October 2015
VRM
News and Information for Vacation Rental Professionals
intel
3rd Party Channels
HomeAway,
Airbnb, and more
Best
VRM Websites of 2015
$2.1B Raised
Funding and Acquisitions
2015
Changing technology and service providers: what you need to know
Vacation Rental
Road Trip Carl Shepherd Retires from HomeAway
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A Tribute to NAVIS Founder Milton Buehner 97
98 VRM Intel Magazine | October 2015
Help your guests feel like locals with
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(855) 275-4523 gladtohaveyou.com 1
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VRM Intel Magazine | October 2015
The Only Complete Vacation Rental Management System in the VRM Industry Call 252-241-9352 to Schedule a Demo!
VRM software assists you to both Manage and Market your rental properties!
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On the Cover
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42 The Changing Landscape of Third Party Channels 54 $2.1B Funding Injected into Vacation Rental Industry in 2015 70 VRM Intel’s Best VRM Websites of 2015
32 50 61 80
A Tribute to NAVIS Founder Milton Buehner Carl Shepherd Retires from HomeAway Vacation Rental Road Trip Changing your technology providers: what you need to know
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Business 58 Jen O’Neal Takes the Industry Tripping 75 VacationRentPayment Customer Data
Potentially Exposed
85 Travel Insurance: To Offer or Not to Offer? 86 Selling Your Vacation Rental Company:
Are you Ready?
Customer Service
Housekeeping
46 Train Your Reservations Team:
92 Coaching Your Housekeeping Staff
Conversational vs Transactional Sales 96 Why Not a Hotel? A Guest’s Perspective
Human Resources 75 Overtime Rules Set to Change
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VRM Intel Magazine | October 2015
Ben Edwards, President ben@weatherbyconsulting.com 755 Grand Boulevard Miramar Beach, Florida 32550 888.304.1405
CONSULTING SERVICES FOR THE VACATION RENTAL MANAGEMENT INDUSTRY
Industry-speciic experience to support your biggest decisions. Buy/Sell Advisory Services Management Consulting Operational Audits Vacation Rental Industry Experience in over 100 resort markets
TRANSACTION ADVISORY SERVICES
VIRTUAL MANAGEMENT
BUSINESS CONSULTING
WEATHERBYCONSULTING.COM
CORPORATE RESTRUCTURING
5
Revenue Management
Marketing 67 Partnering with Destination Marketing
Organizations
30 Using Demand Data for Revenue Optimization
69 Is Your Brand at Risk?
89 Revenue Management 101 -Q&A With the Experts
74 Grade Your Own Website
Technology
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75 What’s Going on with TripAdvisor? 77 How to Shop for a Supplier 84 Got Interfaces? Connecting Your Systems
Your Success Depends on Theirs
From Our Partners Owner Relations 40 Your Success Depends on Theirs 68 Developing an Owner Acquisition Strategy
12 Maxxton: Enterprise Resource Planning 14 LeisureLink Reaches Untapped Markets 16 PointCentral: The Smart Home Wave 18 Q&A with Jim Olin, C2G Advisors 20 ICND: Mobile on the Rise
Rental Regulations 37 The Barbarians at the Gate 38 Owner Service Providers in the Sharing
Economy
22 RealTimeRental Launches Tenant Portal 24 Barefoot: Heart vs. Technology 26 Rentals United: Choosing a Channel Manager 28 NAVIS: Value of Repeat Guests 76 Bluetent’s Tips to Better Booking 78 Real Tech: Is Your Website Mobile Friendly?
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VRM intel magazine
Dear Reader,
I
Editor-in-Chief
do not remember my first experience in a professionally managed vacation rental. I was two years old.
