VRM Intel Magazine Fall 2019 by Amy Hinote

Inhabit IQ Execs

Share Future Plans

18-Month

Performance Review Measure

What Matters Designing Niche

Vacation Homes

Planning for #BookDirect Day

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VRM Intel Magazine | Fall 2019

VACATION RENTAL SOFTWARE

VRM Intel Magazine | Fall 2019

Contents On the Cover

39 Communicating Service Value with Homeowners

25 Inhabit IQ Execs Share Future Plans

Inhabit IQ Execs

Share Future Plans

64 Measure What Matters

18-Month

68 Building & Designing Niche Vacation Homes

Measure

80 18-Month Performance in Key Vacation Rental Markets

86 Planning for #BookDirect Day

Business

Performance Review

What Matters Designing Niche

Vacation Homes

Planning for #BookDirect Day

Revenue Management 47 Revenue Management: Whoâ&#x20AC;&#x2122;s In Your Driverâ&#x20AC;&#x2122;s Seat?

21 What is My Company Worth? A Back of the Napkin Analysis

51 The Pricing Technology Process: Comparing Hotels with Vacation Rentals

43 Using Data to Make Better Business Decisions

56 Considering Levers and Constraints in Pricing Adjustments

80 18 Months in Review: Vacation Rental Performance in Key Markets

76 Calculating Occupancy and RevPAR in the Vacation Rental Industry

22 56 10

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Contents Customer Service

22 Email Overload: Training to Overcome Flooded Inboxes 68 Purposefully Building and Designing Vacation Homes for Niche Markets

Employee Relations 30 Scaling Your Business: 5 Focus Areas for HR Managers 35 Relationship Building: Creating a Culture of Trust

Property Care 39 Delivering & Communicating Deep Service Value with Homeowners 88 What's in Your Housekeepers' Cleaning Kit?

Marketing

64 Measure What Matters: 2020 Analytics 74 Convincing Homeowners to Use OTAs 79 5 Best Practices to Drive Direct Bookings

Technology 25 An Inside Look at Inhabit IQ's Growing Portfolio 73 Using the Booking Engine to Overcome Direct Booking Challenges

Education 86 #BookDirect Day Set for Feb 5 90 Calendar of Events

68 14

VRM Intel Magazine | Fall 2019

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BY TRAVELNET VRM Intel Magazine | Fall 2019SOLUTIONS 15

Dear readers,

Is it even possible we are in the fourth quarter of 2019 and planning for 2020? As a proud member of the class of ’91, I’m not sure that I honestly expected to see 2020. Surprise!

To recap Q3’s headlines, Vacasa purchased Wyndham Vacation Rentals for $162 million; Airbnb announced it is going public in early 2020; HomeAway Software (aka, Vrbo) decided to sunset its property management system V12; Beyond Pricing raised $42.5 million to expand its revenue management technology; TurnKey Vacation Rentals raised $48 million and will be offering its tech platform to individual homeowners; and Greater Sum Ventures continued to add to its portfolio, with majority-stake investments in LiveRez, LSI, Lynnbrook, and iTrip. It also formed Inhabit IQ, an umbrella holding company over its multifamily and vacation rental technology companies. Speaking of Inhabit IQ, in this issue, we had the opportunity to sit down with Inhabit IQ execs (page 25), and CRO Chad Scott and EVP Scott Butler were quite candid in addressing the questions PMs have sent us about the company’s intentions. Watching the transition in vacation rental technology, it is clear we’ll see more advancement in seamless integrations between multiple platforms, allowing vacation rental management companies to utilize a more plug-and-play technology strategy than has previously been available. In August, we hosted the first Vacation Rental Data and Revenue Management Conference in Atlanta. At this show, we discovered where our industry stands regarding data and revenue management and differentiated between the offerings of new and established tech providers. We also got a little closer to achieving consensus regarding the metric definitions and KPI labels. In this issue, we pulled together several of the key takeaways in the form of articles, offering insight into revenue management technology, data interpretation, outsourcing strategies, and dynamic pricing tactics. In addition, Key Data shared 18 months of data in several mountain and beach markets (page 80). In observing the professionally managed vacation rental industry, another major shift in our sector is that we are now seeing vacation rental managers more willing to come together to support the whole. Whether it is participating in benchmark data platforms, attending industry conferences, or joining together in fights against senseless regulations, our industry is finding ways to join forces to meet long-term objectives and has a larger appetite for collective initiatives than we have seen in the past. One of these initiatives is the upcoming Third Annual #BookDirect Guest Education Day, set for February 5, 2020 (page 86). On this day, vacation rental managers and homeowners will come together in a grassroots effort to educate guests about the many advantages of bypassing third-party websites and OTAs to book their next vacation rental directly with the owner or manager. Last year, the campaign reached over 60 million, and we hope 2020’s campaign will be even larger.

On a personal note, I’m so excited to be taking another road trip this year. After the VRMA conference, I’m heading to New England to learn more about these markets, take in some serious leaf peeping, and then travel down the Atlantic Coast to attend Phocuswright and OPMA in Florida in the last half of November. I want to thank you again for reading VRM Intel, for keeping me in the loop about the things you see that affect other PMs, and for sending your questions and concerns about our industry. This whole VRM Intel endeavor is led by you, and I’m grateful for your input. Sincerely, Amy Hinote

Editor-in-Chief

VRM Intel Magazine | Fall 2019

VRM intel magazine

Editor-in-Chief Amy Hinote

Director of Design and Production

Donato Berbelja

Contributors

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Jacobie Olin

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Amber Carpenter

Ryan Saylor

Jeremiah Gall

Chad Scott

Durk Johnson

Anurag Verma

Sue Jones

Hannah Wheeler

Advertising Sales Suzanne Larson, suzanne.larson@vrmintel.com

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© Copyright 2019 VRM Intel Magazine LLC. 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 is not responsible and will not be held liable for the opinions expressed by contributing authors. VRM Intel Magazine LLC reserve rights of ownership

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VRM Intel Magazine | Fall 2019

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VRM Intel Magazine | Fall 2019

What Is My Company Worth?

A Back-of-the Napkin Analysis

By Jacobie Olin

e are currently in an interesting time in the vacation rental industry for M&A transactions. From VC-backed companies to private equity (PE) firms, hotels, OTAs, and traditional short-term rental companies, there is no shortage of buyers.

Q: How is your company’s TTM EBITDA compared to its trailing 36-month EBITDA ?

The short answer is, “Well, it depends.” Let’s start with the easy part—your financials.

 What is your inventory’s yearly churn (attrition) rate?

We get asked this question at least once a week: “How much can I get for my company?”

 Are you growing or regressing? This can be defined as revenue, EBITDA, or inventory. Q: What is the length of time the majority of your homeowners have been on your program? Q: What is your advance bookings report, as of today, compared to the “as of today” from one year ago?  Are you getting more advance reservations? Q: Do any assets come with the deal?  Office, vehicles, etc.

Q: Is there already a GM in place, and how much are the owners involved in the day-to-day operations?

 Is the owner of the company also involved in homeowner relations? Note: This will hurt your valuation if trying to sell.

Objective Part (It isn’t completely objective, but it’s close.)  Figure out your trailing twelve-month (TTM) earnings before interest taxes and depreciation/amortization (EBITDA).

 Adjust by taking out all expenses associated with owners of the company (payroll, benefits, perks, one-time outlier fees, etc.). These can be subjective and are often negotiated.

 If you do not already have a GM in place, add back in a “market rate” expense for replacing the owners/management team, upcoming minimum wage hikes, rent expense (if not charging market rent), etc. Once again, these expenses can be subjective and may be negotiated. This should give you an adjusted EBITDA (AE) for your company. Now that you have come this far, what’s next?

The Subjective Part (The “Fun” Part) Put a multiple on this AE number. The current range of multiples is somewhere between 3.5 and 5.5 times AE, with some acquisitions falling lower or higher than this range. Currently, however, most deals are closing within this range. Why are some companies valued at 3.5x and others at 5.5x? Consider these questions: Q: Are you located in a “hot” market or not?

 Does your market have long peak seasons?

 Is the management fee in your market higher than that in other markets?  Are local regulations lax?

Q: How much of the EBITDA is from a real estate brokerage operation?  Real estate brokerages traditionally trade at a lower multiple. Q: What does the company culture/staff look like?

 Do the buyer and seller have similar company cultures and philosophies? Q: What terms of the deal are you willing to accept? This can change your valuation wildly. Buyers are often willing to offer higher multiples for more agreeable purchase terms.  Are you willing to accept a large amount of seller financing?

 Are you willing to stay with the company for x number of months/years?  Is your entire staff staying on with the new company?

Each buyer has his or her own subjective reasoning that affects the multiple, and there are many more questions in addition to those above. Each buyer treats each factor differently as well. Every deal is different! If you use this cheat sheet to determine your AE and are realistic in your multiple for your company, then you can figure out a range of what your company is actually worth. As I have stated several times, every deal is different, depending on the buyer’s and seller’s priorities in the plethora of factors and issues.

At C2G Advisors, we are M&A consultants with more than 35 years in the short-term rental industry. We predominantly advise buyers by helping them expand through acquisition; however, whether you are a buyer or a seller, we would love to work alongside you to help you get the best deal at the right time. VRM Intel Magazine | Fall 2019

By Douglas Kennedy, President, Kennedy Training Network

Email Overload Train Your Vacation Rental Team to Overcome Flooded Inboxes

ot so long ago in the lodging business, a long meeting or a day off would mean returning to a stack of handwritten notes scribbled on pink message pads. Then came the age of voicemail, and the pink slips were replaced by the flashing light indicator on our phones and a computer voice announcing, “You have 19 messages.” These days we find ourselves overwhelmed with digital messages coming at us 24/7 from multiple channels and devices. Yes, there’s still the occasional old-school handwritten message, and now and then we get a voicemail, both of which are usually from someone who has also emailed and texted about the same issue. Too many lodging leaders and even frontline staff members are now victims of their email inboxes, which is where notifications from apps and platforms arrive. For example, most of us have cloud-based phone systems that forward voice messages to our email address, and web or app-based platforms like Airbnb and Vrbo send us email notifications of in-app messages that await replies. As I make the rounds providing on-site sales and guest service training to VR management companies, I often get a peek at how they handle the flow of both internal and external emails. From 22

VRM Intel Magazine | Fall 2019

what I see, most are struggling and could benefit from reengineering their processes. Here are a few training tips and suggestions that can be applied to a greater or lesser degree according to the size of your company (in terms of staff and homeowners).

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

 A final tip: Do not wait for the day when you finally have time to clean out your inbox, because it will never come. Instead, create a new folder labeled “Old Emails through Today’s Date,” and move everything into it so that you can start fresh.

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

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

Here are some additional training tips. Keep your inbox clean.  The most organized executives I know obsess about having a clean inbox, yet most people use the inbox as a storage folder for all their messages. Having a clean email inbox is especially important as we read incoming emails on multiple devices, because an accidental swipe on the wrong message can delete an unresolved task.

 Don’t attempt to resolve each new message as soon as it is marked as read. The challenge here is that most messages require multiple action steps, often involving other colleagues or departments. Instead, put all required action steps on task lists and then move the messages to email folders. Or create an email folder labeled “Action Needed” or “Unresolved.”  This concept is especially important if multiple staff members are sharing a single inbox. For example, with a shared inbox for booking inquiries and app notifications such as reservations@ companyname.com, I have found inquiries that were missed because one staffer marked it as opened but did not respond.

 Personalize rental inquiry replies by introducing yourself by name as an on-site specialist, then paraphrase and restate what you observe from the remarks/comments received, after which it is fine to use a template.  Include headshots and direct-contact numbers to personalize exchanges and humanize your company.

 Change the subject line when the topic of the email message changes. This will make it easier for your recipients to find email documentation too.

 Discourage excessive internal emailing. Use restraint when cc’ing colleagues and using “reply to all.” If resolving an issue requires more than two or three exchanges, it should have been resolved via a phone call in the first place.

 Train staff to avoid emailing colleagues and instead make a “talk to Chris about” list. Then they should simply call him, or even better, pass by his desk and resolve all issues via a quick meeting.  Use the time saved from internal emailing to send more personalized, proactive emails to guests and owners. VRM Intel Magazine | Fall 2019

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By Amy Hinote

Inside Look at Inhabit IQ

GSV Combines Commercial, Residential, And Short-Term Rental

Technology Portfolios Under Large Proptech Umbrella

reater Sum Ventures (GSV) began making waves in the vacation rental (VR) industry late last year as news spread that the long-term equity firm was making majority-stake investments in several VR technology companies, including Streamline Vacation Rental Software, Virtual Resort Manager, Rental Guardian, Bluetent, and BizCor. In 2018, the company appeared to come from nowhere, and leaks of talks with dozens of other notable VR technology companies led to significant buzz in the industry, with property managers (PMs) asking who GSV is, what its plans are for these companies, how much of the VR tech industry will it roll up, and who will it acquire next. In 2019, GSV added LiveRez, Lynnbrook, LSI Tools, and the VR franchise model iTrip. The addition of iTrip to the portfolio was particularly concerning for the VR industry because iTrip is technically a PM company. Was GSV trying to purchase the technology platforms to build a super-brand of property management franchises? Throughout its investment process, GSV kept a tight lid among media outlets about its plans, leaving the industry to speculate and its portfolio’s leadership teams to field questions that they were un-

able to answer, except to say that nothing had changed: their road map was still intact, and they were still in control of their own companies.

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

However, GSV’s leadership quickly began to identify synergies between the Property Brands and Vacation Brands collectives (more below). As a result, it created a new holding company—Inhabit IQ—which merged these two brands into one. Inhabit IQ named a fresh leadership team over the newly formed holding company—including CRO Chad Scott and EVP, Vacation Division, Scott Butler—who recently reached out to VRM Intel to share the company’s plans, operating thesis, and vision for the future. VRM Intel Magazine | Fall 2019

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Company Structure According to Inhabit IQ’s website,

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

Diving deeper, Inhabit IQ is a holding company providing an umbrella for 33 commercial, residential, and short-term rental technology companies. The company’s C-team includes the following members:  Lisa Stinnett, CEO  John Vingia, COO  Chad Scott, CRO  Bill Roselli, CFO

“Our entire operating strategy—and this is very clearly articulated as we are sitting down, post investment, with the companies that we are partnering with—nothing should change,” Chad continued. “They are still steering the ship, making the decisions, and driving the overall business strategy. We are here to support and provide resources where they need it. On the multi-family side, for example, we have 24 companies that we have invested in. They are all making the decisions, and they are all making pricing increases and decreases as they would normally do.” When asked about the potential for rogue decisions by platform leaders, Chad offered a caveat, “If we see anything that is going to disrupt business—for example, if there are proposed price increases that we have found out about at the 11th hour—we are going to go out and stop. We don’t make any investments based on the requirement to raise or lower rates or to cut half of the staff for head-count synergy. That flies in the face of our operating strategy. We continue to support the leadership teams to make decisions for the business that they feel are the best ways to move forward. If we think [these decisions] might adversely affect the client base of otherwise, we will step in.”

