s on page 64 provides a number of metrics that can be evaluated as a part of your evaluation plan.

VRM Intel Magazine | Spring 2016

| Distribution

Special editorial by George Volsky

HomeAway’s Traveler Fee HomeAway Shifts 3rd Party Booking Fees to Renters. Is This a $1.25 Billion Price Tag for Managers and Homeowners?

VRM Intel Magazine | Spring 2016

George Volsky is one of the vacation rental industry’s most experienced analysts. A former director of Analysis and Research for Escapia and Instant Software and consultant for leading industry VRMs, George has served as the industry’s advising analyst for the 2008 PhoCusWright report sizing our industry, authored studies regarding the economic impact of vacation rentals on state and local economies, and delivered hundreds of education seminars to VRMs. He specializes in pricing and competitive growth strategy.

Executive Summary

acation rental industry highlights for 2015 included Expedia’s acquisition of HomeAway and HomeAway’s subsequent decision to follow Airbnb’s lead in splitting the burden of booking fees between homeowners and managers and the consumers who benefit most from third-party distribution. At first glance, the Airbnb/HomeAway fee model is good news for homeowners and professional managers grateful for some relief from third-party booking fees. But the new fee model comes with a downside that has escaped mainstream scrutiny. It will create a spigot that empowers third-party distributors to shut off the ability of professional managers to offset annual cost creep by increasing fees. The dollars siphoned away from managers and homeowners can equal the dollar value of managers’ current profits. Extrapolated to industry sales totals, the new fees could divert $1.25 billion. As distributors implement the new fees, managers will be forced to share future rent increases with distributors, who – by the way – will be positioned to dictate the share split. SHORT-TERM IMPLICATIONS: There will be a dramatic shift in revenue from homeowners and managers to third-party distributors. LONG-TERM IMPLICATIONS: Distributors will have power to increase prices enough to erode the price advantage that currently makes vacation rentals a better value than hotels. NO MORE LOYALTY TO VACATION RENTALS: HomeAway once could advertise that it promotes vacation rentals over hotels. HomeAway, as an Expedia subsidiary, must now be more indifferent as to whether renters book a vacation home or hotel room. NO LOYALTY TO SPECIFIC MANAGERS OR HOMEOWNERS: HomeAway has no incentive to manage rates to maximize profits for individual homeowners or managers. Renters who reject a fee-enhanced rent as “too expensive” are likely to book another vacation home (or hotel) on the same site.

How New Booking Fees Shift Pricing Power to OTAs The new booking fees are being introduced at four to seven percent of the total price. HomeAway is still testing the percentages, but given this small percentage, a skeptical mind might inquire, “Why would homeowners and managers lose their traditional control over listing prices or relinquish their decision-making power over price increases or decreases?” First, it is important to recognize that there is nothing to prevent HomeAway from raising its fees. Its new parent, Expedia, has induced hotels to pay booking fees as high as 25 percent. Fees will go up each year as Expedia has set a revenue target of $350 million by 2018. Despite concerted efforts by hotels to reduce their reliance on OTAs, independent hotels still rely on OTAs for 75 percent of

their total bookings (60 percent for major hotel brands).  http://www.hotelnewsresource.com/article87168.html Next, it is important to understand that the new fee model promotes HomeAway (and Airbnb) to stand first in line – ahead of managers – to impose annual rent increases for vacation rental homes. Here is why that is important. As everyone knows, prices rise over time. Historically, the vacation rental managers and homeowners have offset cost creep by increasing rents. There are years we are afraid to do so, but when we raise rents, we do so in increments of one to four percent. In prior years, a manager might have increased fees by three percent, adding this to the advertised rent to generate significant revenue without driving renters away (see following section). But, beginning in 2016, managers will have to deal with the fact that HomeAway is independently asking renters to pay an additional fee. When HomeAway’s five percent fee is added to a three percent increase by the rental manager, the price charged to the renter will rise eight percent, adding $136 to an average $1700 booking. This will discourage some renters, pressuring managers to compensate for the HomeAway fee by dynamically reducing rents. Experience confirms that a home will either rent or stay vacant where its advertised rent is $50 to $75 lower or higher than competitors, respectively. By introducing a model where consumers pay a booking fee to distributors, distributors are cutting to the front of the line, preempting and disrupting a privilege previously held by managers and homeowners to impose, regulate and benefit from annual price increases.