As you will read in the article on page 96 “A Guest’s Perspective” written by author (and my dear mother) Ren Hinote, hotels were a last-resort option for our family. As a self-proclaimed disenfranchised, black sheep middle child, the open beaches, the independence of hiking trails and the canoeaccessible lakes fulfilled my rebellious childhood need for vacation adventure. And the deep screened-in porches filled with board games, the outdoor grilling areas for time with Dad, and the open aired fire pits for s’mores and fireworks provided the familial connections I desperately needed. The vacation rentals we called home for a few days or a few weeks at a time were the only places I knew that our family was a unit. A place where we were untouchable as a family force. After my sophomore year in college in 1993, I found myself caught between college majors and any sense of direction, and I traveled back to the place I had found the most happiness….my family’s annual vacation rental destination in Gulf Shores, Alabama. I took a job making piña colada’s and daiquiris for vacation rental guests at the Gulf Shores Plantation run by Pedro Mandoki, industry veteran and past president for both the VRMA and the AH&LA. Readers, my passion for the vacation rental industry runs long and runs deep. I have had the opportunity to work with tourism guru Gary Ellis, Kaiser Realty, Instant Software, HomeAway, NAVIS, TruPlace, Turnkey Vacation Rentals, and dozens of vacation rental managers and technology providers in this fast-growing industry. A lot has changed. In the following pages you will read about third party distribution channels and about all of the new investment in the industry. This year we lost one of our industry’s greats, Milton Buehner who founded the company we now know as NAVIS and who inspired me on a very personal level. In this issue you will also read about the retirement of HomeAway’s co-founder Carl Shepherd and about Tripping.com founder Jen O’Neil’s broad introduction of metasearch to the vacation rental audience. There is significant opportunity for all involved to capitalize on the exponential industry growth, and we are welcoming thousands of new entrants into the vacation rental space every day. This first issue of the VRM Intel Magazine is a tribute to all of the traditional vacation rental managers who have dedicated their lives to creating unforgettable memories for families -like mine -around the world. From the bottom of my heart, thank you.
Amy Hinote Amy Hinote Editor
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VRM Intel Magazine | October 2015
Amy Hinote
Director of Design and Production Donato Berbelja
Contributing Writers John Banzack
Tom K
Heather Bayer
Doug Kennedy
Tim Cafferty
Carie Leyden
Ben Edwards
Doug Macnaught
J. Gary Ellis
Amber Mayer
Greg Herr
Philip Minardi
Ren Hinote
Vince Perez
Mike Hollibaugh
Alanna Schroeder
Durk Johnson
Steve Shur
Sue Jones
Andrew Vick
Advertising Amy Hinote, amy.hinote@vrmintel.com
Address VRM Intel Magazine, 2228 Wandering Oak Terrace, Kissimmee, FL 32507 To subscribe to VRM Intel Magazine to request additional copies, contact info@vrmintel.com or go to www.vrmintel.com
© Copyright 2015 VRM Intel Magazine. All rights reserved. We cannot accept responsibility for any mistakes or misprints. Reproduction in part or whole is strictly prohibited without written permission from the publisher. We cannot accept responsibility for unsolicited manuscripts or photographs damaged in the post. Material sent on speculation, unless enclosed with a stamped addressed envelope, will not be returned to sender. VRM Intel Magazine reserve rights of ownership.
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圀䤀一一䔀刀 伀䘀
䘀䤀一䄀䰀䤀匀吀 9
President, Hatteras Realty.
10 VRM Intel Magazine | October 2015
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| From Our Partners
Revolutionizing Hospitality Management through Enterprise Resource Planning
H
eadquartered in the Netherlands, Maxxton is a software-as-a-service company that provides Enterprise Resource Planning Solutions (ERP) to the lodging sector under the name Newyse. The company was founded in June 1998 by Jean Pierre Mampaey, the CEO, with the aim of solving the unmet needs of Europe’s largest holiday resort chains. A true entrepreneur and an inspirational leader, Mampaey is an ambitious man whose vision began at the age of 15 while working at various campsites and resorts across Europe. Maxxton’s ERP system, specifically designed for the lodging sector, offers a single data base solution to process business flow in real-time across all departments. The company provides solutions for the complete management of vacation rentals, hotels, resorts, and tour operators. Maxxton’s mission is to help medium to large scale operators grow their businesses and maximize efficiencies. In order to unify every aspect of the organization, Maxxton provides solutions including Property Management System (PMS), Customer Relationship Management (CRM), Central Reservation System (CRS), Revenue Management (RMS), Spa, Housekeeping, Workforce Management, Access Control, and more. “Rather than running separate systems and databases for property management, central reservations and customer relationship management, Maxxton delivers an integrated, functional, stable and open enterprise,” explains Jean Pierre.