 Kristoph Gustovich, CTO Early in our conversation, Chad Scott bristled at the term “rollup” and explained that when he thinks of a rollup, he thinks about what other proptech companies have done when acquiring new platforms, including integrating all support systems, cutting staff, putting a halt on innovation, and forcing cross-selling of the customer base. “Our entire investment and operating thesis is based around doing the opposite,” Chad said. “When we think about our operating thesis, we are buying good companies, helping them pour gas on growth and pour gas on innovation, and sharing technology across companies. Over time, we will ease fears [among customers] that innovation doesn’t stop; instead, it speeds up in our operating thesis. Platforms do not get sunset. They continue to drive forward. Leadership teams aren’t removed. They will continue to be supported and have access to more resources where they were previously bootstrapped and growing out of their own balance sheet. Once [customers] see that things are not going to change, and not only that, but there is innovation, new opportunity, and new tech, that will eventually alleviate their fears.”

Inhabit IQ Isn’t Looking to “Flip” the Portfolio We asked, “Do you intend to run these software companies in perpetuity?”

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

Upon hearing that we had heard rumors contrary to this position, Chad explained that confusion around this may result from a misinterpretation around future funding. In the company’s growth strategy, Inhabit IQ is likely to recapitalize the holding company as more resources are warranted to grow the whole. “We are having to pay up for these companies, especially some of the more mature ones. Occasionally, what we will do when we need capital for investment is bring on a new capital partner or fund through which we can advance the portfolio. So I understand the technical misunderstanding.”

Synergy between Commercial/Residential and Short-Term Rental Technology Platforms Inhabit IQ added a CTO to its team, which is somewhat unusual for a holding company. As Chad explained, “The CTO is a critical piece that we didn’t have initially. Once we invest in a company, our first question is ‘What do you need—how can we help?’ 95 percent of the time, looking at their road maps, there are many things they want to do, but they are just scraping the surface. In the multi-family sector, we started building up tech resources that our companies can use to continue driving growth. When we saw these same opportunities in the VR space, we moved over and executed the same playbook—find the cool companies with great leadership teams and great product sets, and partner with them to figure out where they need gas.” VRM Intel Magazine | Fall 2019

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

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

With the Addition of İTrip, Is Inhabit IQ Looking to Compete with Its PMs? According to Scott, the iTrip purchase was about the proprietary technology platform that iTrip had built, not about its property management services. “There is no plan to buy property management companies,” Scott said. “We buy technology, and iTrip has the technology to power those franchises; but the interesting play there was not the property management companies themselves; it was growing that franchise model.” Chad added, “We couldn’t [acquire PMs] if we wanted to because the funds with which we are investing are technology funds, so we would have to go a totally different direction on the capital raise to even be able go down that road.”

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

Is Inhabit IQ Still Looking to Add VR Tech Companies to its Portfolio? The team at Inhabit IQ is continuing to search for companies to round out the technology ecosystem in the VR industry. “Our investment and operating thesis has always been to find very cool companies, innovative products, something that is almost disruptive—or that we can get disruptive—and then invest in them and help them grow faster with our support than they have alone,” Chad said. “That’s why, with all of our investment to date, these companies have never taken large seed rounds or Series A rounds; they don’t have institutional investors because our assistance isn’t as impactful.” He added, “It is about product—more importantly, not current state of product, but future state of product. That is attractive to us. When we see products that aren’t quite where they need to be, but we know they can get there, those are the ones we are looking for. So if there is a target, it is those companies that maybe aren’t run super professionally or efficiently, or their product sets are kind of rounding first and heading to second base, and we can get them around to third and headed home. That is what we are looking for, and that’s why we don’t mess with the institutional-backed companies or the companies that have taken on cash because that is usually not them. We want the rough—the ones that we can step in and help. That is what we are looking for as far as a profile.” “We don’t invest in companies just to invest. We want to be able to help and step in and provide some assistance. If we can get a polished, great company in which everything is perfect and they are not asking an arm and a leg for it, we will do that deal, but that is not the profile that we are proactively looking for. We are looking for really cool, innovative products that we can help build out.”

VRM Intel Magazine | Fall 2019

Leadership Teams Remain Intact Inhabit IQ retains the leadership teams in its investments. “Our operating thesis has been to buy these companies and make sure that the entire leadership team stays—which is why we don’t do full acquisitions. These are investments because we want to be aligned going forward with the CEOs and management teams within these companies, all striving for the same thing, which is continuing to drive growth—just more quickly with access to more resources.” Is there a point that Inhabit IQ would remove a CEO? According to Chad, yes. “I can speak from experience that this happened twice on the multi-family side when we did do that. They were making decisions for their business that were disruptive to—not only to their business—but to closing down integrations, not wanting to partner. You can’t do that.”

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

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

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

“When we think about all-in-one solutions, the future is tight, seamless integrations; and while it is the future in this space, it is the present in commercial real estate and in multi-family housing,” Chad said. “Whether that is between our products or—as is the case 99 percent of the time—between multiple products, it is a requirement among the largest property managers to have plug-andplay solutions with seamless integrations.” He added, “Ultimately, and we learned this in the multi-family tech side, property managers drive the decision about who they are going to use. That’s why all our companies have open APIs. The goal is to drive the best user experience and not force-feed them a product they don’t want to use.”

The Future of Inhabit IQ’s VR Portfolio Despite significant pressing in our discussion, Chad and Scott were unwavering that they are not looking to sunset any platforms, in contrast to other technology rollups we have seen in the VR industry. Chad pointed out that they have a history of not retiring platforms: “Of the 24 multi-family companies we’ve added, we have never sunset a platform, and we have no intention of doing that now.” Chad added, “The ultimate objective is to be able to provide leading-edge technology to all asset classes. We want to be able to service the entire ecosystem of technology for all real estate classes.”

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Hotel-Style OTAs are here to stay. Are you optimized? Online travel agencies (OTAs) have fundamentally changed the vacation-rental industry. Savvy guests research and book online more than ever and the lines between the platforms are blurry. If youâ&#x20AC;&#x2122;re not on most or all of them, youâ&#x20AC;&#x2122;re missing out on millions of eyeballs. So, how do you juggle a channel strategy AND dynamic pricing AND get the most value out of OTA commissions with professional-looking listings? Well, you could do it all yourself through a direct connect, if you like that sort of thing and want to build and distribute listings one at a time. Or you could partner with Lexicon and optimize all your channels at once. They say time equals money. In this case, it also means more money per listing.

sales@lexicontravel.com | lexicontravel.com VRM Intel Magazine | Fall 2019

Scaling Your Business

Focus Areas for Human Resource Managers

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

Often business owners confuse the difference between growth and scaling their business. Itâ&#x20AC;&#x2122;s easy to misunderstand. The phone is ringing off the hook, the email accounts are blowing up, and everyone feels the sales growth. The increased revenue certainly supports this story line. At this juncture, business owners have a decision to make: Do we hire another employee to handle more work, or can we afford to wait and design a strategic plan to scale?

The trick is finding the sweet spot between increasing your revenue and keeping costs low with an effective operations plan for staffing. When business owners are prepared to scale operations, they are equipped to handle a growing volume of sales in a cost-effective and efficient method of continuing to be competitive in the marketplace. Scaling your operations with a strategic plan for staffing is a specific component of the process. 30

VRM Intel Magazine | Fall 2019

People Systems 1

Design a Strategic Plan

Good plans have a one-, two-, and five-year strategic outlook with correlating operational tactics. In addition, a strong plan will allow your business to fully utilize technology and automation, identify your competitive edge, draw your attention to the right things at the right times, focus on the right people (homeowners, guests, and employees), and build your network. If you are in the weeds and practicing a hands-on approachâ&#x20AC;&#x201D;processing details and managing employeesâ&#x20AC;&#x201D;it can be difficult to zoom out to the 30,000-foot level to think and plan, especially to identify patterns and execute visionary work.

Part of the scaling process is to identify methods for automation to free up your time and that of key staff. Research from the World Economic Forum predicts that 42 percent of workplace tasks will rely on some form of artificial intelligence or automation by 2022. Business owners and employees have opportunities to build trust

By Sue Jones and Deborah Allen

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

Being flexible and dealing with growth simultaneously can prohibit your ability to see the big ideas. Use organizational charts, flow charts, and other organizers to get out of the weeds. Going back and forth between graphical organizers and visuals, writing and reading documents, and talking in small groups can support a team that is stuck or indecisive. Be cautious of rigid thinking or a sticking-with-the-plan attitude. The strategic plan needs to be replicable and agile enough to be responsive to changes in real time. Businesses that are successful with scaling are flexible, responsive, and realistic as time goes by. 3

Manage Performance, Not Behaviors

Why is performance management important? It’s simple. Happy employees mean happy owners and guests. When reflecting on your performance management process, evaluate the answers to these key questions:  Are your performance reviews driving the behaviors needed for your employees to succeed?  Are you focusing on past performance or coaching toward future performance?  Are your employees meeting and exceeding their goals?  Are your employees provided with timely and relevant information regarding internal promotions and succession planning?

during this phase through delegation of responsibilities for certain necessary tasks. Focus on how best to use technology to free up your time and build confidence in your employees’ knowledge and skills. 2

Know Your Competitive Edge

Know what separates your business from your competitors and what separates your business in the eyes of your homeowners, guests, employees, and applicants. Take this one step further— know what separates your employment model and culture from your competitors so you are the employer of choice for attracting and retaining talent. Growing and scaling are both exciting and stressful times for employees. When you understand the core strengths of your business from multiple perspectives, you are ready to build your plan while keeping your competitive edge top of mind.

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

Managers and supervisors in all industries need to become more agile when managing performance. Agility allows you to rethink your company’s process. In the past, performance management has been a planning-based approach governed by goals and a scoring system that rates performance with a score or sometimes on a scale. And it has happened annually—once a year. Research tells us that this performance model has become antiquated in some ways. The structure and results are fine, even helpful. The issue is that employees desire to grow. They crave real-time feedback on performance. They want to know when something was off or if their work produced erroneous results.

Employees have accountability when given the chance to correct performance sooner rather than waiting for an annual review. Involving your employees in managing their performance will drive their accountability, ownership, and engagement. They also want to know when they did well, so be specific and accurate. The truth is not all of your employees will be on board with scaling your business. That’s OK. Don’t be afraid to let people go with integrity. People who are not behind the changes and your vision will harm your company with negativity. They will affect internal morale and attitudes. Some of this negativity could reach your guests or affect your brand. Employees, especially leaders, must be aligned with the company vision and serve as cheerleaders of the strategic plan and its tactics for scaling. VRM Intel Magazine | Fall 2019

Invest in Training and Development

When rolling out scaling plans internally, inform your staff of your mission, and gain their trust and support in advance. It takes time and doesn’t happen after one or two big group meetings. Making time for consensus-building conversations and planning meetings, be they company-wide, in department groups, or one-on-ones, is critical to managing change. Don’t rush this process. When you are open, transparent, and honest with your employees, they will appreciate your approach to keeping them informed and will work with you to support your plans. Your organizational culture becomes critical at this point. Ensure your culture, processes, and communications are consistent across all touch points—from employees to homeowners and guests and from existing employees to new hires. Focus on the right people. As the unemployment rate in local markets challenges employers to find talent, start focusing on the talent you have in the workplace today. How can you best invest in their training to develop their skill sets to meet future business needs? How do you invest in transforming employees into managers and leaders?

Developing talent from within your company will free up entry- to mid-level and seasonal positions to attract new talent. At the same time, current employees have opportunities to grow their careers and develop their knowledge and skills. Retain your talent. Find ways to engage and retain those employees who know your systems and internal processes, understand your brand, and represent key competence in the following areas:  Adaptability—can they maintain focus and a positive attitude under pressure?  Customer service—how well do they interact with homeowners, guests, and their internal customers (employees)?  Emotional intelligence—how well do they manage their emotions and the emotions of others?

 Problem-solving—how adept are they at assessing situations and fixing small problems?  Communication skills—how well do they express themselves one-on-one or in groups?

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

Develop a strong, consistent, and documented onboarding experience for new hires. Have the first day of employment planned well—seriously. Write out a task analysis for the first day, and identify key indicators to gauge the onboarding process for the first week through the 30-, 60-, and 90-day benchmarks. At 90 days, conduct a stay interview. Find out what you’re doing well and not so well. Adjust the new hire process based on information gained, and ensure adjustments are aligned with strategic goals. 5

Focus on Team Building

A cohesive team will meet or outperform your expectations consistently. When you train your leaders from within and recruit for 32

VRM Intel Magazine | Fall 2019

company culture and fit, your guests, homeowners, and employees will experience stellar customer service and feel valued within your business model. You are creating a win-win situation for all parties. Core employees execute their essential duties flawlessly most of the time. But when employees make mistakes, teams can pick up the slack and correct the errors with almost no detection from a customer. Every guest service touch point is important; if your employees make mistakes, let the team correct the situation. It’s an opportunity for the employee who made the mistake and the team member who corrected it to learn more about your brand and delivery of services and products. Let them learn together, and avoid micromanaging the small stuff.

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

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

You’ve already identified what your company does well and your competitive edge. You have the right people and systems in place to support scaling. The elusive piece of the puzzle is how to do this while keeping your company’s soul. The truth is that you’ve done most of the work. Your brand, systems, and people are the soul of your company. Your brand can scale, and your systems are responsive to growth and demand. Your employees have scaled by learning new software and building new processes. You’ve attracted, recruited, trained, reskilled, and retained employees. You’re working smarter rather than harder.

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

Brands are not static, and you should expect your company to evolve over the years. As your brand matures, be the architect of customer service and culture. Be accountable for internal and external forces that pull your company in the right or wrong directions, and make corrections quickly. Keep your company’s core values visible and practiced. Not only will you increase your revenue and ensure repeat guests; you will retain your talent and the soul of your company. Sue Jones, owner of HR4VR, is passionate about creating human resource programs and services that are strategic in scope and consistent with the goals and objectives of vacation rental clients. Sue’s innovative approach to HR and extensive experience encompasses businesses of all sizes in multiple industries. When addressing the needs of her clients, Sue is especially skilled at transferring her knowledge, skills and abilities across business channels in a personable manner. Sue is a veteran of the US Navy, holds a Master’s Degree in Business Administration from Northeastern University and is both SHRM-SCP and SPHR certified.

VRM Intel Magazine | Fall 2019

Relationship Building Creating CULTURES that Build Trust in Relationships By Ali Cammelletti

he vacation rental industry has an amazing foundation, one built on relationships and communication, which is why I was drawn to the industry and continue to enjoy working in it; the industry complements my hospitable spirit. I watch how company owners and leaders connect. They are quick to offer help to one another and give advice on technology and new projects. The real struggle I see is facilitating the relationship-building mind-set for the company’s both internal and external customers. The key takeaway is that relationship building takes focus and time. As we navigate this fast-paced world where everyone wants everything now, it becomes more challenging to slow down and work on our business instead of in it. When I work with companies that want a relationship-building culture, I often see that the key challenge is a lack of communication and direction for employees. This relates to employees’ lack of trust, as they often lack motivation to build relationships internally or externally. Because of this, communication and direction require the most focus time from company leaders.