The New Fee Models Could Financially Cripple VRMs EXAMPLE OF VRM REVENUE STREAMS | COMMISSION VS. FEES

$500.000

ECI

$12.096

LCO

$6.007

$123.101

Renterln

$7.692

Admin

$127.779

Prep

$55.720

Travel Insurance

$28.332

Pet Fees

$9.377

Park Pass

$44

Connect

$16.738

HmCmptrs

$68.821

$41.882

13%

Ccard

$137.274

Pool

$12.271

POM

$63.325

46%

Commissions

Housekeeping $39.000

11%

Laundry

12%

100%

TOTAL

$1.088.441

COMMISSIONS EQUAL JUST 46% OF ANNUAL REVENUE FEES GENERATE 54% OF REVENUE

VRM Intel Magazine | Spring 2016

The following table illustrates the enormous importance of fees to the health of professional managers. NEW VRM REVENUE FROM 3 FEE INCREASES *

Fee Increases

Total Rent & Fees

Fee Increase

Paid by Renter

Per Reservation

NEW COMPANY REVENUE

$1.700 $15

$60.000

Travel Insurance

$22

$86.000

Damage Waiver

$24

$81.175

$61

$227.175

* THIS COMPANY BOOKS 4000 RESERVATIONS AVERAGING $1700 EACH

The next table illustrates how a manager can historically increase a few fees to completely offset cost creep by implementing a three percent rent increase where fees are buried in the advertised rent: Here, the manager only had to raise rents by $61 to $1,761 from $1,700 in order to generate an additional $227,000 in profits. The price increase was small enough not to chase away renters. In all future years, a three percent price increase by the rental manager, imposed on top of any HomeAway or Airbnb fee, could send renters to lower-priced homes. In some cases, the financial impact on individual managers would be mitigated to the extent that renters in every price category move down one price tier (renting a lesser home at last year’s rent). But rental managers will, nonetheless, be routinely hurt whenever a renter substitutes a lower-priced home from a competitor on HomeAway’s site and whenever a decline in bookings for a higher-end home motivates the homeowner to find another property manager.

HomeAway’s Five Percent Fee May Equal VRM Profit If the average booking is $1700, HomeAway’s five percent booking fee would be $85 per booking. In my projections, HomeAway will divert $85 from managers for performing electronic marketing and booking functions that have relatively small costs when scaled. This $85 fee will bleed off more dollars than the average rental manager earns per booking for cleaning, maintenance and customer care. PRO-FORMA CALCULATION : VRM PROFIT PER BOOKING

Average booking $1.700 Effective commission rate (commission & fees) 35% Management Company Revenue $595 Profit margin 14% Profit per booking $83 86

Assume that vacation rentals generate $25 billion in annual sales. If OTAs could achieve their implicit goal of earning a booking fee for every vacation rental booking, a booking fee of even three percent would divert $750 million from manager and homeowners. A five percent fee would divert $1.25 billion. INDUSTRY SALES

VRM split (Commission & Fees)

Admin Fee

$61

A Billion Dollar Impact

VRM Intel Magazine | Spring 2016

$25B

30%

35%

40%

$7.5B

$8.75B

$10B

12.5%

Profit Margin 12.5%

Industry Profit $937.5M $1.093B

$1.25B

Stated differently, rental manager profit margins can average five percent of sales, which is the same percentage of sales that HomeAway is imposing on renters as a booking fee.

Even More Dollars at Stake HomeAway and Expedia have also laid the foundation to impose a credit card fee of three percent on transactions where they handle the money. As HomeAway evolves its revenue models, this could eventually pressure managers to either remove their own credit card fees from the advertised rent or risk a reduction in bookings when their homes appear overpriced. Credit card fees are an important profit stream for rental managers who build a credit card fee into the advertised rent for 100 percent of their bookings, but experience a lower level of credit card usage (e.g., where a credit card is used just 70 percent of the time).

Distributors are Ironically Usurping a Pricing Privilege That Managers Previously Usurped From Homeowners There is, in all of this, an irony. Over the past 20 years, VRMs convinced homeowners to authorize managers to impose and increase fees that are then buried in the form of increases in advertised rents. This effectively empowered managers to raise rents annually and keep as much of this as they chose. Though it has a new imposition of a booking fee on renters, HomeAway (following Airbnb) is now usurping that very opportunity from professional managers.

Conclusion Third-party distribution is prospering because it satisfies consumer demand for a single website that allows consumers to compare prices for all available rentals and offers convenient online booking. Consumers want (and distributors are providing) a marketplace that favors renters over homeowners and managers. Despite this, managers need to offer inventory on sites where consumers shop.