“Newyse; a hospitality ERP revolution.” Newyse is a software-as-a-service solution, providing a cost effective and agile alternative to conventional systems which require significant capital and internal IT resources to deploy and maintain. “Our fully integrated suite of ERP- based hospitality solutions significantly reduces the need to install expensive disparate systems from multiple vendors. The solution automates every aspect of the organization,” adds Jean Pierre. Newyse offers a risk free pay-for-performance model aligning expert consultants with organizational business goals and objectives to maximize revenue. The software-as-a-service based solution manages complex businesses with varied inventories, activities, accommodation types, amenities, extras and fragmented ownerships. The solution has earned Maxxton a vast clientele including companies that boast over 200 resorts and 50,000 accommodations. Roompot, De Krim, Hogenboom, Libema and Alpin Rentals are some of the company’s European clientele. Maxxton is also focused on U.S. expansion and is now implementing well-respected vacation rental brands. “Our solution is multilingual and 12 VRM Intel Magazine | October 2015
supports multiple currencies which will continue to increase our global success,” explains Jean Pierre. In an interesting case study, one of the Netherland’s premier holiday resorts faced an issue with limitations of its direct online bookings. The client had enabled little in the ways of visual accommodations and resort facilities. Due to non-visibility of guest reviews, lack of transparency prevailed, and it was a time consuming process to monitor write-ups and articles on the booking site. The client implemented Newyse to overhaul its online presence, improve guests’ experience, and acquire powerful reporting tools to propel their business. Newyse offered a more engaging and fully branded online presence to the client. It also streamlined operations through all hospitality management elements including integrated PMS, CRS which increased revenue and overall guest satisfaction. What’s next for Maxxton? The company will continue to lead the niche holiday resort and vacation rental market. By experiencing 20 percent growth year over year, Maxxton plans to open at least 20 more offices across the globe in the coming years. “Apart from meeting the unique requirements of holiday resorts and vacation rentals market, we also intend to capture the hotel and time share industries,” concludes Jean Pierre.
Jean Pierre Mampaey Founder and CEO Middelburg, Netherlands www.maxxton.com
A software company that provides ERP solutions to the lodging sector.
Hospitality ERP One System Property Management System Central Reservation System
No Limits Full Control
Customer Relationship Management Online Booking Engine Housekeeping Owner and Guest Portals Housekeeping & Maintenance Accounting Inventory Control
Learn more at www.maxxton.com or 214 - 347 - 0651
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| From Our Partners
LeisureLink opening an Untapped Market for Vacation Rentals By Julian Castelli LeisureLink CEO
A
irbnb’s recent expansion into the vacation rental market heralded a strategic shift to move beyond the peer-to-peer model on which it was founded. This is making big waves in the hospitality industry. While there is much speculation about the impact this will have on the industry, there is little doubt the magnitude of the opportunity this affords property management companies - including access to their 32 million monthly visitors in more than 190 countries. LeisureLink is the first technology partner to integrate on the Airbnb vacation rental API, an exclusive channel through which Airbnb can rapidly scale in the vacation rental market. The integration between LeisureLink and Airbnb was seamless, and now LeisureLink suppliers (property managers) have easy access to Airbnb’s vast network of travelers. Airbnb, a household name for some time now, represents a rapidly growing niche of the accommodations market. According to a report by GlobalWebIndex, 8% of internet users in North America and 14% worldwide rented rooms or apartments through a home and lodging rentals service in Q1 2014. Already, hundreds of LeisureLink’s clients are benefiting from exposure to the highly engaged Airbnb audience. Skift reports that at 9 to 11 minutes on average, Airbnb’s users spend more time on the site than any other travel site’s users, and they view over 7 million pages of the