I recommend beginning with the building blocks of trust. We can break this down to a simple formula that speaks to internal and external trust building, which includes frequent communication, openness, warmth, truth, and confidence, as Ron Zemke outlines in his book Delivering Knock Your Socks Off Service. Once teams understand the main concepts of trust building, I like to bring in values, either personal or professional. I share my values of transparency, integrity, the platinum rule (treating others the way they want to be treated), respect, passion, and love. Discussing values also reveals what doesn’t align for employees, which can create potential friction and take away from relationship building.

Then, we talk about their values and what emotional triggers they might have. I had an employee share that she struggled with being yelled at. She said she didn’t know how to handle being yelled at and would feel upset and not know what to do. I explained, when people are upset, their IQ can decrease by up to 50 percent. When they act emotionally, they do not act as their best selves, and this VRM Intel Magazine | Fall 2019

has nothing to do with the service provider. I often feel that I am part therapist when coaching, but this is necessary because employees need to understand why they feel these emotions before they can use the right tools to change the situation. All of us have different emotional triggers. Being mindful of those triggers allows us to acquire more tools for working through the friction that arises when we are triggered.

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

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

Once we have a solid sales team in place, I like to recommend a detailed sales IQ assessment that shows 16 areas in which employees are either highly developed or require development. These areas include preparing for sales, connecting with the head or the heart, collaborating with the buyer, and managing oneself. During this assessment time, we also score employees during reservation sales, opportunity calls, and guest and owner services calls. We have one-on-one webcam coaching sessions to enhance their skills, and monthly employee-wide interactive relationship-building topics and a focus article or video supplement this. Individuals revert to old behaviors after two weeks, and they usually retain only 20 percent of what they learn; therefore, I am a fan of providing additional focused content on a specific goal an employee is working on. I also suggest they self-score a call between coaching sessions so they can hear how they sound and where opportunities for improvement lie.

When creating change, it is essential to have the people being coached own and drive their change instead of have a supervisor tell them what to do. Sometimes an employee will ask for guidance, however, and I will make recommendations. When they say, “Just tell me what to do,” I have a conversation about their growth mindset and their buy-in to the process. Years ago, my good friend Sue Jones of HR4VR said to me: “I can coach skill, yet I cannot coach will.”

We cover various relationship-building sales skills. One specific skill is checking in with callers and asking if they have time to review different homes instead of assuming that they are too busy or want to have home links sent via email. We also discuss the importance of asking a minimum of two open-ended questions, which offers potential areas for relationship building through sharing commonalities and creates an emotional picture of how callers will experience their time in the area. It is important that we understand why the guest is visiting, not make assumptions. For example, we wouldn’t build relationships if we talked about how much fun they would have at the home because it is next to a beach or ski mountain if they were coming for a celebration or business trip.

We should focus on hospitality and makes booking easy for clients by offering to call them back; this way, they don’t have to worry about calling us when they are living busy lives. I often hear, “I am 36

VRM Intel Magazine | Fall 2019

not comfortable offering to call them back because I don’t like callbacks.” This is when we cover the platinum rule. The golden rule is about treating others the way we would like to be treated, whereas the platinum rule is treating others the way they would like to be treated.

A better technique is to ask the prospective client the following: “When are you looking to make a decision? If I don’t hear from you before then, can I call you?” Relationship building is soft and focuses on offerings, not hard pushes. We separate ourselves from third-party marketing sites by showing our gratitude because we recognize that our clients have many booking options. By holding monthly interactive, company-wide webcasts, we allow multiple departments to learn about how their coworkers think about concepts such as showing empathy, building relationships through hospitality, practicing conflict transformation, and creating buyers by empowering self-care in a service industry. When we offer duplicate presentations, most supervisors like to attend both because they learn so much about their team members through those members’ questions and comments.

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

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

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

“Clear is kind.” — Brené Brown

Ali Cammelletti of Cammelletti Consulting brings over 30 years of experience in the hospitality industry. She has served in many capacities within the industry, from working front-line at a restaurant and lodging to building and owning a successful event planning business. She now runs a consulting company, and her current area of expertise is leadership and sales coaching, with a focus on relationship building. Visit www.cammelletticonsulting. com for more details.

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(888) 304-1405 VRM Intel Magazine | Fall 2019

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VRM Intel Magazine | Fall 2019

Homeowner Communications

By Jeremiah Gall

Delivering and Communicating Deep Service Value to Homeowners

he past decade in hospitality has been a whirlwind, and short-term rentals have (and are still having) an incredible run. Every aspect of the industry is growing quickly, from rental supply to technology to consumer expectations to municipal regulations. One thing hasn’t changed. Vacation rental managers still have two distinct customers: guests and homeowners. The identity of a manager continues to evolve into that of a hospitality provider, and the industry is adapting to the idea that professionals not only manage properties, they also shape the guest experience.

I’ve spent 15 years examining the interplay of marketing, operations, and software in the vacation rental industry. We’ve built our business on the premise that elevating the brand experience is the future of the industry, and I’m confident that more attention will be devoted to the owner portion of this experience. In this article, I discuss the importance of delivering deeper service and suggest ways to effectively communicate this value to property owners.

The True Significance of Deep Service Value For homeowners, there are many options for facilitating the rental process. First, you can manage the entire process on your own: list the property on platforms such as Airbnb and Vrbo and hire cleaners and contractors to handle turnovers and maintenance repairs. A second option is to use an agency model—for example, Evolve — where owners receive marketing and OTA assistance but rely on a network of their own for cleaning, maintenance, and guest services. Finally, there is the full-service option of hiring a vacation rental property manager. This is particularly attractive for the top end of the market—when the owner is time constrained or doesn’t live locally—and nearly 44 percent of owners select the full service option.

As platforms such as Airbnb lower the barriers for owners to choose self-management and more professionals compete in vacation rental markets, owner expectations have risen. Homeowners are looking for top-to-bottom asset management, which includes preventative maintenance, clear communication on services delivered, time spent caring for properties, VIP concierge service, and guest communication. Managers who don’t deliver hospitality-like service will lose their clients to alternative management options or other property managers in their markets.

Showcasing the Full Value of Your Work When an owner makes the purposeful decision to employ a manager, he or she expects that manager to deliver value commensurate to the management fee (which is typically around 25 percent but depends on the market and on services provided). The manager takes on the responsibility of effectively communicating with the homeowner, which is instrumental in building trust and transparency in the relationship.

Of course, the idea of owner relations is not a novel one. As the industry has matured, however, owners are demanding greater detail and more frequent reports. Property management has evolved into a much more service-oriented business (i.e., it’s no longer just about maintaining property but also about maintaining guests), and managers have become saddled with heavier workloads. The increased owner-facing responsibility comes second to that of meeting guests’ service and quality expectations, but it is still critical. With 76 percent of guests expecting a personalized rental experience, property managers are forced to do a significant amount of behind-the-scenes work during each reservation. This work extends well beyond property care and readiness prior to each VRM Intel Magazine | Fall 2019

check-in (e.g., cleanings, inspections, and maintenance repairs) and includes both reactive and proactive guest attention.

In fact, managers are spending an average of 200 hours of work at each unit per year, but owners are aware of approximately 20 percent of it. Demonstrating service level takes time and resources, which is why many managers don't consistently relay information regarding level of service to property owners. It’s not enough to simply say your team is accomplishing X, Y, and Z on a daily basis. Managers need compelling data to convey value, and they need to showcase the data to owners. This is where some of the disconnect lies. Managers often lack the time and software resources needed to meticulously track the frequency, details, and results of their work; and manual tracking activity takes time that managers simply don’t have.

Despite their best intentions, managers often fall prey to reactively relaying information to homeowners. However, this makes it all the more important to have a positive working relationship with homeowners so that when there is an emergency, or when a costly repair arises, owners are more receptive because trust has already been established.

Actionable Methods to Convey Service Making a good first impression is the foundation of a robust owner relationship. Building strong rapport leads to a better understanding of owners' idiosyncrasies related to the items in their rentals, their styles of communication, and the overarching goals of your service. Building trust from day one sets the tone for a positive relationship, which often affords you more flexibility when it comes to maximizing rental income. There are many ways to foster owner relationships, from personalized preventative maintenance plans to consistent and reliable communication.

By leveraging data, managers can easily provide concrete evidence of work completed at the home (e.g., the number of visits made to the property; the amount of time spent on cleanings, inspections, and maintenance repairs; the frequency of performance for each task; the length of time required to complete various tasks; the number of service calls made to the property; and the frequency of guest communication). Consider how these metrics would easily translate into a comprehensive view for owners that could be shared on a weekly, monthly, or quarterly basis and could supplement existing meetings by phone or in person. Although many owners expect to be kept in the loop regarding the above metrics, not many understand the full value of preventative maintenance and asset management.

Tracking and reporting information such as appliance downtime, number of repairs per appliance, running age of each appliance, and quarterly inspection reports will impress many owners and prove that you can quickly diagnose issues, prevent emergency repairs, extend appliance lifespans, and drive more predictive property management — all of which demonstrates how indispensable you are to the homeowner.

Another best practice when conveying value is outlining service standards that are tailored to each property. No two properties are exactly the same, and each therefore requires a specific level of service. This fact may require you to implement different service measures that contribute to the success of each rental property (e.g., more than one property manager to oversee the property, thoroughly customized checklists, and preventative maintenance plans). 40

VRM Intel Magazine | Fall 2019

Suggestions for Homeowner Reporting Number of visits made to the property

Amount of time spent on cleanings, inspections, and maintenance repairs

Frequency of performance for each task

Length of time required to complete various tasks

Number of service calls made to the property

Frequency of guest communication

Making homeowners aware of the extra (and customized) measures taken to make sure their properties are well maintained will go a long way toward ensuring you retain your owners for years to come.

Benefits of More Service Offerings and Effective Communication Embracing the service side of the business and constantly looking for growth opportunities is the future of property management. Managers who deliver quality services will be given more work and responsibility. (Note: increased operational load can be offset through smart partnerships and adding service staff.) Upselling owners with added services such as landscaping, mildew removal, snow cleanup, and pest control increases your owners' lifetime value by helping you generate more revenue in the short term, as well as develop longer-lasting relationships.

Today’s consumers hold fellow consumers' reviews in high regard. Homeowners researching property management companies in their markets want reassurance that the services they receive will be top notch. Happy owners who feel they are getting more value than the fees they've paid are much more inclined to refer your services to others. As we know, the best form of marketing in this industry is word-of-mouth referral.

Conclusion Providing hospitality-level service for both guests and owners is one of the strongest trends in today’s vacation rental market. Delivering on this service isn’t quite enough, though, and managers are now expected to take the necessary steps to effectively communicate all the work they do. Those who are able to leverage deep property data to execute on prescriptive service plans will be able to adapt to this new service-provider role and will more quickly differentiate themselves from the growing number of managers in the market. Jeremiah Gall is a serial entrepreneur and vacation rental market veteran with a history of delivering great products to rental managers. Jeremy cofounded FlipKey.com in 2006, which grew into one of the largest vacation rental marketplaces in the world and was acquired by TripAdvisor in 2013. Jeremy cofounded Breezeway in 2016, which provides intelligent software to help property managers automate their property care and maintenance programs and deliver the type of quality experiences that guests and owners demand.

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VRM Intel Magazine | Fall 2019

Using Data

By Jack Newkirk

to Make Better Business Decisions

ata can be a vacation rental management company (VRMC)’s best friend. However, it’s only useful if you’re looking at the right data for the problem at hand. Too much data can be overwhelming, but too little can lead to incorrect assumptions and uninformed decisions. There’s no such thing as information overload, only filter failure— so here’s a look at how to best analyze and understand data to avoid potential business mistakes.

information, they could alter policies that were discouraging leads from booking. After all, although you can’t control what the market is doing, you can control your policies. You’re never going to know why 100 percent of unbooked guests didn’t book, but if you know a statistically relevant percentage of reasons, it can help you make better decisions.

Using Data to Drive RevPAR

The previous example is just one of myriad ways in which data can be misleading if not used strategically. Imagine that, when looking at data from your pay-per-click (PPC) campaigns, you notice the online booked revenue for a campaign is barely higher than the total cost. Clearly you should pause this campaign and divert that money to a different one that’s driving more bookings—right? Not necessarily. If you can’t see offline inquiries and bookings in addition to online bookings, you’re not looking at the full picture.

Imagine the average daily rate (ADR) in your market is up, but occupancy is down. Based on this information, it might be tempting to assume a price drop will lead to higher occupancy. But lowering rates isn’t a decision to be taken lightly; you should have confidence in your understanding, based on data, of what the market can tolerate. Sure, certain markets are pushing back against aggressive rates, but rate resistance is just one of many reasons a guest might not book with you. Understanding why your leads booked elsewhere is essential to driving revenue per available night (RevPAR). Although dropping your rates may seem like a simple solution to increase occupancy, it will only work if you are in fact losing leads due to rate resistance. But what if rate resistance only accounts for a small percentage of lost nights? If you could see what caused lost revenue, you could make more informed decisions. For example, if the majority of nights lost were not due to rate resistance, you could be lowering your rates for no reason. Besides that, lowering rates would be unlikely to drive additional bookings, meaning your ADR, occupancy, and RevPAR would all suffer. When looking at the unconstrained demand for rentals in the Outer Banks for July 2019 versus July 2018, we found that although ADR was up and occupancy was down, rate resistance accounted for less than 4 percent of lost nights. Company policies—such as deposit and cancellation rules—were responsible for a much higher percentage of lost revenue. When companies had access to this

Considering All Revenue Channels

It’s essential to consider all booking avenues when analyzing a campaign’s success. Otherwise, you could pause a campaign that’s driving many of your company’s phone leads and bookings. A 360-degree view of your PPC spends with revenue attribution for all channels allows you to make more informed and more effective marketing decisions. Employ actionable analytics, then act.