To attract the large pool of inventory required for critical mass, HomeAway solicited worried homeowners and managers by promising to lure new renters from hotels. But as an Expedia subsidiary, HomeAway cannot vigorously fulfill that promise without jeopardizing the 20 to 25 percent booking fees Expedia earns from hotels. To step further into darkness, there is no evidence that HomeAway or other distributors have increased the total number of vacation rentals to help offset the rising cost of third-party distribution. What sustains the growth of HomeAway is a steady increase in the share of online bookings. More online bookings, alone, merely translates to revenue growth for HomeAway and higher distribution costs for homeowners and managers. I would love to offer more strategies that insulate rental managers from a disruptive technology that is shifting revenues from homeowners and managers to third-party distributors. VRMs can certainly foster competition by supporting multiple listing sites and resist any demands by distributors for rate parity. (As long as managers retain the option of offering lower fees on their own websites, they can tempt repeat renters to book directly through their company website to avoid distributors fees.) But none of these strategies will prevent HomeAway and Expedia from leveraging renter loyalty to siphon a large chunk of vacation rental dollars. However, if distributors squeeze rental management revenues too much and approximate a result that was both an original goal of rent-by-owner sites and the worst nightmare of legacy VRMs – where rental managers are relegated to acting as service organizations – then distribution sites and their investors will confront a not-so-obvious conclusion that is inevitable in an industry where occupancy rates are chronically low, price ceilings are set by self-managing homeowners whose primary goal is to generate a few dollars to offset the cost of second-home ownership, and a large segment of inventory is controlled by individual homeowners who do not rely on commercial distribution.

The heart of vacation rentals has always been, and will always continue to be, service: “Fix it, clean it and take care of screaming guests and homeowners.” The true cost of this service is today subsidized by fee revenue. It will remain structurally impossible to siphon away from VRMs the level of revenue that publicly held third-party distributors target to attract and retain investors without diminishing service levels, destroying consumer confidence in listing site rental homes and sending renters to the websites of smaller VRMs.

The best proof of this can be found in the relationship between Service Master and rental managers – a relationship which is virtually nonexistent: the true cost of providing reliable home services is so high that VRMs who outsource housekeeping and maintenance cannot afford to use Merry Maids Cleaning Service or other Service Master subsidiaries. Why is this revealing? Because every opportunity to streamline home services has been thoroughly explored and exhausted by the best corporate home service minds in the world, in the form of Service Master, a public Fortune 1000 company that provides residential and commercial services that include professional home cleaning, pest control, home warranties, disaster response and restoration, janitorial service, furniture repair and home inspections. Home service is really, really expensive. Most VRMs operate under thin margins. Distributors can only divert a limited amount of revenue from legacy VRMs before they degrade the service levels that are required to support a leading listing site or OTA brand. While this knowledge may not spare legacy managers pain as the industry goes through this cycle, it may at least provide consolation that the value of legacy VRMs must ultimately be vindicated (and compensated).

VRM Intel Magazine | Spring 2016

| Business

Fixed-Rent Contracts

By Amy Hinote

Fixed-Rent Contracts, Leasebacks, Net Commission Arrangements, Guaranteed Payments, Fixed Leases

VRM Intel Magazine | Spring 2016

hese are all terms used in the vacation rental industry to describe an arrangement between the property owner and the property management company in which the management company pays the homeowner a predetermined, “fixed” or “guaranteed” monthly payment for rental rights to the property. In this arrangement, the manager is able to keep all revenue he makes from the rental over the amount paid in monthly payments to the homeowner.

Are They Really a Good Thing for Vacation Rental Managers?

of issues. After hearing multiple reports about several companies across the country who utilize Fixed-Rent Contracts experiencing business difficulties, we reached out to industry experts to find out more about these “net arrangements” or “Fixed-Rent Contracts.” According to Tim Cafferty, President at Outer Banks Blue in North Carolina, “Net arrangements are not legal in this state and are not looking out for your client’s best interest in the eyes of the Real Estate Commission.”

“In a client relationship you owe the fiduciary loyalty, duty and obedience,” Cafferty explained. “The NC Real Estate Commission has been strong on this. They feel you are not fulfilling your ‘duty’ to the client.” And the North Carolina Real Estate Commission has a point. These contracts encourage VRMs to favor one property over another for reservations. Let’s look a little deeper into this model that – for simplicity – we will refer to going forward as “Fixed-Rent Contracts.”

Advantages and Disadvantages for the Owner The major advantage for the homeowner in signing a Fixed-Rent Contract is securing a steady, guaranteed income stream for the home. Jeff Paglialonga, owner of TeemingVR, said, “For older retirees looking to eliminate fluctuations in income, these contracts work well.”

Steve Milo, founder and managing director at Vacation Rental Pros, added, “We are starting to see builders of vacation rental homes in Orlando discuss leaseback options with potential buyers. It is most attractive for foreign buyers, particularly if they are looking for bank financing as leaseback contracts offer guaranteed cash flow to show the bank.” With Fixed-Rent Contracts, homeowners are also able to eliminate market risk. In a bad market, the homeowner covers his expenses.