site per day. Airbnb exposure affords vacation rental suppliers the unique opportunity for dual exposure - on traditional OTAs (the hotel side) and within the sharing economy (the owner-supplied side). Not only does this expand the volume of eyes on LeisureLink’s partners but it puts vacation rentals in front of a different kind of traveler, one who is looking for a local experience,often searching for a larger space, and desiring rates that are more affordable than the standard hotel. Property management companies are already skilled at delivering on these requirements. The fit is natural - and it is lucrative. Airbnb is, unsurprisingly, popular among millennial travelers, however, there are also unexpected audiences such as extended stays (which Airbnb says are about 10% of its business), family travel, and over 250 corporate travel programs, including Google and Salesforce according to reports by Bloomberg and Condé Nast Traveller. 14 VRM Intel Magazine | October 2015
For vacation rental suppliers already working with LeisureLink, Airbnb distribution is just a mouse click away. It’s as simple as the flip of a switch, since LeisureLink connects with most property management systems. It has never been easier to manage online distribution from one platform -automating and optimizing rates, availability, specials, and content changes. Why is this so important? Because this year is poised to be the tipping point for the vacation rental market. According to a recent study commissioned by Choice Hotels International, Americans are planning to spend 8% more on leisure travel and 5% more per trip than they did in 2014. Millennial leisure travel spending will increase by 6%, spending for families traveling with children will increase by 5%, and senior spending will increase by a whopping 33%. However, leisure travelers are still searching for the best deals - 62% said the most influential factor when selecting a travel destination was budget. Vacation rental companies are primed to supply the spacious accommodations, the “sense of belonging” that Airbnb travelers desire, and, perhaps most importantly, the ideal rates that will influence travelers to stay. With the expanded partnership of Airbnb and the support of experienced LeisureLink Account Managers, LeisureLink clients can be confident they are reaching all the right channels with the right inventory to optimize their online revenue potential. Learn more about how simple it is to connect to Airbnb via LeisureLink at http://www.leisurelink.com/Airbnb
One LINK to more bookings — online, offline, anywhere.
JUST ANNOUNCED NOW ON (coming soon)
with KEY LEVEL INVENTORY
Schedule a Demo Today at LeisureLink.com/Key-Level 15
| From Our Partners
The Smart Home Wave and the Impact on the Vacation Rental Industry By Greg Burge, President PointCentral The Smart Move
VRMs have a remarkable opportunity to help their homeowners, their guests, and themselves – by implementing Smart Home technology. The key to this opportunity is to implement it before your homeowners. VRMs across the U.S. report that many of their homeowners are installing Smart Home because it provides better security and saves on energy costs. But homeowners are installing consumer-grade systems that will give control of access and temperature to the homeowner, not the VRM. VRMs need to install a commercial-grade solution that provides centralized control of ALL their properties.
Smart Tech is in the House
T
here is a significant technology trend occurring in the U.S. and other countries that is having a major impact on the vacation rental market – the adoption of Smart Home technologies by homeowners and Vacation Rental Managers (VRMs). This article examines the growth in the sector, the benefits and risks to homeowners and VRMs, and the best course of action for all. Here are some stats to get started: Approximately 81% of home buyers prefer smart homes over non-smart homes. More than 10% of U.S. broadband households are planning to buy a smart thermostat over the next 12 months. Nearly 75% of current smart thermostat owners report reduced electric bills. Global smart home connected appliances are projected to grow from fewer than 1 million units shipped in 2014 to more than 223 million units by 2020 Worldwide the 13.4 billion internet-connected devices in 2015 are projected to grow to 38.5 billion in 2020 – a 285% increase ( Juniper Research). The home automation market in the U.S. is estimated to reach more than $5.5 billion in 2016.