Leveraging a Hospitality CRM Platform Although leisure demand has been strong, it won’t continue to thrive indefinitely, and VRMCs need to be prepared for unpreventable situations such as recessions and natural disasters. All signs say a recession is coming—this isn’t an “if ” but a “when.” Launching data-based strategies now will empower VRMCs to manage this inevitable downturn. Partnering with NAVIS while ADR and RevPAR are thriving is the best way to ensure your stability when the unavoidable happens. NAVIS is the only complete CRM platform for the hospitality industry and gives you the power to make smarter decisions and bring in more revenue. VRM Intel Magazine | Fall 2019

Do what you love. Let us take care of the rest. Looking to sell? Vacasa takes care of you, your employees, homeowners and your community, leaving you with more time for the things you love. I knew Vacasa would honor my company’s legacy while giving my homeowners something I could not—the technology and tools to compete in a rapidly evolving industry. Laura Hancock Former Owner, Laura’s Vacation Rentals. 98% of homeowners saw improvements in rental revenue with Vacasa, averaging a 49% increase. Gulf Shores, AL

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VRM Intel Magazine | Fall 2019

Revenue Management

Who’s in Your Driver’s Seat

t the recent Inaugural VRM Intel Data & Revenue Management Conference in Atlanta, the first day largely focused on “setting the table.” This meant getting everyone on the same page in terms of terminology, focus, past, present, and an exciting-if at times overwhelming-look into the future. With that context, the second day then dug into more tactical recommendations and action items attendees could take with them when they returned to their business later that week. In this “table setting” exercise, Ralf Garrison was expertly positioned to kick off the conference. Ralf took us all through the evolution of the vacation and short-term rental industry in general and of the sophistication of the data collection and management process as well as revenue management in particular. In discussing what revenue management means and should mean in our space

By Andrew McConnell, CEO, Rented.com. today, Ralf made an analogy to autonomous vehicles. Yes, there is software out there today that allows artificial intelligence to drive your car for you, but as the number of lawsuits against Tesla for driver deaths increases, are you ready to put your life blindly into a machine’s hands? Revenue performance for your company is as critical as breathing is for you as an individual. If you are not prepared to trust the machine for one, are you prepared to blindly trust the machine for the other? Better understanding what revenue management means, and should mean, is helpful on this front.

To begin, there are many who conflate dynamic pricing with fullblown revenue management. For the former, there are some great technology companies out there like PriceLabs and BeyondPricing, and even some of the larger listing sites have their own tools that can help. VRM Intel Magazine | Fall 2019

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

Given where our industry is, and the ecosystem around it, much more manual work is required than many realize or want to believe. On top of that, as Sarah Franzen of Natural Retreats said during a panel discussion I was invited to moderate, “Anyone who is trying to tell me how to price my home—who has an interest elsewhere—I’m probably not going to take that recommendation.” That being the case, how can and should you as a vacation rental manager navigate this ever-evolving space today and going forward? As with so much else in our industry, every single business is different; but there are many commonalities across companies. My own experience at Rented.com might be informative, and I offer it here to help you avoid the mistakes we made.

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

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

Additionally, as so many of you realize, knowing the right price for a property at the right time is only a small piece of the puzzle. Given our complex ecosystem of property management systems, listing sites, company sites, phone reservations, etc., getting those prices updated to every relevant spot in a timely manner is never easy, and it is sometimes seemingly unfeasible given other priorities of your team. And finally, we began to see that having the right price in the right place was not even the be-all and end-all we had imagined. Truly managing revenue, and thus maximizing it, means far more than just price. It also has to do with what you are pricing (unit mix and strategy), where you are pricing it (channel strategy), how you are positioning it (listing strategy, listing attributes, minimum stay requirements, etc.), and so much more. All of these factors ultimately lead to the conclusion that you can only get the price that people are willing to pay for that specific unit at that specific time on the channels it is marketed on, with the attributes of those listings—such as reviews—being paramount to whether someone will book it.

While technology could and can help with a component of this, we found more was needed. At the same time, the managers we were working with simply did not have the internal capacity to take on all of the work that was needed on this front to maximize revenue. And so, given our portfolio size, we began to build it internally. We assembled a team of experts with diverse backgrounds in revenue management—from destination and urban vacation rentals as well as airlines and large-chain hotels in major cities. These experts 48

VRM Intel Magazine | Fall 2019

began holistically performing what we now understand is actual revenue management. They began balancing the relevance of the available data with technology to understand the market and the comparative sets for each property. This team was then able to dig into the nuance of individual unit pricing to account for positive and negative attributes and listing qualities of those properties. As we put in place a team of experts who were dedicated full time to this practice of revenue management, a funny thing began to happen. The revenue performance on our units went up dramatically. In some cases by greater than 2x, and across the board by 20–30 percent.

This surprised us and the managers we worked with, but in retrospect it shouldn’t have. In most vacation rental markets, the best manager from an owner and guest’s perspective is the manager who knows that market best; the manager who lives in that market and who has for years. It is a very rare owner or guest who asks how many other properties the manager manages around the world, or how much money that company has raised. Even of those few who do, a larger amount is not always the answer they want to hear. That puts the local manager at a distinct advantage when compared to the goliaths of our industry. At the same time, due to the vast number of properties those goliaths manage and all of the money they have raised, these companies in turn have distinct advantages when it comes to nonlocal activities and services. They have the scale to invest in and build technology and tools a local manager cannot afford. They can hire armies of teams for things, like revenue management, that most managers do themselves or that are just one part of an already overstretched employee’s job. The issue is that there are certain tasks too critical to the success of your business to be part-time jobs. As the lifeblood of your business, revenue performance—and thus revenue management—is one of these.

At the end of the day, equating dynamic pricing to revenue management is like thinking a car’s cruise control is the same as driving. Sure, the cruise control can set the right speed and maintain your momentum, but who is setting the direction? Who is dodging the reckless drivers around you? Who is slowing down as traffic piles up? Yes, maybe one day it will be technology through autonomous driving, but today, like with revenue management, it still requires a focused and dedicated driver. In a car, your life is on the line. With revenue management, it is the life of your business. In both cases, it is critical to have the best answer possible when you're in the driver's seat.

Andrew McConnell is the Founder and CEO of Rented.com, the world’s largest full-service revenue manager for professional vacation rental companies. Andrew holds degrees from Harvard College, Harvard Law School, and Cambridge University, and has worked with some of the world's largest public and private entities as a management consultant at McKinsey & Co., and as a Director, Solutions Design at Axiom Global, Inc. In addition to speaking and writing about vacation rentals and the sharing economy, Andrew also contributes more general business insights and advice to publications like Forbes, Inc.com, and Huffington Post, and serves on the non-profit Boards of Sheltering Arms, Georgia's oldest charity, and Atlanta's Entrepreneurs' Organization.

VRM Intel Magazine | Fall 2019

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VRM Intel Magazine | Fall 2019

By Ryan Saylor

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

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

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

External data in hotels points us to trends in the market and the competitive set but isn’t as readily available as internal data. Thirdparty sources like STR Analytics and TravelClick provide paid reporting for hotels to gauge historical and future market performance and can be highly valuable in setting future strategies. Within the vacation rental industry, there is one key external metric that is widely available that is not as available in the hotel world. Forward-looking market occupancy is commonly used in vacation rental revenue management to gauge prospective availability. This data is harder to come by in the hotel world because many hotels do not disclose their future “on-the-books” occupancy data, and you can’t easily get this information by going on a hotel’s website and checking availability. Hotels also often compare their daily rates to their competitive set and need to utilize a rate shop to pull at least 365 days of pricing data for each of their competitors. Competitor price shops are important for hotels because guest rooms between hotels are often of similar value to potential guests. Vacation rentals are obviously more unique; therefore, competitor rate shopping is not as necessary when determining strategy. The importance of good, clean data is as vital to vacation rentals as it is to hotels. Having reliable sources to count on while making strategic decisions is important because that data is the groundwork for any and all decisions made. Understanding the importance and capabilities of different data sources is also key when using advanced pricing and revenue management systems. VRM Intel Magazine | Fall 2019

Systems & Software

Revenue Management Services

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

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

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

One of the most common techniques for yielding is by using a “hurdle” price. By setting a hurdle rate in addition to the rack rate, hotel revenue managers are able to tell their revenue management system the lowest acceptable rate they want to take across all rate plans for a certain night, similar to a minimum price. The revenue management system works with the rack rate and hurdle rate set by the revenue manager to open and close inventory on certain channels. To better illustrate this, here’s a graphic demonstrating how a hurdle rate may affect a guest’s booking process on an OTA website versus a big-brand hotel’s website using the exact same nightly rate. In this example, the revenue manager has set a $100 rack rate that is offered to the guest on both channels, but in the background, the revenue manager’s hurdle point rate is restricting the Expedia rate from booking because the net rate is below that hurdle.

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

Brand.com

expedia.com

rack rate commission NET RATE

$100 3% $97

$100 16% $84

Hurdle point

$90

The first option is also the easiest: hiring someone or promoting a reservationist to expand the role. Over time, this happened at many hotels, but only at larger, urban properties where it made financial sense to have at least one person in charge of revenue management for one hotel. The second option fits better for smaller hotels—mostly midscale-branded properties—that have a harder time finding the money to dedicate to revenue management. As the larger hotel brands began to understand the importance of revenue management, franchise agreements began to include the requirement of a dedicated revenue manager. Large hotel brands then began to offer an additional service to franchisees in the form of third-party revenue management. Hoteliers pay a flat fee to the brand and in return have a revenue manager for their hotel that is managed directly by the brand. Imagine large call centers packed with revenue managers who have portfolios of 10–20 franchise hotels.

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

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

Vacation Rental Industry: What’s Next? Can the guests book?

YES

VRM Intel Magazine | Fall 2019

While we’re not able to predict the future, we do have the opportunity to learn from what hotel revenue managers have done

over the past 20â&#x20AC;&#x201C;25 years. First, hotels use similar data points as vacation rental managers to manage hotel revenue, which will help align strategic practices across both industries. Second, hotels (and airlines) have evolved their technical tools to include the use of a complete revenue management software solution, similar to a PMS. These RMSs take care of dynamic pricing, yielding, channel management, and more in one place. Hotels have also been battling third-party channels over the cost of distribution for years, and yielding strategies in hotel revenue management have become as important as dynamic pricing. With OTA and third-party sources already prominent in the vacation rental industry, the cost of relying on such channels has already become a topic of revenue management discussions. Vacation rental revenue management is likely heading toward a combination of both dynamic pricing and yielding as more and more owners and managers opt to use dynamic pricing and more advanced revenue management becomes necessary. Finally, hotels have realized the importance of having dedicated revenue management teams responsible for implementing strategy. The hotel industry also figured out, over time, how to efficiently ensure that dedicated revenue management is feasible for hotels of all sizes.

There are quite a few key differences between hotels and vacation rentals that make both industries unique. Revenue management practices are prevalent across the board in the travel world, but hotels have already recently worked through regulation, changing markets and economies, technological advances, and more. Insight into the history of hotel revenue management can help vacation rental managers anticipate similar hurdles and adapt their strategies to remain successful. Ryan Saylor is a Revenue Manager at Beyond Pricing, the worldâ&#x20AC;&#x2122;s first dynamic pricing platform for the vacation rental industry. Prior to joining Beyond Pricing, Ryan spent time in hotel revenue management after obtaining a degree from Purdue University in Hospitality & Tourism Management. His previous experience includes independent and branded hotel revenue management, as well as hotel digital marketing, web development, and strategic planning.

VRM Intel Magazine | Fall 2019

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Pricing Decisions for VRMs

Considering Levers and Constraints when Adjusting Pricing for Vacation Rentals

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

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

2. Segmentation Depending on location, larger family groups are likely to book longer vacations in high season, while in low season, smaller families and couples book shorter weekend getaways. Once you 56

VRM Intel Magazine | Fall 2019

By Anurag Verma, Founder, PriceLabs understand these patterns, and that shorter stays tend to have a smaller booking window than longer stays, you can cater to both audiences based on how far out they book. Although the basic principles of revenue management for vacation rentals mirror similar industries (think hotels and airlines), practicing revenue management in vacation rentals is significantly more complex.  Uniqueness Each rental is unique and not identical to the one next door, unlike hotels with multiple rooms that are exactly the same.  Portfolio optimization vs. equitable distribution In most cases, each rental is owned by a different entity that wants its property to do as well as others being managed by you (or someone else). Unlike hotels, which only care about total revenue made by all the units in the property—and in some cases across all properties in an area—you have to worry about individual owners being happy.  Highly fragmented supply Vacation rentals managed by multiple companies and owners are all competing for limited demand in the area, especially during low

seasons. If the occupancy is only going to be 30 percent, you want your rentals to be in that 30 percent. This starts a race to lower prices that might not always be fruitful.  Owner restrictions Owners of the rentals you’re managing might not give you complete freedom to do what you think is going to maximize revenue for them. This is not to say the owners are wrong, just that they may have their own concerns. But these concerns add additional constraints on your strategies. Complexities aside, even in industries where the practice of revenue management has matured, pricing is still is one of the more rewarding problems to solve, both intellectually and monetarily.

Nightly Rates There are a few well-established frameworks that different managers use, varying in complexity with respect to both analytical capabilities and execution.  Fixed rates Many rental managers set or adjust rates for the next year or two at one point in the year, and then change them again for next year after the high season is over. This was fairly common when active revenue management wasn’t as popular as it is today, and distribution constraints didn’t allow for changing rates too often. While these are easy on distribution, you run the risk of not reacting to changes in demand trends as well.

When thinking about revenue management strategies to implement for your vacation rentals, it is important to understand what levers you can pull and what constraints you have to operate within. The most commonly used levers tend to be the nightly rates, minimum length of stay (LOS), LOS discounts, and fees. When working with any of these levers, it is important to be aware of any constraints and the effect the levers might have on them.

 Dynamic rates

NIGHTLY RATES

LOS PRICING FEES

LEVERS

MIN LOS

CONSTRAINT

DISTRIBUTION OWNER PREFERECENES

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

OPERATIONS

 Automated dynamic rates  Operational capacity You might decide to target last-minute bookers with discounts and shorter stay requirements. This will generate more revenue in general, but going to extremes with this strategy might burden your staff with too many last-minute check-ins and too many short turnovers to plan for.

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

 Owner preferences Your rental owners might restrict you from going below a certain price even during low seasons. Even though the vacation rental industry has been trending toward shorter bookings, owners might not be comfortable with shorter stays yet.  Distribution If you’re using offline distribution for your rentals (like sending price sheets to travel agents), it might be hard to keep those upto-date if you are frequently changing your prices. If a significant portion of your bookings come from these channels, it might make sense to keep price parity across them.

 “Supervised” dynamic rates While automated dynamic pricing is beneficial, it is recommended that you don’t “set and forget” because human oversight is a key VRM Intel Magazine | Fall 2019

ingredient when using automated systems, which might not know some things you know based on experience. While every revenue manager has a standard set of reports, some common things to keep an eye on are discussed toward the end of this article.

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

 Dynamic minimum-stay plus, or unlocking vacant but unbookable

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

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

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

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

LOS discounts NO YES

Longer bookings: Incentivize discounts, operationally less expensive

The most common frameworks that let you slide along this scale to help find the right place include the following:  Weekly or monthly discounts to encourage longer stays  “Short-break” pricing where guests can book one or two nights as long as they pay the price for three nights  Dynamic minimum stay, or segmentation by booking window This strategy takes segmentation up a notch by recognizing that people who book last minute generally tend to book shorter stays. With this in mind, you could start with your usual LOS requirements for each season but lower them as the dates get closer and there are vacancies remaining.