However, in a good market, the owner is leaving money on the table. There are several additional key disadvantages for the property owner: B The Owner has Less Access to His Vacation Home

While Fixed-Rent Contracts vary on how many days of use are allowed, the owner has significantly less flexibility to enjoy his vacation home.

C More Wear and Tear on the Home

Vacation rental managers have been hearing a great deal about the benefits of “Fixed-Rent Contracts” over the last two years. Every VRMA conference has at least one session promoting this type of business arrangement with homeowners, and in the most recent VRMA Review, the cover story was entitled, “Fixed-Rent Contracts: Good for Managers, Good for Owners.” (VRMA Review, Winter 2016, Volume 28, No. 1)

But are Fixed-Rent Contracts really good for managers and good for owners, like the article says? At VRM Intel, we receive emails, calls and comments from vacation rental professionals, homeowners and employees on a range

Vacation rental managers are more likely to book a home in their inventory under a Fixed-Rent Contract than a commission-based home since they are able to keep all of the revenue. As a result, there are more stays in the Fixed-Rent home resulting in more wear and tear on the property.

D Higher Utility Bills

For similar reasons, higher occupancy leads to higher utility bills. In some cases, vacation rental managers are opting to pay for utilities as part of the contract.

E Risk of the VRM Experiencing Cash Flow Issues

If the vacation rental management company experiences financial issues, the VRM will prioritize paying trust accounts for commissioned homes for which they have collected advanced rental payments before paying Fixed-Rent expenses. VRM Intel Magazine | Spring 2016

Advantages and Disadvantages for the Vacation Rental Manager For the vacation rental manager, the decision to pursue Fixed-Rent Contracts is more complicated. While the utilization of FixedRent Contracts can help a company quickly obtain – or buy – market share, there are other considerations. These arrangements are not new. In Orlando in the mid 1990’s, many property managers utilized these contracts, and some went out of business as a result. Fixed-Rent Contracts require discipline, deep market knowledge, strategic construction and flawless execution.

D Revenue Requirements for the Property Owner

We reached out to George Volsky to help explain this principle: A key difference between vacation rentals and hotels lies in the goals of investors. A hotel is often owned by a real estate investment trust (“REIT”), which assigns operations to a management company. The REIT expects the manager to generate enough rent to both pay the mortgage and generate a return on investment.

Why are Fixed-Rent Contracts complicated for VRMs? B Trust Accounts vs. Fixed-Rents

For vacation rental managers who responsibly operate under trust accounting rules, there are specific ways in which rental payments are protected for the homeowner. In contrast, the Fixed-Rent payments to the owner are allocated as an expense. Therefore, the money due to the homeowner is not protected, and there is a temptation for the VRM to use monies collected from rental payments for homes under Fixed-Rent Contracts to expand the business or to pay expenses. Even the best VRMs can easily find themselves upside down paying fixed payments to owners if rental payments are not set aside.

A vacation rental home, however, is usually owned by an individual who expects to lose money for five to eight years until he can sell the property at an appreciated price (enjoying lifestyle benefits in the meantime).

Take a poll of all the vacation rental companies you know. Find out how many of these companies (or these companies’ owners) actually own homes in their own rental program. Of those that do, find out how many generate positive cash flow. There is a reason why VRMs – our nation’s experts on vacation rentals – tend not to own the properties they rent.

C Fiduciary Responsibility to All of Your Property Owners

To revisit Tim Cafferty’s comment, according to the North Carolina Real Estate Commission, “In a client relationship you owe the fiduciary loyalty, duty and obedience.” The VRM is more likely to push reservations for the home for which they get to keep the revenue over a commission-based home where they only get to keep a small percentage. Consequently, demand is not evenly distributed across the VRM’s inventory, resulting in favoring the Fixed-Rent home and harming the commission-based property owners.

VRM Intel Magazine | Spring 2016

In the vacation rental industry, a large percentage of homeowners are using short-term rental income to supplement the cost of owning a vacation home instead of requiring a profit-driven income stream from the rental of their home. In contrast, once a VRM is paying for a Fixed-Rent Contract, he now is required to make money on the property.

E Risk vs. Reward

According to Volsky, “Under traditional contracts, VRMs charge whatever renters will pay. The homeowner assumes the market risk. However, when a VRM executes a Fixed-Rent contract, the VRM effectively ‘buys and owns’ the weeks, assuming all risks.”

The vacation rental industry is built on the premise that the homeowner is able to absorb the risk associated with rental

TurnKey Vacation Rentals Chairman John Banczak explained, “Anyone who takes on more risk needs to see more reward, and vice versa. If you are a business getting 35% from a property, when moving to Fixed Payments, you are going to want to see more reward. That means the Fixed Rents to owners have to be so low that it likely will not be appealing.”