Explosive Growth
Yes, you read that right. Smart Home growth is expected to rival mobile phone growth. Fueling much of this is the growth in consumer awareness of the technology. Giants like Apple, Google, Samsung, LG and others are committing huge resources to the category and have invested hundreds of millions in marketing to shine a very bright light on Smart Home. Google’s purchase of Nest and Apple’s launch of HomeKit have brought more attention to the category and opened the eyes of many consumers to the advantages of Smart Home technology.
The Smart Home Pull
For the homeowner, Smart Home provides peace of mind knowing they have more control over their property, from remotely controlling locks and thermostats to being alerted when someone enters their home. Plus, there are significant cost savings that come from automating energy usage and controlling min/max temperatures. This is especially critical for vacation rental properties that often see guests leave the air conditioning on high after they check out. Smart Home automation provides alerts when thresholds are exceeded so that temperatures can be remotely adjusted.
VRMs are able to significantly reduce their risk and liability with Smart Home since they can eliminate hard keys, which are often lost, copied or stolen. The news is filled with terrible stories of vacationers experiencing theft and violence during their stay because of so many keys unaccounted for. Smart Home not only provides new lock codes for each guest, it provides the VRM with the ability to monitor and remotely control access and temperature for ALL their properties. Not having to send someone out to a property to let someone in or change the thermostat saves operational costs for VRMs. 16 VRM Intel Magazine | October 2015
The Market Push
In addition to Apple and Google bringing attention to the category, Samsung, LG and others are shifting their focus from mobile and TV to Smart Home devices. The result of all of this is that homeowners are increasingly eager for the added security and convenience, as well as the energy savings that Smart Home provides.
For VRMs, this has both good and bad ramifications. On the bad side, the more control homeowners have over their locks and thermostats, the less control this gives the VRM. There have been many reports from VRMs of homeowners changing the temperature of their home while a guest was occupying their property. That’s right – while the guest was there. Of course, one of the positive aspects of the Smart Home wave is that homeowners are much more open to the technology and can thus be more easily convinced to go with a solution offered by the VRM.
Consumer vs. Enterprise
It’s important to point out here that the market push by the major players is focused on the DIY/Consumer-Grade technologies. These are self-contained solutions that give the homeowner control of access and temperature for just their property, usually from their smart phone or other mobile device. VRMs, on the other hand, require an enterprise solution that provides centralized control of multiple properties, something a consumer-grade solution cannot provide. It’s this enterprise class system that gives the VRM the type of property intelligence they need to see a complete picture of property status. This realtime information helps them to streamline turn days, improve operational efficiencies, and provide a better guest experience – things that every VRM wants.
Win-Win-Win
So what should a VRM do? What’s the best course of action? As with any major trend, especially one that is changing the market in so many ways, VRMs need to get in front of the wave or they will find themselves struggling to catch up. If homeowners adopt Smart Home, which we know is already happening, VRMs will be relinquishing control of access and temperature. Once a homeowner has installed Smart Home, they will be reluctant to uninstall it. VRMs should talk to their homeowners now and show them the advantages of an enterprise system that provides centralized control of all their properties. PointCentral, the leading provider of enterprise Smart Home solutions in the vacation rental market, has found that the large majority of homeowners are not only eager to adopt Smart Home, they are very open to covering the cost since they will be reaping many of the security and energy benefits. The Smart Home wave is here and it is good for homeowners, VRMs and guests.
17
| From Our Partners
A Conversation with
Jim Olin
A leader in the vacation rental industry for close to 30 years, Jim is the former CEO of Abbott Resorts, ResortQuest, and Sterling Resorts. He has overseen as many as 20,000 vacation rental units, 250 resort real estate agents, and 200 homeowner associations. Jim has also been involved in more acquisitions within the vacation rental space than anyone else in the history of the industry. A Broker in four states, Jim is one of only eight real estate professionals in the entire United States that is simultaneously an invited member of the Counselors of Real Estate (CRE) and the Council of Real Estate Broker Managers (CRB).