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

Monitoring Your Revenue Management Strategy Whether you go with manual or automated revenue management frameworks, it is important to monitor the way your rentals are performing and take corrective action if needed. Some basic reports used by revenue managers include the following:  Year-over-year booking curve, ADR, and Revenue per Available Night (RevPAN) reports. It is good to be aware of how key metrics for your business are shaping up for the upcoming month compared to last year. Year-over-year booking curve, ADR, and RevPAN reports help you understand if a corrective action should be taken, regardless of whether it’s because of your pricing strategy or changes in underlying demand.

VRM Intel Magazine | Fall 2019

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VRM Intel Magazine | Fall 2019

These reports are usually run at an aggregated level, both for a timeframe and a segment of your portfolio that behaves similarly (e.g., four-bedroom beach-facing homes in September) and shows how the chosen metrics are trending compared to a similar time last year. Suppose we’re 15 weeks away from September, and you want to know how things look compared to last year. Knowing the final occupancy rate for September last year is useful, but only after September has ended this year as well; before that point, you’re not able to make any corrective changes. The following chart demonstrates that knowing how occupied your rentals were for the month of September around the same time last year allows you to be proactive.

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

The reports also illustrate market behaviors that might have nothing to do with your pricing strategy. Suppose you’re trailing on both occupancy and ADR (and as a result, RevPAN) compared to last year. This suggests that there may be less demand than last year because even though you’re selling for a lower price, you’re not selling more. You can try finding out if it’s softness in demand everyone is experiencing or if it’s something only you’re seeing. Either way, the solution now seems to lean toward demand stimulation rather than pricing.  Future-looking occupancy and pickup rates These reports can show how the demand for future dates is shaping up and if there’s a date-level pricing adjustment that can help. The chart below shows the current occupancy outlook and which of those bookings were made in the past week. This will identify peak demand periods, which will be high overall, or periods that are not yet highly occupied but may become so (where the bookings in the last week are particularly strong).

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

ADR Curve -sept YOY $700.00 $600.00 $500.00 $400.00 $300.00 $200.00 $100.00 $-

52 50 48 46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8642 2018

2019

RevPAN Curve -Sept YOY $600.00

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

$500.00

Practicing Revenue Management

$400.00

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

$300.00 $200.00 $100.00 $-

52 50 48 46 44 42 40 38 36 34 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 2018

2019

VRM Intel Magazine | Fall 2019

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VRM Intel Magazine | Fall 2019

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VRM Intel Magazine | Fall 2019

Measure what Matters Analytics Planning for 2020 By Amber Leto Carpenter

e are all drowning in data, and most of us do not want to admit out loud that we arenâ&#x20AC;&#x2122;t quite sure where to start or even what data matters most. Donâ&#x20AC;&#x2122;t worry, everyone is in the same boat, and the truth is that there are new data opportunities all the time, so your data strategy should be focused but flexible and constantly evolving. Web analytics are a great place to start when taking a fresh look at what is going on with your business. Google has many different products these days and has rebranded its platform as the Google Marketing Suite, including both its enterprise (paid) and free versions of Analytics, Tag Manager, Survey, Optimize, and Data Studio. One of the most powerful sets of data you can analyze going into the 2020 season is your website booking funnel. Hopefully your webmaster has set up a goal in Analytics to track the different pages encompassing an online booking, but even if that is not set up, all is not lost. 64

VRM Intel Magazine | Fall 2019

On average, most vacation rental websites convert less than one percent of website traffic into online bookings. That is not a typo, and the number becomes even more alarming when you segment mobile traffic to less than .5 percent of traffic that converts on a mobile device. A great goal for your 2020 website is to double online conversions on both full-size browsers and mobile devices. That may seem like a stretch, but it is achievable and something that your revenue-generating teams can work on together that is measurable and highly impactful for your brand and guest experience. Here is a list of items to analyze related to the booking process that can get your team thinking about a website conversion strategy heading into 2020. Remember, the booking process starts on your property details page. Given that most vacation rental websites present the full price on the property details page, that is the first page of your booking funnel and probably where you are losing 80 percentâ&#x20AC;&#x201C;plus of your opportunity.

Travel Research Phase Average consumer visits over 38 websites*

Traveler narrows options down to a few properties or finds the perfect place

Speaks to a Call Center Agent/ Vacation Planner

Enters Online Booking Flow

99% Books Online

Abandons Booking

30%

70% Hangs up without Booking

Books Over the Phone

Remarketing/ Outbound Campaign

35%

Finalizes Booking

65% Disclaimer:

Never Book

Conversion % in graphic are industry averages. Your conversion % may vary. *2015 Expedia Research

VRM Intel Magazine | Fall 2019

Do your fees have clear descriptions with tool tips that help explain why they are being charged? No one wants to pay random, unexplained fees. If you show the entire price on the property details page, do you also display the amount required to book online today? If not, then most consumers will assume that you expect full payment when booking online. Are cancellation policies hidden in the terms and conditions? Being clear about your cancellation policy is so critical in driving online conversion that some OTAs even put the cancellation policy for each property in the search results. Burying your policies in a long, legalese terms and conditions box can make even excited buyers hesitate.

Are you hiding the company phone number in the booking process to try to drive more online bookings? Stop doing that immediately. Even Google has emphasized that making the booking process as easy as possible will drive the highest conversion. Why do you care if the booking occurs online or over the phone, as long as you get the booking? And for most of you, your phone channel converts at over 30 percent, so if you can get them interested in a property and on the phone with an agent, the likelihood of converting the lead will be much higher than it would be if you leave them doubtful and confused on your website. Google has added a lot of functionality during the last year to both Analytics and Optimize. Optimize is a tool that your team may not be using, but it’s free and incredibly powerful! In the past, Optimize was only an A/B testing tool allowing you to measure the effectiveness of different page designs to help measure messaging or design changes that would lead to better landing pages or higher goal conversion.

Optimize can now be used to provide a personalized site experience! That’s right, you can segment traffic and show different personalized content on your website, such as specific promotions based on geographic location or marketing source. The code is simple to install, especially if your webmaster uses Tag Manager. Once you have the code installed on your website, your team can get creative with testing personalized content without expensive third-party tools. A 2017 study commissioned by Salesforce showed highly promising results whereby personalized recommendations and content increased conversion by as much as four times. In the world of Analytics, there is so much more to the tool than the out-of-the-box reports most of us are familiar with when we review website benchmarks. One of the most underused free tools in Analytics is called Custom Dimensions & Metrics. Free accounts can set up 20 custom dimensions and 20 custom metrics. Here are some examples of what can be measured with Custom Dimensions & Metrics to get your team thinking about what to ask your webmaster: B What are the dates and length of stay being searched on my website? C How many properties am I returning in search results for different queries? D How many different searches/dates do my prospective guests usually search before entering the booking funnel?

E How many properties do my prospective guests usually review before entering the booking funnel?

VRM Intel Magazine | Fall 2019

Depending on how high your website traffic is annually or how many dimensions and metrics you want to measure, consider upgrading to the paid version of Analytics so that you are not getting results from a limited data set. Once you have this data in hand, the questions your team can answer are endless. Instead of only knowing what dates are being booked (conversion data), you will have the dates being searched (demand data) to help you make more proactive revenue management and marketing decisions.

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

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

Once you have the abandoned property details page and cart data, your marketing team can set up remarketing email and social media campaigns, your reservations team can perform highly effective targeted outbound campaigns, and your revenue managers will have invaluable data they can use to spot patterns with conversion issues. Abandoned cart leads in the vacation rental space convert at approximately 35 percent or more when teams are cross-functionally engaged.

Don’t take my word for it on all these suggestions. Do the math on what would happen if you doubled online booking conversion and if you supplied your reservations team with more leads from traffic you are already generating. The return on the investment is huge, and these are all highly actionable strategies. Amber Leto Carpenter has been part of the vacation rental industry since 2003. With an early start in the operations and owner relations side of the business, she has spent most of her career on the technology side of the industry. In the last decade, Amber built and sold a web marketing company to Instant Software (now HomeAway Software), she was the VP of eCommerce for Wyndham Vacation Rentals, the Chief Marketing Officer of The St. Joe Company, and most recently was the VP of Product for NAVIS before transitioning back to consulting with global hospitality software teams and tech-enabled vacation rental companies in early 2019.

VRM Intel Magazine | Fall 2019

Building for a Niche Audience

Three vacation rental entrepreneurs purpose-DESIGN vacation rentals to meet unique travel needs By Heather Bayer, Vacation Rental Formula

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

Each was purposefully built with a rental demographic in mind.

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

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

“They just weren’t set up for the average group that travels on golf getaways—usually six to eight buddies or three to four couples. Instead, we were faced with the decisions—who would have the master bedroom with the en suite bathroom and who got the bot68

VRM Intel Magazine | Fall 2019

tom bunks in the kid’s room. The guy who planned the trip was the lucky one—the others took potluck.”

If they went to a hotel instead, they would be guaranteed an en suite room with two guys to a room but would likely be scattered across the property. Then there were issues with where they could meet collectively to play a game of cards or watch a football game. There was no good way of hanging out together. It seemed no one had given a great deal of thought to what these groups would do outside of playing golf. On top of all that, the accommodations were expensive. At one property Rick stayed in, the charge was $1,600 per night for average accommodations.

Oster mulled this over and figured, “If I combined the two concepts—all the amenities of a hotel built into a custom home—built it twice as big, and charged half as much, I’d have a pretty good business.”

| Oster Golf Houses build even commences; he continues to learn all the time.

He didn’t use an architect—he simply took his rough drawings to a designer, who created the plans for around $3,000, then sourced a reliable contractor who understood his goals and ideas. Rick is rueful about some of the mistakes he made with his earlier projects: “In the first houses, I installed carpeting in the bedrooms and economized a little on furniture. Now I know that the properties get some hard use, so I‘ll put in hardwood flooring throughout and buy more robust pieces that will stand up to rental use.”

What followed was the blueprint for Oster Golf Houses, a collection of purpose-built homes designed with a specific type of person in mind. Whereas some golfers travel with their partners, many travel in groups of players; the “guys’ weekend” springs to mind. They have some very specific needs, and Rick outlined these on the back of the proverbial napkin as his first blueprint. He knew his golfing guests would want the following:  A large, open-concept living area with a large-screen plasma TV and large flat-screen TVs in each bedroom  A game room with a pool table and an additional card table to seat at least eight people

 Four master suites, each with two queensized beds with top-of-the-range mattresses  En suite bathrooms with large walk-in showers and wide vanities with double sinks  Space for storing and cleaning clubs

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

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

| Villa Carpe Diem, CYPRUS

| Oster Golf Houses

His advice to anyone looking to purpose-build for a niche: “Choose something you are passionate about, something you know and love. That would be the easiest way to guarantee success.”

 Stainless steel grills

Two years later, Oster’s first golf house was built on a course in Oregon, and the response was immediate and strong. However, it was fairly short-lived as a business venture. The golf course resort made policy changes that curtailed the benefits to those golfers who stayed in private accommodation and made that choice less appealing than staying in resort lodgings. Having proven the concept, Rick started looking for locations that were friendlier to private ownership and rentals and discovered the Robert Trent Jones Golf Trail (RTJG) in Alabama. RTJG is a collection of 26 golf courses in 11 locations, which made it a perfect home for Oster Golf Houses. Rick has built five properties with a sixth currently under construction, and they all follow his original design.

He says the development process is not for the faint of heart because it involves searching for land, learning about running utilities, engineering, building driveways, and so forth, before the actual

For the Renals, that was a turning point—if they were going to build from scratch, why not make it accessible for people like David? And not just for people in wheelchairs, but for all those with more complicated needs? For David, a member of the Spinal Injuries Association, this was the opportunity to share the needs of those with physical disabilities and to explain what a great vacation would look like in a rental property if it were accessible. VRM Intel Magazine | Fall 2019

The result is a three-level villa with a swimming pool, of which two levels and the outdoor space are fully accessible via ramps, slopes, lifts, and hoists. On the lower floor, the accessible suite has two bedrooms, a large wet room, and a kitchen. “If you’ve got one person in a group needing accessible accommodation, there will typically be four or five others travelling with them. Most have a personal assistant or caretaker, so it’s important to have a second bedroom closely located to

swimming pool to a fully adapted vehicle, the villa has just about everything a person with complex disabilities would require to enjoy a great vacation.

Andy recognized early on that to offer accessible accommodation on an island where guests arrive by air, he would have to research the means by which they could get there. He realized that without specific equipment, some of his potential guests wouldn’t be able to disembark from their airplanes at Larnaca Airport. In 2016, after

| Villa Carpe Diem, CYPRUS

| Branson Vacation Houses, Cedar Cove

the disabled person on one floor,” says Andy.

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

“We listened to David and talked to others who have visited, and subsequently built up a large range of equipment as part of the overall package,” says Andy. From electric profiling beds to a manual hoist for access to the 70

VRM Intel Magazine | Fall 2019

working with a range of stakeholders, Andy was rewarded with the news that an Eagle Passenger Lifter had been purchased by the airport authority. This meant access was opened up to many more guests, and, in a market that Andy says is “surprisingly large and underserved,” it was a boon for business. Creating a great vacation isn’t limited to providing accessible accommodation. The owners of Villa Carpe Diem partner with other island providers to offer a wider experience of Cyprus for guests

with disabilities, and one such experience in particular is dear to Andyâ&#x20AC;&#x2122;s heart.

Thanks to Andyâ&#x20AC;&#x2122;s partnership with Freedom Divers Cyprus, guests can visit the island on a diving holiday and experience the perfect combination of accessible accommodations, adapted vehicles, and the means of learning a new activity that few would have thought possible.

As community manager for the digital guest guide Touch Stay, Tyann is fully immersed in the guest experience, and the success of her small-town businesses, Missouri Haus and Branson Family Retreats, shows that she walks the walk. The latest addition to her growing property portfolio is a 10-bedroom, 10Â˝-bathroom house in Branson, Missouri, that should be completed in early 2020.

Bank Haus, Marthasville, Missouri|

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

Branson is a town of 10,000 people centrally located in the United States and easily accessed by car. Known as the live entertainment capital of the world, it hosts nearly 8 million visitors each year and is the second most popular destination in the US for group travel. With a popular theme park, a renowned Christmas lights display, and a major convention center, Branson attracts visitors year round, so Tyann has no doubt her third property will be another success story. VRM Intel Magazine | Fall 2019

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

supported, and the Chamber also provides a wealth of information about what guests are looking for.

Tyann suggests joining the Chamber early in the process and getting to know the staff. “Get friendly with the person who meets the travelers who walk through the door—this is the one who is going to recommend your place,” she says.