F Reservation-Based Model vs. a Property-Based Model

What is the difference between a reservation-based model and a property-based model? In a reservation-based model, the VRM makes money by increasing reservations, largely based on fees to the guests. In a property-based model, the VRM primarily makes money from the owner through higher commissions or service fees for managing the home.

Most experts agree that there are instances where Fixed Contracts can be beneficial when used intentionally, strategically and skillfully, but managing Fixed-Rent Contracts requires the VRM to be disciplined with the money, outperform the market in rentals without taking away from the commission-based inventory, and manage the risks associated with market and destination conditions.

“There is a place for Fixed-Rent contracts, but that place is defined in terms of strategic goals,” said Volsky. “Fixed home contracts will not generate profits for a majority of homes in a typical rental company. They will not earn long-term profits for even half of the units in a typical rental company. Fixed-rent contracts must be used in special situations by VRMs with sophisticated growth expectations.” By Amy Hinote

income since the owner prioritizes the value of the home over the rental income. Fixed-Rent Contracts shift all of the risk to the VRM, while the homeowner is quite willing to accept the risk of less rental income as they still maintain value and appreciation of the actual home. Unlike the owner, when the VRM takes on the risk, he cannot afford to lose money.

If a VRM’s revenue model is reservation-based instead of property-based, more inventory doesn’t lead to more reservations. It just leads to more capacity. The demand has to be there to fill it. Knowing how your VRM generates income helps you to make an informed decision regarding Fixed-Rent Contracts.

Your Statewide Vacation Rental Managers Association The Florida VRMA represents the professional management of vacation homes, condos and resort units throughout the state of Florida. We are your statewide vacation rental management industry association dedicated to supporting and protecting the $31,000,000,000 per year economic impact realized through the Florida vacation rental industry. The new Florida VRMA continues to deliver the educational programs, legislative advocacy and member benefits to help you to grow your segment of the industry throughout the state of Florida and beyond. Explore what our new regional chapters can mean for your business as a professional in the Florida vacation rental industry. The Florida VRMA is the largest statewide association in the US market today supporting property managers with tens of thousands of vacation rental units. From major Florida attractions to local supporting tradesman, the Florida VRMA has various participation levels for all businesses and industry partners.

Find out what the new Florida VRMA can do for you at

www.fvrma.org or call us at 407-218-6600 VRM Intel Magazine | Spring 2016

| Housekeeping

Vacation

Rental Linens: Everything You Want To Know About Purchasing Linens

By Stephen R. Craig Pro Resort Housekeeping

his is the time of the year when many summertime season vacation rental companies are spending money to buy linens in preparation for the summer. And the total dollars they are spending on linens is getting higher every year. A great part of this massive increase is due to linen losses. There are basically two types of vacation rental companies. One type of vacation rental company is the one I call “The Owners.” They own their own linens and get these linens cleaned on a guest or owner departure in one of two ways: they either send it to a laundry company for cleaning and pay per pound, or they have their own laundry machines and wash everything themselves. The other type of vacation rental company I call “The Non-Owners.” These companies do not own linens and either rent them from a linen supplier at a set price per piece, or their property owners own the linens and clean them in the unit washer and dryer on a departure clean. I wish I had time to share the pros and cons of all these systems, but I’ll leave that for a later date. Suffice it to say that laundering in a rental unit is the worst system imaginable. The only system where linen losses are usually not an issue is when a company rents linens. (The other systems mentioned above should strongly take a look at how they are losing linens.) The key to a successful linen system is using the same linens over and over again. Linens that cannot be used over and over again are referred to as “shrinkage,” and these numbers are getting worse every year. Take a look at a few ways shrinkage can occur in a vacation rental company: 92

VRM Intel Magazine | Spring 2016

Collection  Employee theft  Stains (laying linens on oil or grease, wheel burns, etc.)  Tears (rips occurred by removing sleeper sofa linens)  Mildew (being stored prior to processing)  Damage (stuffing pillow cases and dragging them on cement, etc.)  Accidental Loss (linens can be left on landings or even thrown in the dumpster by getting mixed with trash)

Processing  Over-bleaching  Irremovable stains  Tears or rips from getting caught on machines and carts  Rust from tumblers or carts  Employee theft  Over-drying or scorching  Chemical residue in linens

Distribution  Employee theft  Guest theft (when carts are left unattended)  Stains

Guest Use  Theft  Irremovable stains (make-up, blood, etc.)  Abuse  Misplacement (beach, tennis court, golf course, etc.) To put this in more common terms, I’ll cite actual examples of ways shrinkage has occurred that have been shared with me:

 Employees use room linens to do the cleaning. The stains do not come out. This is the single biggest way that linens are abused at many properties, primarily vacation rental companies.  Owners take a pillow and it’s case when they depart so kids can sleep in the car on the way home, or they take a pillow case to hold dirty clothes.  Golfers take face towels to clean their clubs and put a hole in the towels in order to hang them on their bags.  Blood located on a fitted or bottom flat sheet that is not removed during cleaning.  The owners or guests take towels home or renters exchange linens.  Employees steal linens for their own use or for sale at flea markets.  Dirty linens are stuffed into pillow cases and dragged along the ground causing irremovable stains on the case.