Q: You have been CEO of some of the largest vacation rental companies in the industry, and were CEO when ResortQuest had over 20,000 units. How have you seen the industry change over the years?
Obviously, the self-management fad has further fragmented our industry, when we were already very fragmented. It made us adjust our service offerings and in many occasions squeezed our margins and profits. On a more positive note, I have seen the management companies become much more professional, doing a much better job keeping up with all the technological changes that have occurred. I am bullish that this self-management fad will slowly die down, as governments start to regulate these activities in a manner that is proper to put everyone on a level playing field.
Q: If you owned a vacation rental company right now, what would you be doing to prepare for the next big wave of changes?
First and foremost, never stop learning. Don’t trust that you know everything. You don’t. Also, embrace hiring consultants and advisors when you start to feel you may be lagging the competition. Many national consultants are seeing things that you may not hear about until it is in your market. And there are plenty of great ones out there to tap into. Just ask around.
Q: What is the Biggest Threat to the “Mom and Pop” vacation rental company right now?
The “threat” of consolidation. Everyone is concerned when a “Big Boy” national vacation rental brand comes to town. Local companies start looking over their shoulder so much that they stop focusing on their customers. This is not a “Walmart coming to town” scenario. We are in the relationship business. Maintain your relationships, do the best job you can, keep up with the changes in the industry, and you will do great.
Q&A
Q: You have completed more buy/sell
Q: What got you interested in the vacation
They have become much more technical in nature than before. While lawyers and CPA’s have always been part of the process, they are more involved now due to the plethora of tax changes and ways in which a deal can be structured. I actually work a lot harder on each deal nowadays than in the days when we were closing two deals a month at ResortQuest. Every deal seems to have to be changed midway through, as we discover some tax law or corporation structure that makes it better to close the deal a little different than planned. One deal I did recently ended up closing as three separate deals, with two being 1031 tax free exchanges and the third as a stock transaction.
rental industry?
I
n 1989, as I was working in the tourism industry, my wife June and I decided I would go to law school. We had three kids already, but she pushed me to go, saying we would live like hippies for three years as I went. I asked Bill Abbott, owner of Abbott Resorts and a friend, to write a letter of recommendation for me for law school, and he immediately said, “I am saving you from being a lawyer.” He hired me as CEO, but made me go undercover and work in every facet of the company first (laundry, housekeeping, reservations, mowing yards, etc). I was truly the first Undercover Boss. It was the greatest experience and I highly recommend it. Bill and his brother Steve taught me everything about this industry. They were way ahead of their time. 18 VRM Intel Magazine | October 2015
transactions than anyone else in the industry. How have the transactions changed over the years?
Q: As someone who tends to represent buyers
more than sellers in a transaction, what do you look for initially when assessing a potential company to buy?
My first look at a company obviously involves combing through the financials. I like to look at 3-12 month periods. From there, I look at how “together” the company is. Are they organized? Do they have their contracts, leases, and other agreements in one location (hard copy or cloud based)? Have they kept up with the changes in technology and marketing? These all give me an idea of what is in store for me as I proceed with a possible acquisition.
Q: Is it a Sellers market right now? In terms of the number of potential buyers out there, yes. In terms of the price points and “multiples” used to determine value, not really. There is a lot of activity, but I have not seen a huge increase at all in prices buyers are paying. Still, if a company is thinking of selling, this is a good time to at least test the waters.
Q: Besides the Financial Performance of a company, what other factors make the company worth more to you?
I like to see loyalty of homeowners. For instance, how many of your homeowners have been on your program for more than three years? Even if you are growing, are you adding five and losing three, or are you keeping owners on your program? I also like companies who do not have one person controlling all the action. A company that empowers their employees is more attractive to me. As I stated previously, I like a company that is organized and has their act together.