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

Like Rick and Andy, Tyann stresses the importance of knowing what prospective guests want in a rental home. This in-depth knowledge extends to understanding the optimum length of stay. Whereas a trip to Cyprus usually lasts a week or more, group travelers to Branson and golfers in Alabama tend to book for shorter periods. From a marketing perspective, purpose-built niche properties lend themselves to booking directly and not relying on OTAs to deliver their guests.

Oster Golf Houses| Bank Haus, Marthasville, Missouri|

All three owners have comprehensive websites that appeal to their target markets. Villa Carpe Diem provides a lengthy access statement that describes every aspect of the property, from the height of each bed to floor coverings and lighting types. Oster Golf Houses includes drone videos covering every hole on each golf course where the homes are located. And Branson Family Retreats offers information on all the activities and events taking place in the area. Each drives traffic to its respective site from targeted marketing in niche-specific forums and groups and in partnerships with local organizations.

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

A final word of advice from Tyann: “You have to know the numbers—projected income and expenses plus extra for the things you’ll forget. Know what your definition of success is, and if the numbers don’t get you there, think again.” “All the properties in the area are vacation rentals, and building plans incorporate sufficient parking areas outside each home,” adds Tyann.

She’s also considered the access requirements of her typical guest group, which often includes older and less mobile family members, and has installed ramps and wheelchair-accessible areas. Friendliness to short-term rentals is integral to Tyann’s portfolio plans, and her first stop in a new town is the local Chamber of Commerce. In Branson, where tourism is a primary part of any location’s business plan, new building projects are encouraged and 72

VRM Intel Magazine | Fall 2019

Heather Bayer has been fully immersed in the short-term rental industry for over 25 years, first as an owner of multiple properties in the UK and Canada, and for the last 15 years as CEO of one of Ontario’s leading property management companies. She co-founded Vacation Rental Formula (formerly Cottage Blogger) where she contributes training materials that support independent owners and managers. She’s also the voice behind the Vacation Rental Success podcast – with 270 episodes of interviews, owner and manager features, and her own musings on this great business.

By Jennifer Perez, Production and Content Specialist, Bluetent

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

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

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

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

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

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

Your brand is how you represent yourself to the world and how you prove your value to potential guests—building it takes time and money. If you’ve already invested in a website that perfectly conveys your brand identity, you don’t have to abandon it and start over to add direct booking. Instead, choose a booking engine that can be easily added to your current website’s code. Hub effortlessly integrates with your existing website, allowing you to match the booking experience not only to your brand but also to your site’s design. Because you know your guests and properties better than anyone, Hub’s search widget is fully customizable. Just select the search fields you want to include—highlighting popular amenities, features, and locales—and it’s a breeze for travelers to find the perfect property and click “Book Now.”

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

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

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

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

The list could go on. We’ve identified even more ways that the right booking engine can make it simple, efficient, and affordable for vacation rental managers to put more “Book Now” buttons online. If this article has made you curious how Bluetent—and Hub—can help your company drive more direct bookings, give us a call at 970.510.5615. VRM Intel Magazine | Fall 2019

By Michelle Marquis, Chief Revenue Officer at Lexicon Travel Technologies

Owners and 3

Party Channels

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

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

Why the shift? “Because more people book online now!” exclaimed their operating partner. And he’s right. According to Phocuswright, 70 percent of all VR bookings were expected to be made through online partners rather than directly with property managers last year. As we all know, Vrbo was the original listing site for short-term rentals, but hotel-style online travel agencies have gotten in on the action. New entrants and changing listing terms at Vrbo (and HomeAway) over the past few years have created five VR marketplaces, each operating in similar ways but each with their own pros and cons. Vrbo and Airbnb are native VR sites—visitors expect to book at a VR and are the same guests who look for short-term rentals year after year. This is a good market, but much smaller than the audience looking for lodging options on Expedia and Booking.com.

You can certainly fight it out for a bigger slice of the pie, but why not add a newer and much larger pie? There are millions of new potential VR guests loyal to Expedia and Booking.com you need to get in front of. From my conversations around the United States, I hear property managers acknowledge this trend, but they hesitate because of the higher price the hotel-style channels charge and the resistant homeowners’ voice.

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

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

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

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

Convincing Homeowners to

Pursue New Guests using Expedia and Booking.com 74

VRM Intel Magazine | Fall 2019

Fortunately, now is a fantastic time to be seeking new vacation rental guests. According to Skift, demand for nonhotel accommodations is rising 30 percent to 40 percent faster than for hotels. And for good reason: The value of short-term rentals is undeniable. Earlier this year, Booking.com released news that only 20 percent of its revenue is from alternative accommodations. However, 35 percent of its bookers say they want to stay in a home. That means millions of potential new guests are looking for a home but have yet to stay in one.

Free Exposure

D Booking Safety Net

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

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

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

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

An Advantage for First Movers Who Get It Right Expedia and Booking.com built huge businesses as hotel-specific listing sites. As you know, they’ve been adding vacation rentals to their platforms for the past several years. Expedia’s $3.9 billion acquisition of HomeAway is Exhibit A in this market shift. Although some VRs have been listed on these sites for several years now, many struggle to create listings that perform. Translating the added complexity of a VR home’s additional amenities into these platforms is difficult. There’s a big opportunity to list your homes on these platforms as traditional hotel guests continue to shift to looking for higher-value homes for the first time. You want these guests to find your homes the first time they look; this gives you the best chance of building lifelong, loyal guests.

Acquiring New Guests Costs More A senior executive at a large VR company recently told me that its PPC costs have increased 190 percent in the past 18 months. Acquiring new guests has never been so expensive, while property manager commissions get smaller and smaller. The biggest complaint I hear about Expedia and Booking.com is that their commission rates are too high. However, when you evaluate these commission rates in light of today’s true costs of acquiring new guests, many property managers are finding OTAs are in fact cost effective in this new reality. So, in summary—a quick review of the incremental value of listing on Expedia, Booking.com, and all of their affiliates:

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

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

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

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

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

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

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

E Use a pay-to-play opt-in for homeowners. A few property managers have offered homeowners the option to list, but with an upcharge for these new external marketing costs.

There’s never been a better time to build your business, as an increasing number of traditional hotel guests look for higher-value short-term rentals. Our industry continues to flourish, in large part due to this guest migration. Now is the time to get your homes in front of these firsttime guests, and the best way to get them there is to list your homes on Expedia and Booking.com. VRM Intel Magazine | Fall 2019

By Melanie Brown and Hannah Wheeler, Key Data Dashboard

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

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

Hoteliers are decades ahead of vacation rental managers in terms of revenue management. As a result, vacation rental revenue managers have borrowed many strategiesâ&#x20AC;&#x201D;including measuring the occupancy rateâ&#x20AC;&#x201D;from hotel revenue managers. But, as we now know, 76

VRM Intel Magazine | Fall 2019

hotels and vacation rentals are different industries. Vacation rentals deal with more nuanced booking windows, a variety of inventories, and a traditionally different clientele. Perhaps the most obvious difference is that hotels do not have owners booking stays in their rooms. These stays, typically non-revenue-producing except for the occasional cleaning fee, sometimes dramatically reduce the number of days available for booking. Factoring in vacation rental owners alters the occupancy rate in an essential way: They change the number of nights a property manager is able to book. The traditional occupancy rate is measured by taking the total number of nights sold and dividing by the total number of nights in the period. If we manage 10 units during September, and have sold 100 nights, the calculation would be as follows:

Occupancy Rate 100 nights sold / (10 units x 30 nights) = 33% occupied In other words, on an average night during September, we filled one third of our properties with guests. This method of occupancy calculation is typically how hotels track performance and vacancy. It may appear to be the best way to determine how well a revenue manager performed during a given time, but it fails to take those important owner nights into account.

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

100 nights sold / ([10 units x 30 nights] - 50 owner nights) = 40% occupied If owner’s stays are excluded from the occupancy rate, the percentage changes drastically—from 33 percent to 40 percent. Suddenly, it seems as though we are doing a better job of filling our properties. At Key Data, we take this a step further; if owner nights are excluded from available nights, maintenance holds should also be removed, because they detract from the nights available to guests. When maintenance holds are considered, the occupancy rate continues to grow.

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

Revenue Per Available Rental Occupancy x ADR = RevPAR Scenario 1: 90% Occupancy Rate x $150 ADR = $135 RevPAR Scenario 2: 75% Occupancy Rate x $200 ADR = $160 RevPAR Even though occupancy is higher in Scenario 1, RevPAR is lower, indicating that additional revenue can be made by raising prices. When calculated using adjusted paid occupancy percentage, this becomes a vacation rental-specific KPI: Adjusted RevPAR. This KPI is a step above hotels’ idea of RevPAR and accommodates the intricacies of vacation rentals. A critical KPI for measuring revenue performance, adjusted RevPAR accounts for both ADR and the paid occupancy percentage. Adjusted RevPAR will usually be higher than RevPAR because owner stays and maintenance holds are considered, making it ideal for comparative purposes.

Adjusted Revenue Per Available Rental Adjusted Paid Occupancy x ADR = Adjusted RevPAR

Adjusted Paid Occupancy Percentage 100 nights sold / ([10 units x 30 nights] - 50 owner nights - 25 holds) = 45% occupied This occupancy rate is called the adjusted paid occupancy percentage, because it only includes paid nights and adjusts the denominator to consider only nights available to guests. Although that traditional occupancy rate may be helpful for the KPI to consider, adjusted paid occupancy percentage allows property managers to look at occupancy from an angle that excludes factors beyond their control. Because the rate of owner stays and maintenance holds varies greatly from property to property, the adjusted paid occupancy percentage is useful for comparing similar inventories and is essential when benchmarking performance against competitors. It is difficult to determine when a competitor’s properties are unavailable to book because they are already reserved or whether there is an owner stay/maintenance hold. Removing owner stays and maintenance holds allows for a true apples-to-apples comparison.

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

By combining occupancy and average daily rate (ADR) revenue managers can calculate their revenue per available rental (RevPAR),

Adjusted RevPAR versus RevPAR Adjusted Paid Occupancy = 40% ADR = $150

Adjusted RevPAR = $60 Occupancy = 33% ADR = $150

RevPAR = $50 We work in a dynamic industry and are building the playbook as we go. As we continue coming into our own we should consider adopting the calculations and data sources that best set up our industry for success. Seemingly small differences, like changing our occupancy calculations, can have large impacts; as we continue sharing our ideas, we will find how to best measure performance. The decisions property management companies make about pricing are fundamental to their success. As we continue growing in our space together it is critical that decisions are not just data-driven but driven by high-quality data, calculated using methods optimized for the industry. VRM Intel Magazine | Fall 2019

FIVE BEST PRACTICES TO DRIVE DIRECT BOOKINGS

o truly develop your brand requires building direct bookings. It’s critical for a vacation rental property management company to maintain a professional looking website, and all of your marketing efforts should work in alignment to drive traffic to your branded site. Here are five best practices you can use to accomplish the goal of driving direct bookings.

Website Optimization Your website should define your brand, allow guests to make inquiries, offer value to drive conversions, and answer questions your guests have. Here are key elements to include on your website to help accomplish your goal:  Professional photography

 Well-written unit descriptions  Location information

 Key factors—price and offers  User reviews

 Online booking capabilities  Speed and accessibility

 Functionality across all devices  Blogging

Email Marketing One of the most important marketing assets you have is the email list of prospects who inquire about your properties and your former guests. Email marketing is one of the most effective ways to build long-term relationships with guests.  Build your subscriber list

 Encourage readers to engage  Make it personal

 Keep your email out of spam folders

 Make sure your emails are clean and crisp  Include links and calls to action  Make it easy to unsubscribe

 Make email mobile friendly

Social Media Marketing When properly utilized, channels such as Facebook, Instagram, Pinterest, and LinkedIn can be great sources for adding names to your email list, driving traffic to your website, and increasing direct bookings.

 Have a plan

 Determine which platforms suit you  Get to know your target audience

 Market your properties via social media  Use photos, videos, and graphics  Prioritize quality over quantity  Work with the right tools

 Follow conversations and respond

Paid Search Use paid search (i.e. Adwords) to promote special events and offers, book slow rental periods, or drive traffic to your website. Unlike the low- or no-cost options, you will need a establish a budget first.  Understand how PPC works

 Have defined conversion goals  Select your PPC channel

 Perform detailed keyword research  Determine your PPC budget  Create compelling ad copy

 Make sure your landing pages are relevant  Continue to test and optimize

Organic Search It’s a marathon, not a sprint!

 Identify your target keywords/keyword phrases  Perfect your on-page optimization  Develop your content strategy  Attract high-quality links  Monitor performance

 Continue to optimize your SEO efforts Acting on and implementing these five best practices can help you to build an effective marketing strategy and drive direct bookings for your properties. Most of these best practices can be accomplished for low or no cost and a small commitment of your time. The result, whether you choose to do it yourself or hire staff or third-party contractors, will be to drive direct booking and increase your revenues! For more details and to read the full-length article, visit partner. xplorie.com/direct-bookings VRM Intel Magazine | Fall 2019

By Amy Hinote

18 Months in Review A Look at Common KPIs Across Key Vacation Rental Markets

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

The data and KPIs displayed on the following pages were provided in partnership with Key Data Dashboard and provide a look at the average daily rate (ADR), available occupancy (see page 74), average length of stay, and average booking window. We pulled together a few key mountain markets ( Jackson Hole, Park City, Telluride, the Lake Tahoe region, and the Gatlinburg area) and beach markets (Hawaiian Islands, Hilton Head, the Florida– Alabama Panhandle, and North Carolina’s Outer Banks). We also looked at the Charleston and Orlando markets to compare across destination types. As you comb through these KPIs, some interesting points jump out. Across markets, ADRs are generally higher in 2019 than in 2018 with a few interesting exceptions. The ADR in April 2019 was lower across all the mountain markets we examined. However, in April, occupancy in these same mountain markets was considerably higher, averaging 25 percent across the markets. In the stateside beach markets (Hilton Head, the Florida–Alabama 80

VRM Intel Magazine | Fall 2019

Panhandle, and the Outer Banks), March brought a drop in ADR and an increase in available occupancy for Hilton Head and the panhandle, but the Outer Banks still saw a 14 percent decline in available occupancy.

We often hear industry experts say, “Stays are shorter, and guests are booking more last minute.” But are they? As we look at the average length of stay and the average booking window over the past 18 months, that theory starts to fall apart. In the mountain markets the average length of stay was either higher or the same year over year with a few exceptions. Jackson Hole saw a slightly lower length of stay in the winter, whereas Park City and the Lake Tahoe region experienced a more significant drop in stay length in the summer. In the beach markets, the average stay length was also either higher or flat over 2018 with the exception of the Outer Banks, which saw a notable year-over-year drop in length of stay from January through April. Looking at the booking window, while there are mixed results among destinations and across seasons, when we look across markets, the average booking window did not change significantly year over year—with a handful of exceptions in 2019; in Telluride in January (down 28 percent), in Park City in April and May (down 27 and 37 percent), and Lake Tahoe in January (down 25 percent). In all these cases, available occupancy during these months was up 9 to 39 percent. Now that we are seeing actual aggregated transactional data coming directly from professional property managers, we are able to challenge theories and analyze actual performance locally, nationally, and soon globally, to better understand vacation rental performance.