 Employees carelessly take sheets off sleeper sofas and rip the sheets on the springs.  Wash cloths are used to shine shoes, wash cars, remove makeup, etc.  Skis are waxed using room linens causing irremovable stains.  Maintenance crews wipe up messes with face towels or use sheets as drop cloths.  Guests wash linens in the in-unit washers and dryers and they become dyed from other linens.  Chemicals are improperly added to washing machines — either too much or the wrong chemical — and damage the linens.

Regardless of the processing system you use, you can minimize your expenses by following some of these guidelines:

Bed linens  Use 250-thread count for king and queen sized beds — no higher — for all sheets. Use a 65/35 blend of poly/cotton.  Use 180-thread count for twin beds. They are cheaper than 250-thread count and kids won’t notice or care.  Eliminate the use of double sheets and use queen sheets on double beds. You only need to have queens marked by laundry markers or threads. This saves time and money.  Use deep pockets on all fitted sheets.  Pillow cases: Use either all regulars or all kings. No combina- tions. And use 180-thread count because they will take many, many stains and will need replacing more often.

Terry  I believe your linens are measured by the quality of your bath towel. Invest in a good bath towel. Use at least a 14-pounder (pound weight is the total weight of 12 of the items). Many companies are investing in 17-pounders.  Limit the quantity of towels per occupant. The oldest rule in the linens book is “the more you give, the more you will need to replace.” Most companies give two bath towels per occupant, but many companies have limited bath towels to one per occupant.  Do not provide hand towels per occupant, but provide one per bath/half bath instead.  Use hand towels of a lesser quality than bath towels.  Purchase the least expensive wash cloths possible. They are now viewed as disposable, so why waste the money? They are going to go by the wayside no matter what the quality is.  Do not provide dish rags in the kitchen. Use kitchen towels only and add an inexpensive wrapped sponge.  Minimize the number of kitchen towels, never more than two.  Consider microfiber kitchen towels instead of cotton.  Presentation can often be as important as what or how much you provide. A big trend in our industry is to display terry on the beds in attractive piles per occupant. Don’t place them under sinks or hide them in cabinets. Also, place the sleeper sofa linens on the cushions so the guests do not have to track them down.  Preventing shrinkage is critical, but in the meantime we hope these purchasing tips will help to minimize your investment.

VRM Intel Magazine | Spring 2016

| Housekeeping

— The — Importance of Housekeeping Thereʼs More to Creating Vacation Memories Than Meets the Eye.

ecently, I had the opportunity to travel for work, and I stayed in a vacation home while away. For this particular trip I ended up traveling alone because my family could not join me. I arrived at the home well after sunset. As I exited my car I could smell the salty air and hear the surf hitting the shore. Oh, how good it was to be back at By Durk V. Johnson the beach! After a few minutes of Industry Consultant and soaking in the sounds and smells, Executive Director, Vacation I approached the front door of the Rental Housekeeping home and keyed in the electronic Professionals lock code. It didn’t work. I called the after-hours number of the professional management company, and after a few short minutes, a new code was configured and I was able to enter the home.

 Proper staffing had to be scheduled. The housekeeper and inspector both had to be allotted the right amount of work, without having to rush, in order for them do their jobs correctly.  The housekeeping department had to run an arrival report to determine guest arrival locations and which properties needed to be inspected.  Lastly, an inspection had to be performed on the property before guest arrival. The inspector had to make sure that the housekeeper’s work was up to standard, and if not, the house keeper or inspector would correct the issue. The inspector also had to make sure that the property was staged correctly.

I opened the door, turned on the lights and took several steps in. The home felt warm and inviting. As I looked around, I could imagine what it would be like to have my family with me with my children running around and exploring the home and then racing to the beach. I could almost hear the gleeful chatter of my happy family. It made me realize how lucky I am to work in the vacation rental industry. As I reflect on the first night of my stay in this particular vacation home, I think of the pleasant thoughts I had and how much I felt at home being there. It also made me realize that there is a lot that goes into preparing a vacation home for guests to be able to create memories like mine...and housekeepers are a large part of this. As with any successful vacation story, there are a myriad of things that must take place in order for a guest to have a positive check-in experience. Here are a few:

 When the housekeeper cleaned the property, there were service standards that outlined what needed to be done for the departure clean which assisted in knowing exactly was expected to be cleaned.  There was a Standard Property Appearance that each house keeper and inspector worked towards. This particular document showed the housekeepers how to hang towels, place remote controls, , arrange couch pillows, what amount of toilet paper to put in each bathroom, and so on. 94

VRM Intel Magazine | Spring 2016

After all of these things had taken place, the property was ready for its upcoming guests.