Q: Two final questions – your use of Gumby
as your “mascot” and the name C2G. How did both come about? The Gumby came about after I endured a 3-day HOA Board meeting in Destin one fall. We adjourned only to go home and sleep. We were the management company and we were getting beat up. At the end of three days, I felt like I had been twisted every different way, and all I could think of is the toy Gumby I played with when I was a kid. I keep a Gumby doll on my desk to always remind me of how much we all must adjust in our industry, and how we are always pulled by our two customers who want opposite results – our owners and our guests! Owners want us to charge high rates and allow 2 people in their 5 bedroom house. Guests want us to charge low rates and want to stuff 10 people in a 1 bedroom! The C2G name was given to me by a client. After I worked on a very complicated transaction for many months, the client complimented me for sticking to it, and he told me that I worked his deal from “Cradle to Grave”, which was a huge complement. I was in the midst of renaming my company, and decided on C2G because of it. These acquisition deals are all different and can be exhausting to get closed, but I feel blessed to be part of this industry and helping entrepreneurs achieve their dreams. For more information on Jim Olin, go to www.C2GAdvisors.com.
READY TO SELL YET? YOU GUEST
UNIT OWNER
WE HAVE BUYERS!
CONFIDENTIAL • DISCREET • 25 YEARS OF EXPERIENCE OVER $250MM IN VR TRANSACTIONS ALONE Brokerage Services • Consulting Services • Real Estate Services Start-Ups • Mergers and Acquisitions • Litigation Support • Restructuring and More
850-699-1828
Jolin@C2G Advisors. com 19
| From Our Partners
Mobile Visits are On the Rise By Vanessa Humes, Director of Sales at ICND Mobile. Responsive. Mobile-Friendly.
Y
ou’re probably tired of hearing about everything going mobile. It’s all you’ve heard about since responsive web design came on the scene a few years ago.
Chances are you are going to see your mobile traffic increase, desktop traffic decrease, and mobile transactions up regardless if you have made the move to responsive or not. Increased Mobile Users
Why are we seeing such a jump in mobile users? There’s no denying that we use our phones more and more. As phones increase in size and capabilities, we are able to use them for more than just calling and emailing. Here are some statistics we gathered:
Responsive website design is the approach of developing a site that responds to a user’s behavior and environment based on the device, screen size, and orientation. As a result of the new device habits of your guests, they are booking with their mobile phones. If you are a vacation rental manager who is hesitant to make the investment into a new site or a marketing director who needs further ammunition to approve this expenditure on the next year’s budget, then we’ve got the fact and figures to prove - responsive matters. Mobile matters.
20% of Google searches are performed on mobile devices.
Websites Analyzed
55% of social media activity happens on mobile devices.
As a provider of custom vacation rental website development and marketing, we’re fortunate to have a large sample size of website data (via Google Analytics) at our fingertips. For this article, we included data from 16 sites taken as a random sampling. We analyzed the data from January 1, 2015 to August 31, 2015, compared to the same time period in 2014. If you like what you are reading, head over to our website www.icnd.net/mobile-study for a full view of our data and more takeaways. Below are some statistics we put together for you: Mobile visits to websites are up 73%.
Mobile reservations are up 153%. Some sites saw as much as 2100% increase in mobile reservations this year compared to last year. Mobile reservations accounted for 3%-18% of total bookings in 2015 in comparison to <1%-10% in 2014.
The number of desktop users was down across the board from <-1% to -32% and were down an average of -9% across the board. Log into Google Analytics to take a look at your own data. On the left side menu, click on Audience, then click on Mobile, select your dates from January 1, 2015 to August 31, 2015, and compare the data against the previous year. This will show you desktop, mobile, and tablet usage. It will break it down by traffic and the number of transactions (if you have Google E-commerce tracking set up).
20 VRM Intel Magazine | October 2015
50% of local searches are performed on a mobile device.
25% of all internet access is done through a mobile device.
61% of people have a better opinion of a brand when they offer a mobile-friendly experience. 30% of emails are opened on a mobile phone or tablet.