Average Daily Rate: JanUARY 2018 through AUGUST 2019 Mountain Markets

*Data provided by Key Data Dashboard



1200 1000 800 600 400 200 0

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Beach Markets

Jackson Hole

Jul-18

Aug-18

Sep-18

Park City Area

Oct-18

Nov-18

Telluride

Dec-18

Jan-19

Feb-19

Lake Tahoe Region

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

May-19

Jun-19

Jul-19

Aug-19

Sevier County, TN

600



500

400

300

200

100

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Hawaiian Islands

Sep-18 Hilton Head

Dec-18

Jan-19

Feb-19

Mar-19

Apr-19

Outer Banks

Beach Markets Park City Area

Telluride

Lake Tahoe Region

Sevier County, TN

Hawaiian Islands

Hilton Head

Florida - Alabama Panhandle

Outer Banks

Jan-18

$416.19

$1,028.20

$354.41

$312.70

$207.17

Jan-18

$287.66

$112.31

$65.35

$63.12

Feb-18

$448.70

$821.50

$330.97

$326.08

$176.34

Feb-18

$278.53

$111.08

$72.88

$56.40

Mar-18

$377.14

$693.77

$352.86

$232.79

$199.08

Mar-18

$289.11

$185.03

$197.90

$109.22

Apr-18

$223.08

$174.30

$176.58

$168.39

$197.95

Apr-18

$249.13

$286.71

$256.23

$147.44

May-18

$249.25

$115.74

$176.66

$245.19

$189.33

May-18

$248.03

$309.05

$275.96

$220.02

Jun-18

$398.52

$169.82

$323.67

$396.68

$254.16

Jun-18

$291.29

$473.50

$379.13

$410.22

Jul-18

$568.40

$227.38

$319.40

$510.06

$271.04

Jul-18

$301.01

$498.35

$401.90

$503.51

Aug-18

$527.68

$196.26

$314.10

$460.96

$216.75

Aug-18

$278.76

$384.50

$275.17

$406.47

Sep-18

$316.76

$149.69

$324.03

$334.44

$189.35

Sep-18

$224.44

$254.01

$205.12

$217.95

Oct-18

$238.31

$123.85

$158.18

$208.87

$227.96

Oct-18

$235.89

$229.71

$206.28

$165.18

Nov-18

$194.86

$180.29

$167.64

$308.74

$256.51

Nov-18

$247.41

$247.64

$159.05

$148.58

Dec-18

$625.61

$1,082.31

$535.27

$494.96

$300.09

Dec-18

$350.15

$216.20

$117.03

$116.59

Jan-19

$451.18

$1,114.81

$355.51

$353.05

$213.51

Jan-19

$324.92

$114.50

$73.78

$69.87

Feb-19

$475.22

$940.06

$360.18

$324.71

$174.52

Feb-19

$298.37

$110.87

$78.30

$53.88

Mar-19

$432.60

$742.25

$384.27

$247.64

$196.29

Mar-19

$299.30

$172.97

$195.86

$94.45

Apr-19

$196.60

$171.63

$163.76

$166.44

$195.59

Apr-19

$272.28

$305.99

$245.94

$162.83

May-19

$248.62

$76.97

$189.89

$275.61

$194.97

May-19

$244.55

$330.06

$283.17

$231.69

Jun-19

$423.88

$167.95

$347.77

$400.74

$257.56

Jun-19

$287.63

$490.87

$395.40

$431.35

Jul-19

$554.76

$262.18

$338.22

$514.00

$283.04

Jul-19

$319.56

$508.32

$409.24

$524.56

Aug-19

$449.53

$212.90

$345.03

$492.63

$218.05

Aug-19

$280.93

$388.77

$257.44

$418.41

Charleston and Orlando

Charleston Area

Greater Orlando

Jul-19

Aug-19

Jun-19

Apr-19

May-19

Mar-19

Jan-19

Feb-19

Dec-18

Oct-18

Nov-18

Sep-18

Jul-18

Aug-18

Jun-18

Apr-18

May-18

Mar-18

$500.00 $450.00 $400.00 $350.00 $300.00 $250.00 $200.00 $150.00 $100.00 $50.00 $Jan-18



Nov-18

Florida - Alabama Panhandle

Jackson Hole

Feb-18

Charleston and Orlando

Mountain Markets

Oct-18

Charleston Area

Greater Orlando

Charleston AreA

Greater Orlando

Jan-18

$91.20

$160.27

Nov-18

$224.91

$150.70

Feb-18

$96.26

$147.78

Dec-18

$199.13

$211.69

Mar-18

$170.13

$188.22

Jan-19

$99.67

$163.63

Apr-18

$282.16

$182.57

Feb-19

$104.68

$152.32

May-18

$339.82

$142.04

Mar-19

$161.07

$175.85

Jun-18

$423.13

$182.07

Apr-19

$287.24

$195.65

Jul-18

$456.07

$194.53

May-19

$342.00

$143.39

Aug-18

$361.07

$168.03

Jun-19

$437.50

$178.53

Sep-18

$274.66

$134.65

Jul-19

$471.44

$188.29

Oct-18

$205.67

$136.40

Aug-19

$379.22

$160.08

VRM Intel Magazine | Fall 2019

Average LENGTH OF STAY (DAYS): JanUARY 2018 through AUGUST 2019 Mountain Markets

*Data provided by Key Data Dashboard



30 25 20 15 10 5 0

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Beach Markets

Jackson Hole

Aug-18

Sep-18

Park City Area

Oct-18

Nov-18

Telluride

Dec-18

Jan-19

Feb-19

Lake Tahoe Region

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

May-19

Jun-19

Jul-19

Aug-19

Sevier County, TN

 45 40 35 30 25 20 15 10 5 0

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Hawaiian Islands

Sep-18

Oct-18

Hilton Head

Charleston and Orlando

Mountain Markets



Nov-18

Dec-18

Jan-19

Florida - Alabama Panhandle

Feb-19

Mar-19

Apr-19

Outer Banks

Beach Markets

Jackson Hole

Park City Area

Telluride

Lake Tahoe Region

Sevier County, TN

Hawaiian Islands

Hilton Head

Florida - Alabama Panhandle

Outer Banks

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Jan-19

Feb-19

Mar-19

Apr-19

May-19

Jun-19

Jul-19

Aug-19

Charleston and Orlando

25 20 15 10 5 0

Charleston Area

Greater Orlando

VRM Intel Magazine | Fall 2019

Charleston Area

Greater Orlando

Charleston AreA

Greater Orlando

Jan-18

Nov-18

Feb-18

Dec-18

Mar-18

Jan-19

Apr-18

Feb-19

May-18

Mar-19

Jun-18

Apr-19

Jul-18

May-19

Aug-18

Jun-19

Sep-18

Jul-19

Oct-18

Aug-19

Available Occupancy Rate: January 2018 through August 2019 Mountain Markets

*Data provided by Key Data Dashboard



90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19

Beach Markets

Jackson Hole

Park City Area

Telluride

Lake Tahoe Region

Sevier County, TN

 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18

Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

Hawaiian Islands

Hilton Head

Beach Markets Park City Area

Telluride

Lake Tahoe Region

Sevier County, TN

Hawaiian Islands

Hilton Head

Florida - Alabama Panhandle

Outer Banks

Jan-18

61%

48%

43%

48%

26%

Jan-18

69%

19%

45%

Feb-18

67%

50%

56%

53%

32%

Feb-18

73%

43%

63%

Mar-18

55%

44%

51%

46%

56%

Mar-18

66%

61%

57%

14%

Apr-18

13%

30%

51%

Apr-18

60%

49%

41%

22%

May-18

22%

16%

51%

May-18

56%

53%

40%

Jun-18

62%

25%

51%

36%

74%

Jun-18

57%

75%

82%

74%

Jul-18

78%

48%

71%

65%

82%

Jul-18

63%

85%

88%

89%

Aug-18

70%

40%

50%

53%

60%

Aug-18

53%

64%

53%

88%

Sep-18

66%

27%

49%

32%

60%

Sep-18

45%

38%

46%

57%

Oct-18

26%

19%

22%

17%

68%

Oct-18

50%

38%

54%

33%

Nov-18

13%

21%

25%

59%

Nov-18

57%

20%

38%

20%

Dec-18

41%

37%

30%

44%

52%

Dec-18

59%

13%

29%

11%

Jan-19

66%

49%

47%

50%

28%

Jan-19

68%

20%

52%

Feb-19

79%

54%

63%

56%

32%

Feb-19

73%

50%

69%

Mar-19

70%

57%

62%

49%

62%

Mar-19

66%

62%

61%

12%

Apr-19

14%

18%

34%

54%

Apr-19

55%

49%

47%

32%

May-19

31%

20%

18%

19%

50%

May-19

50%

51%

57%

45%

Jun-19

68%

29%

48%

36%

75%

Jun-19

56%

76%

81%

77%

Jul-19

80%

44%

70%

63%

81%

Jul-19

62%

87%

83%

90%

Aug-19

78%

38%

58%

54%

65%

Aug-19

52%

66%

52%

92%

Charleston and Orlando

Charleston Area

Greater Orlando

Jul-19

Aug-19

Jun-19

Apr-19

May-19

Mar-19

Jan-19

Feb-19

Dec-18

Oct-18

Nov-18

Sep-18

Jul-18

Aug-18

Jun-18

Apr-18

May-18

Mar-18

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jan-18



Jul-19 Aug-19

Outer Banks

Jackson Hole

Feb-18

Charleston and Orlando

Mountain Markets

Florida - Alabama Panhandle

Charleston Area

Greater Orlando

Charleston AreA

Greater Orlando

Jan-18

23%

49%

Nov-18

26%

44%

Feb-18

33%

62%

Dec-18

19%

47%

Mar-18

45%

71%

Jan-19

20%

52%

Apr-18

40%

56%

Feb-19

32%

89%

May-18

43%

50%

Mar-19

43%

88%

Jun-18

67%

56%

Apr-19

46%

62%

Jul-18

76%

71%

May-19

47%

52%

Aug-18

60%

54%

Jun-19

68%

57%

Sep-18

36%

32%

Jul-19

76%

68%

Oct-18

42%

45%

Aug-19

62%

54%

VRM Intel Magazine | Fall 2019

THE FUTURE OF DATA IS THE DASHBOARD. THE FUTURE OF THE DASHBOARD IS KEY DATA.

PERFORMANCE ANALYSIS

BENCHMARKING INTELLIGENCE

PACING TRENDS

MARKETING

HOW OFTEN DO YOU CHANGE YOUR RATES? In a perfect world you would change them all the time, nimbly adjusting up and down, perpetually optimizing prices, achieving that elusive balance between ADR and Occupancy.

Donâ&#x20AC;&#x2122;t set it and forget it. Optimize instead. K E Y DATA DA S HB OA R D. C OM

S A L E S @ K E Y DATA DA S HB OA R D. C OM

Average Booking Window (Days): January 2018 through August 2019 Mountain Markets

*Data provided by Key Data Dashboard



120 100 80 60 40 20 0

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18

Jul-18

Beach Markets

Jackson Hole



Aug-18 Sep-18

Park City Area

Oct-18 Nov-18 Dec-18 Telluride

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

Lake Tahoe Region

Jul-19

Aug-19

Jul-19

Aug-19

Sevier County, TN

200 180 160 140 120 100 80 60 40 20 0

Jan-18

Feb-18 Mar-18 Apr-18 May-18 Jun-18

Jul-18

Aug-18 Sep-18

Hawaiian Islands

Oct-18 Nov-18 Dec-18

Hilton Head

Outer Banks

Beach Markets Park City Area

Telluride

Lake Tahoe Region

Sevier County, TN

Hawaiian Islands

Hilton Head

Florida - Alabama Panhandle

Outer Banks

Jan-18

107

Jan-18

111

175

125

Feb-18

116

192

Mar-18

Apr-18

105

104

May-18

119

133

Jun-18

109

Jun-18

128

152

Jul-18

108

Jul-18

111

162

Aug-18

110

168

Sep-18

122

151

Oct-18

103

116

108

Nov-18

107

108

104

Dec-18

131

Jan-19

115

173

125

Feb-19

117

168

103

Mar-19

124

Apr-19

102

May-19

109

133

Jun-19

126

Jun-19

124

159

Jul-19

109

Jul-19

112

163

Aug-19

101

Aug-19

116

170

Charleston and Orlando

140

Charleston Area

Greater Orlando

Charleston AreA

Greater Orlando

Jan-18

Nov-18

Feb-18

Dec-18

Mar-18

Jan-19

Apr-18

Feb-19

May-18

Mar-19

Jun-18

115

104

Apr-19

Jul-18

116

May-19

Aug-18

101

Jun-19

123

101

Sep-18

102

Jul-19

117

100

Oct-18

100

Aug-19

104

118

120 100 80 60

Greater Orlando

Jul-19

Aug-19

Jun-19

Apr-19

May-19

Mar-19

Jan-19

Feb-19

Dec-18

Oct-18

Charleston Area

Nov-18

Sep-18

Jul-18

Aug-18

Jun-18

Apr-18

May-18

Mar-18

Jan-18



Florida - Alabama Panhandle

Feb-19 Mar-19 Apr-19 May-19 Jun-19

Jackson Hole

Feb-18

Charleston and Orlando

Mountain Markets

Jan-19

VRM Intel Magazine | Fall 2019

t c e r i D k o o B # Guest Education Day February 5, 2020

The Third Annual #BookDirect Guest Education

Day is Scheduled for February 5, 2020

he Third Annual #BookDirect Guest Education Day, recurring on the first Wednesday in February, is set for February 5, 2020. With a multitude of new travelers searching for vacation rentals, vacation rental managers and homeowners are yet again joining forces for one day with a singular message to let travelers know there are many advantages to bypassing third-party channels and booking directly with management companies and homeowners.

What Is #BookDirect Guest Education Day? The idea for the campaign originated three years ago in a webinar discussion with several large vacation rental management companies located across the United States exploring ways to educate consumers about the value of booking vacation homes directly instead of on third-party channels. The urgency for education increased with the guest/traveler fees—and the consequential confusion among guests—that were added to Vrbo and TripAdvisor. After the conversation, we did a little research and quickly realized it only takes a few thousand tweets on a single day to create a “trend.” In addition, vacation rental travelers often have stayed in several vacation rentals in the past and would be likely to get email messages from multiple VRMs in a short amount of time if a large number of VRMs initiated email messaging at the same time. As a result, #BookDirect Guest Education Day was born. The campaign’s goal is for vacation rental shoppers to see multiple messages across social and email channels on the same day, all promoting the many reasons to book their vacations directly with managers or homeowners. With frequency as a driver, we believe that guests will understand why they should #BookDirect.