The housekeeping department has a direct impact on how guests feel when they enter a vacation rental. All of the detailed work that is done helps create a great first impression of each property. When the housekeeping department works well together and quality is up to standard, the ripple effect of excellent work is felt throughout the property management company. There are less calls to the front desk, guests are happier, owners are happier and the vacation rental system works cohesively and runs smoothly. Otherwise, everyone feels the pain. Property management companies should take the time to make sure their housekeeping departments have the training, resources and tools they need to continue to make awesome vacation memories for their guests.

VACATION

JOIN

RENTAL HOUSEKEEPING PROFESSIONALS

VRHP

HERE ARE SOME

OF THE BENEFITS YOUR COMPANY RECEIVES AS A VRHP MEMBER

è Certifications available for housekeepers, executive housekeeper and inspectors è Best practices for Housekeeping and Maintenance teams è Weekly housekeeping articles for vacation rentals è Access to over 70 archived monthly VRHP newsletters è Access to industry experts who can answer your company-specific housekeeping questions è Member discounts to VRHP seminars and the National VRHP Conference in November 2016 è Networking with other VRM companies who make Housekeeping and Maintenance a

number 1 priority

VRHP.ORG

www.face

HOUSEKEEPING SOLUTIONS TEAM

Contact Durk Johnson, CVRHP durk@housekeepingst.com

251-597-3230 NOW INSPIRING THE ENTIRE CONTINENTAL UNITED STATES! BE CONFIDENT, BE SURE, AND BE HAPPY!

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 ADVANCED HOUSEKEEPER TRAINING  IN HOUSE LAUNDRY SOLUTIONS  EXECUTIVE HOUSEKEEPER COACHING TEACHING: SPEED-QUALITY HOUSEKEEPING AND INSPECTIONS AND MANY MORE TOPICS

VRM Intel Magazine | Spring 2016

| Business

 Hilton Head, SC  Call for venue details  www.software.homeaway.com

VRM Intel Magazine | Spring 2016

 Atlanta, GA  Marriott Marquis Atlanta

APR

APRIL

VRMA EASTERN REGIONAL CONFERENCE

 Atlanta, GA  Marriott Marquis Atlanta  www.vrma.com

3001

VACATION RENTAL SUCCESS SUMMIT

 Toronto, Ontario  BMO Institute for Learning  www.vacationrentalsuccesssummit.com