#BookDirect Guest Education Day is a collective education effort, and VRMs are encouraged to leverage their own brands in communications. The idea is to use your own graphics, customer list, and benefits and to direct people to your company’s website and/ or social pages. “I think the timing of this campaign is impeccable,” said Tim Cafferty, president at Sandbridge Blue Realty Services and Outer 86

VRM Intel Magazine | Fall 2019

Banks Blue Realty Services and cofounder of the popular podcast Sarah and T. “The message has resonated with consumers and vacation rental managers alike.”

April Salter, chair of the Association of Vacation Rental Operators and Affiliates said, “[Vacation home owners and managers] are a creative and determined group, and they’re excited about putting advocacy into action. #BookDirect Guest Education Day is a chance to shout out to the world that booking direct is better for owners and managers and for guests. This is a chance to work together to get out the message.”

Campaign Performance (2018 and 2019) Over the past two years, VRMs delivered creative social media posts, videos, landing pages, how-to instructions, emails, and promotions from both managers and homeowners. The independent boutique hotel industry joined the effort last year, expanding the overall reach.

Last year’s #BookDirect Guest Education campaign was able to directly communicate with over seven million travelers through email messages to past guests and prospects (reported by VRMs) and resulted in over 60 million impressions on Twitter and Instagram (Keyhole.co).

2018

2019

Percent Change

Direct Emails (reported from VRMs)

3.5 million

7.2 million

 103%

Twitter and Instagram Impressions (Source: Keyhole.co)

24.1 million

61.5 million

 155%

754,312 ENGAGEMENT

6,099,669 REACH

61,519,493 IMPRESSIONS

Top #BookDirect VR Performers on Twitter Name

Find Rentals The Holiday Cottages Paramount DSTNs Holiday Let Success Southern Vacation Rentals PC Rental Properties DestinPalmsVacations iTrip Vacations Paradise Retreats TTVP Ola Properties, Inc. Vacation Soup Brett/Robinson

Total Exposure

17,028,505 2,570,755 1,364,903 576,782 433,703 407,780 387,617 277,745 266,919 262,683 210,614 200,756 171,714

AnchorVacations

129,605

Ali’i Resorts Orlando Vacations Claire | Key Vacation Homes

113,241 109,943 100,369

Location

Worldwide Wells, Somerset Corolla, NC Martley, Worcestershire Gulf Coast Park City, UT Destin, FL Worldwide Santa Barbra Truckee, CA Kapolei, HI Worldwide Orange Beach, AL Gulf Shores & Orange Beach, AL Maui, HI Orlando, FL Kissimmee, FL

Source: Keyhole.co

As a nonbranded, grassroots effort—with a zero dollar budget— the campaign trended on Twitter in both 2018 and 2019, and we hope for an even larger reach in 2020.

How to Participate We are asking all vacation rental managers and homeowners to do the following on Feb 5, 2020:

 Use the hashtag #BookDirect on Twitter, Facebook, Instagram, and LinkedIn to bring attention to the many advantages of booking vacation rentals directly with managers or homeowners instead of on third-party channels.  Send out an email campaign to past and prospective guests with a message about the value of booking direct, booking local, and booking smart. Other ideas:

 Work with local and feeder-market media sources to educate consumers about the best ways to book vacation rentals.

 Encourage local destination marketing organizations (i.e., CVBs, chambers of commerce, and state tourism organizations) to join in promoting their direct connections to lodging providers.  Create a landing page on your website about the value of booking direct and instructing guests how to book direct.

Using #BookDirect Guest Education Day as a Catalyst for Year-Round Education Efforts For most vacation rental managers and owners, the #BookDirect movement is not a one-time pitch. Instead, it is a launchpad for an ongoing campaign to let travelers know the following:  When travelers book on large vacation rental websites like Airbnb, Vrbo.com, and TripAdvisor, they are paying substantial fees to use these sites.  Many of the best homes are not listed on these third-party websites.

 Local managers and homeowners know the properties and the area better than anyone and can better match travelers to homes and help plan better vacation experiences.  Travelers can find out about special offers that cannot be found on the big websites.

 Managers and owners can better help guests optimize dates and budgets to fit their needs.

 Travelers with special needs and requests can work directly with owners and managers in a much more personalized way to guarantee an amazing vacation for their family or group. Mike Harrington, former president of the Vacation Rental Managers Association (VRMA) and founder of Carolina Retreats in North Carolina, has been a longtime advocate of industry-wide education. “At VRMA’s educational events, finding new avenues of marketing—both direct and through listing and third-party sites—have been some of the most requested topics at any event,” Harrington said. “With our industry now squarely in the spotlight of the mainstream travel sector, continuing to market your local brand and what makes each location and company unique is becoming more and more of a challenge. Finding ways to highlight and educate travelers of the intimate knowledge that you offer of a unique property and area is something that everyone in the industry should want us to promote in order to elevate the guest experience that is so important to the long-term health of the vacation rental industry.” Vince Perez, vacation homeowner, property manager and founder of Fetch My Guest, agreed. “Guest education is important because travelers appreciate and expect transparency when making important vacation decisions.” Perez added, “We believe it is important that travelers get the best value for their vacation dollars. We don’t believe charging them hidden fees on vacation rentals that will drive up their cost by hundreds of dollars is the answer. This effort gives the vacation rental professional community a voice in educating the travelers on what is taking place and how it impacts the market—and their pocketbooks.”

According to Steve Milo, founder and CEO of Vtrips, “Vrbo and Airbnb will soon realize they do not have the power in the vacation rental space they think they do. Given the dynamics of far more demand than supply, the power in this relationship is with owners and property managers with exclusive inventory.”

Heather Bayer echoed Milo’s sentiment: “Demand for vacation rentals is rising as this type of accommodation becomes a mainstream choice. Supply is critical to this trend, so it’s important for travelers to know that the OTAs don’t show the entire inventory. Giving them the information on where to find the best accommodation at the best prices and with the best people—the owners and managers—is what they need to create the best vacation experience.” As investors and analysts examine the vacation rental industry, it is worth noting that the supply is controlled by individuals and local, independent property managers who are capable of and accustomed to voting with their feet.

“It’s been exciting to see the newsletters, posts, images, and tweets that they’ve developed and are sharing across their networks,” Salter said. “I think the message to OTAs is that vacation rental owners and managers have a voice, and they intend to play a major role in shaping the future.” VRM Intel Magazine | Fall 2019

Professional Cleaning Kit A

By Durk V. Johnson, Industry Consultant and Executive Director,VRHP

s vacation rental managers, housekeeping professionals are likely the most visible employees the company has. This visibility must be used to the fullest extent possible. Housekeeping staff must look organized and professional because how they look and act is how your company is perceived by those who see them. One of the ways a cleaning professional can look effective and efficient is to have a professional cleaning kit, and the best cleaning kits start with a bucket and a bucket liner. This bucket system has the space needed for the tools a housekeeper uses regularly. Below are the specific tools needed in your housekeeping cleaning kit.

LIL’ CHIZLER Your kitchen buddy, etc. This scrapes off dried “stuff ” on surfaces. For example: dried egg yolks or pancake mix on the counter, dried child (or adult—true story!) boogers on walls, etc.

RAZOR BLADE Removes paint from windows, stickers, or the burnt ring on a smooth cook surface. Always follow safety precautions when using these types of tools.

BRUSH Cleans hard-to-reach corners, grimy water faucets, or dirty tracks on sliding glass doors and windows. It gives the user better scrubbing power. 88

VRM Intel Magazine | Fall 2019

GLOVES

This personal protective equipment is a must in your bucket. Whether used or not, they must be made available. It is recommended that latex-free gloves are purchased due to possible allergies.

TRASH BAGS

Include various sizes of trash bags (small, medium, and large).

9” LINT ROLLER

This tool is invaluable for pet-friendly properties or other areas that have a lot of hair or glitter.

MAGIC ERASER Thank you to Mr. Clean for inventing this! It removes scuff marks on the wall, hard-to-clean soap scum on a tub that other products can’t touch, and a myriad of other stains. Read the packaging for instructions on what it can and cannot be used on. It truly is a housekeeper’s magical friend!

SWIFFER DUSTER No one should be without this baby. This tool picks up dust like no other and reaches hard-to-get places without a step stool. They offer one that extends three feet and has a head that can rotate 270 degrees. Nice!

MICROFIBER RAGS

CLEANING PRODUCTS Should include:

• All-purpose cleaner with disinfectant • Degreaser with disinfectant

• Bathroom cleaner with disinfectant • Neutral floor cleaner

• Deodorizer (unscented)

• Oven cleaner, nonaerosol

• Stainless steel cleaner, nonaerosol

DOODLE BUG These clean every surface (windows, counters, floors, etc). The microscopic grooves pick up and hold dirt and gunk better than a cotton rag. Because microfiber is so potent, it can sometimes scratch a fragile surface, so be sure to test it on an inconspicuous area.

The cool thing about the Doodle Bug is that you can use rags as mop heads and change out as frequently as you need them. No need to buy expensive “uni-taskers” (thanks, Alton Brown, for that word) such as mop heads. Microfiber rags work wonders, but again—test first. Another handy dandy ability is that the Doodle Bug can reach high areas (cobwebs on ceiling, etc.).

Excellent and effective tools in conjunction with superior cleaning products make all the difference in a housekeeper’s work. Having an organized cleaning system that your workers carry around makes your company look organized and gives the look that you want. After all, “you don’t get a second chance to make a first impression.” PS: I am not being paid to advertise these products, but I wish I were, lol!

A UNIVERSE OF KNOWLEDGE! A F U L LY T R A I N E D A N D C E RT I F I E D S TA F F C O N T R I B U T E S TO T H E SUCCESS OF OWNERS AND GUESTS ALIKE N O W O F F E R I N G S E V E R A L C E RT I F I C AT I O N P R O G R A M S DESIGNED TO WORK WITH YOUR SYSTEMS! HOUSEKEEPING, LAUNDRY & MAINTENANCE E D U C AT I O N T H AT B E N E F I T S E V E RY O N E MORE LIVE EVENTS THROUGHOUT THE YEAR TO K E E P C O M P L I A N C E & E D U C AT I O N F R E S H ! J O I N V R H P TO D AY TO TA K E A D VA N TA G E O F A N U N R I VA L E D L I B R A RY O F K N O W L E D G E !

HOUSEKEEPING EDUCATION VRHP.ORG

Come learn with VRHP! We offer three levels of accredited certification to assist in backing up your professional credibility & knowledge! VRHP certification can give you a competitive edge in your market, and leverage you above the crowd!

VRHP Headquarters

PO Box 1883, Kill Devil Hills, NC 27948

252-455-4121

FOR MORE INFORMATION NAVIGATE TO VRHP.ORG 89

VRM Intel Magazine | Fall 2019

 London, UK  Business Design Centre  www.terrapinn.com/exhibition/host/index.stm

NOV

NOVEMBER

NOV

HOST 2019

VRMA CONNECT NEW ENGLAND

 North Falmouth, Massachusetts  Sea Crest Beach Hotel  www.vrma.com

0910

VRBO PARTNER SUMMIT

 Scottsdale, AZ  Fairmont Scottsdale Princess  www.vrbo.com/l/partner-summit/

1214

VR BREAKFAST SEMINAR

 South Carolina  TBD  Bluetent.com/vacation-rental-breakfast-seminars-2019

NOV

3101

NOVEMBER

OCT-NOV

 London, UK  Portland House, Bressenden PI  https://bit.ly/2nwA9Ft

NOVEMBER

VRTECH LONDON

OCT

LIVEREZ PARTNER CONFERENCE

 Memphis, TN  The Peabody  Conference.liverez.com

NOV

2830

OCTOBER

VR BREAKFAST SEMINAR

NOVEMBER

2830

OCTOBER

VR MASTERED BOOTCAMP

 Big Bear, CA  TBD  Bluetent.com/vacation-rental-breakfast-seminars-2019

APR OCT

OCTOBER

2428

 St. Louis, MO  Union Station Hotel  www.vrmastered.com

OCT

OCTOBER

OCT

OCTOBER

Calendar 2022

OPMA FALL EXECUTIVE SUMMIT

 Palm Coast, FL  Hammock Beach Resort  www.theopma.org/opma-summit

 London, UK  Crowne Plaza – London Battersea  needmorerentals.link/more-bookings-direct

VRMA 2020 EUROPEAN CONFERENCE

APR

 Barcelona, Spain  World Trade Center  www.kigo.net/kigoworld/

2022

2020

2020 NWVRP ANNUAL CONFERENCE

 Whistler, Canada  TBD  Nwvrp.org

2325

2020 BAREFOOT USER CONFERENCE

 Chicago, IL  The Westin Michigan Avenue  barefoot.com

APR

2020

APRIL

MAR

2325

2020

KIGOWORLD

APRIL

2020

MORE BOOKINGS DIRECT

FEB

FEBRUARY

2020

MARCH

MAR

 Chapel Hill, NC  The Carolina Inn  www.vrma.org

1517

 Lisbon, Portugal  TBD  www.vrma.org

APR

VRMA CONNECT – NORTH CAROLINA

MARCH

 Rome, Italy  Centro Conferenze Hotel Capannelle  https://hostb2b.it/

APRIL

2223

2020

HOST BASIC TO BUSINESS

DEC

DECEMBER

NOV

NOVEMBER

of Events 2728

VRMA SPRING FORUM

 Chicago, IL  Hilton Chicago  www.vrma.org

VRM Intel Magazine | Fall 2019

Coming October 2019 Ornacor.com and Second Home Report

It’s time to level the playing field. Vacation rental providers—both managers and homeowners—have been witnessing the shortterm rental industry fundamentally change before our eyes. While many changes have been positive, disruption is causing chaos for managers, homeowners, and guests. We believe it is time to come together as the powerful vacation rental ecosystem that we are and use our collective voice to address industry changes and provide education for guests and homeowners. Second Home Report and Ornacor.com are being built to:  Educate homeowners about industry changes, guests expectations, and best practices.  Create a comprehensive vacation rental ecosystem directory to help everyone in the industry find professionals who provide services, technology, and products specific to the vacation rental industry.  Provide much-needed PR initiatives to educate guests about how to find and select vacation rentals and educate the investor community about the reality of our industry.  Aggregate the supply side of the vacation rental industry to bring all stakeholders together to battle nonsensical regulations and push back on major policy changes at OTAs. Let’s join hands to secure the vacation rental industry for generations to come.

ornacor.com | secondhomereport.com 92

VRM Intel Magazine | Fall 2019

VRM Intel Magazine | Summer 2019

Offer your guests the most comprehensive destination specific travel insurance available in the Vacation Rental Management Industry. VRM Intel Magazine | Summer 2019 4

866.549.5283 redskyinsurance.com Coverage is underwritten by Arch Insurance Company (a Missouri corporation, NAIC #11150) with executive offices located in New York, NY. Not all insurance products or coverage are available in all jurisdictions. Coverage is subject to actual policy language.