04 MAY

2526

NCVRMA

 Atlanta, GA  Marriott Marquis Atlanta  www.ncvrma.com

APR/MAY

BAREFOOT USER CONFERENCE

APRIL-MAY

2324

MAY

APR APR

HOMEAWAY BREAKFAST SEMINAR

 Outer Banks, NC  Call for venue details  www.software.homeaway.com

APR

APRIL

VRMA WESTERN REGIONAL CONFERENCE

 Denver, CO  Grand Hyatt Denver  www.vrma.com

APRIL

0405

06 APRIL

MOUNTAIN TRAVEL SYMPOSIUM

APRIL

0309

 Keystone, CO  Keystone Conference Center  www.mtntrvl.com

APR

APRIL

APR

Calendar of Events HOMEAWAY BREAKFAST SEMINAR

 Charleston, SC  Call for venue details  www.software.homeaway.com

MAY-JUN

3102

FVRMA XTRAVAGANZA

 Orlando, FL  Renaissance Hotel at Seaworld  www.vrmxtravaganza.com

2830

STREAMLINE SUMMIT

 Arizona  Venue TBD  www.streamlinesummit.com

1013

LIVEREZ PARTNER CONFERENCE

 Austin, TX  Lost Pines Resort  www.liverez.com

OCTOBER

OCT NOV

NOVEMBER

1619

ANNUAL VRMA CONFERENCE

 Chandler, AZ  Sheraton Wild Horse Pass  www.vrma.com

0709

VRHP NATIONAL CONFERENCE

 Las Vegas, NV  Excalibur Hotel and Casino  www.vrhp.org

NOV

JUN

JUN SEPT

REZFEST

NOVEMBER

 Honolulu, HI  Call for venue details  www.software.homeaway.com

2123

 Orlando, FL  Renaissance Hotel  www.software.homeaway.com

SEPT

MAY

HOMEAWAY BREAKFAST SEMINAR

 Breckenridge, CO  Call for venue details  www.software.homeaway.com

OCT

 Englewood, CO  Inverness Hotel and Conference Center  www.theopma.org

SEPTEMBER

OPMA EXECUTIVE SUMMIT

SEPTEMBER

1820

OCTOBER

MAY

 Kauai, HI  Call for venue details  www.software.homeaway.com

19 MAY

HOMEAWAY BREAKFAST SEMINAR

1417

PHOCUSWRIGHT CONFERENCE

 Los Angeles, CA  JW Marriott at LA Live  www.phocuswrightconference.com

DEC

 Leavenworth, WA  Sleeping Lady Resort  www.vrmawa.com

MAY-JUN

2016

VRMAWA

DECEMBER

MAY

1011

0405

NEVRMA

 Lincoln, NH  Mountain Club on Loon Resort & Spa

VRM Intel Magazine | Spring 2016

| Business

Vacation Rental Peer Groups By Amy Hinote

Peer Groups Provide Managers Non-Competitive Setting to Explore Ways to Grow Their Business

he Vacation Rental Exchange (VRX) Conference was held at Hatteras Realty in Avon, NC, March 9-10. The VRX is made up of several sizeable and established vacation rental management companies in non-competitive destinations. This group of some of the industry’s brightest minds assembles annually, free of any conflicts of interest or hidden agendas and includes owners, managers and team members from all departments. The conference is specifically designed to be a safe, confidential and trusting peer setting to help each other navigate industry opportunities, problems, challenges and issues of all shapes, sizes and descriptions. “VRX, formerly The Big 8, has been a must-not-miss seminar amongst non-competitive colleagues in the vacation rental industry for us,” said Jodi Refosco, co-founder of Taylor-Made Vacations. “This year was our third year doing it, and they just keep getting better and better. My entire team brought back ideas to implement immediately. Since we are talking to non-competitors, our sessions can be more in-depth and detailed than at larger conferences. They are more personal with a smaller group of people. My team also got to experience what it is like to stay at a vacation rental, in which most of my staff have never done before.”

Refosco continued, “I think all companies should gather like-minded companies in non-competitive areas and do the same thing. The knowledge is incredible and the networking top notch.”

Kenneth H. Blanchard, author of The One Minute Manager, said, “None of us is as smart as all of us.” In the vacation rental industry, that is especially true. With few defined sets of best practices, vacation rental managers can greatly benefit from learning from each other in a safe, non-competitive environment. Would you like to join or form a VRM peer group? If so, what kind of group would help you the most? Let’s look at potential types of vacation rental peer groups:

Owner, C-level Groups: Allows company owners to be transparent and authentic. For many business owners, “it is lonely at the top.” An owner group provides these leaders a safe, confidential and caring environment, with other like-minded owners facing many of the same challenges. 98

VRM Intel Magazine | Spring 2016

Multi-Department Groups: Like the VRX conference, these groups are team-focused, and the group provides an opportunity to discuss challenges as a team and with other teams. This brainstorming environment allows different departments to interact and work together to face challenges and come up with solutions. This setting also creates deeper understanding between departments.

Department-Focused Groups: Whether the department is reservations, marketing, housekeeping, administration/accounting or owner management, forming a peer group with other department heads in non-competitive destinations offers a forum in which members can drill down into very specific departmental challenges, discuss tactical solutions and evaluate new processes, technology and strategies. When deciding to form a VRM peer group, here are a few other considerations:

Frequency and Structure: Whether the group meets at an annual retreat, holds a quarterly virtual meeting or schedules a monthly conference call, it is important for members to feel comfortable with the frequency and structure and be able to commit to the meetings. For example, some groups may want an unbiased moderator to provide structure to the conversation and move through the agenda, while others may desire a more spontaneous arrangement.

Size: The size of the group has a big influence on the dynamic of the group. Typically, in a small group, members have more opportunities to contribute to discussions, while larger groups can offer participants more perspectives and feedback. Our industry doesn’t have a lot of precedent to fall back on regarding what is the best size for the best type. Starting with a group of six to ten companies will allow you to feel out the dynamic before adding more companies to the mix.

Group Parameters: As you look to form peer groups with like-minded vacation rental companies, consider creating parameters (i.e., no conflict of interest or vendors in the discussions, an expressed desire to help each other, confidentiality and commitment to the group meetings). At industry conferences, such as VRMA, VRHP and OPMA, keep your eye open for like-minded companies with whom you can start a group. If you would like help connecting with other non-competitive vacation rental management companies to join or form a group, let us know at info@vrmintel.com.

If you have the willâ&#x20AC;Ś we know the way. The way to more demand, more bookings, and a more profitable business. Let our Client Advocate industry veterans guide you.

TheNavisWay.com/TheWay

VRM Intel Magazine | Spring 2016

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VRM Intel Magazine | Spring 2016