When you are looking to differentiate yourself from the competition, take a look at the behavioral actions of your customers. What percentage of users are accessing your site from a mobile device? What percentage of your marketing dollars lands in the hands of someone holding a mobile device? Is the user experience on a mobile device as good on your website as it is on your competitor’s? Think about these questions when you are looking at when and how to update your Vacation Rental website. About ICND:
Since 1999, InterCoastal Net Designs (ICND) has been serving a nationwide client base of vacation rental companies. ICND’s ability to build custom designed websites, digital strategies, and offer a suite of business automation tools has pushed ICND to the forefront of providers in the industry. To ICND, the guest experience starts with your website and marketing. They make it easy for guests to find you, search your site, book online, sign digitally, and plan their vacation all through the suite of products they offer. This allows you to focus on what you are good at – providing a memorable vacation to last a lifetime.
21
| From Our Partners
RealTimeRental Vacation Rental Software
Launches
Tenant Portal RealTimeRental, the leading cloud based vacation rental software, has recently announced the launch of their new Tenant Portal. The RealTimeRental Tenant Portal allows vacation rental companies to give their rental guests online access to their vacation information and the ability to make online payments.
“K
eeping up with the current trends in the vacation rental industry, we wanted the RealTimeRental Tenant Portal to help Property Management and Real Estate companies offer their rental guests a secure and modern online travel experience,” said Sherry Tomasso, Co-Founder of RealTimeRental. Through the RealTimeRental Tenant Portal, rental guests can view the details of their bookings and access information about the rental property including photos and amenities. Rental guests can log in to their secure tenant portal account and make payments on existing bookings with credit cards or electronic check, if the rental company chooses to accept these payment types. “Today’s traveler is used to planning their vacation online. In addition to RealTimeRental’s property links that integrate with existing websites and our property owner portal, we wanted to give RealTimeRental clients another way to interact with their rental guests online” said Tomasso. “The Tenant Portal was designed with not only the professional vacation rental manager in mind, but also the overall rental guest experience.” Designed to be user friendly, the RealTimeRental Tenant Portal has a video tutorial menu that walks the rental guest step by step through the payment process. Rental guests can also update their personal contact information on the Tenant Portal, and it will be automatically updated in RealTimeRental vacation rental software. All payments received through the Tenant Portal are seamlessly integrated with RealTimeRental’s, industry leading, trust accounting package. “One of the main benefits of RealTimeRental’s trust accounting package is the fact that it is fully integrated with our comprehensive reservation system,” said Joseph Tests, Co-Founder of RealTimeRental Whether payments are received through the tenant portal or processed through the rental office, RealTimeRental creates a full audit trail from the moment the money is received through payout. Rental offices can keep track of their finances all in one system without having to purchase or use additional accounting software. “Many RealTimeRental clients are vacation rental companies who have built lasting relationships with their rental guests and have repeat tenants year after year. Because of our client’s high guest retention rates, we decided to include guests’ past rental history in the Tenant Portal,” said Testa. 22 VRM Intel Magazine | October 2015
The RealTimeRental Tenant Portal displays the past rental history of the guest, as well as details about the vacation rental properties that they have stayed in. The lease history section of the Tenant Portal also features a rebook request form. Rental Guests can inquire about availability on their past favorite rental properties and send a message to the property manager right from within the RealTimeRental Tenant Portal. The launch of the Tenant Portal follows the successful release of www.RentalRetreat.com, RealTimeRental’s distribution portal that was launched earlier this year. “It is very important to have an online presence in today’s vacation rental industry. We are constantly working to bring digital marketing opportunities to RealTimeRental clients,” said Tomasso. Unlike many other popular distribution channels, RentalRetreat exclusively hosts professionally managed vacation rental properties. “Our fifteen years of experience in the vacation rental industry has truly shown us the extra value and protection that professional vacation rental companies provide to travelers. Rather than letting home owners list their own properties, we wanted our distribution portal to exclusively host vacation rentals that are professionally managed,” said Testa. RentalRetreat has over 40,000 professionally managed vacation rental properties across the United States, Mexico, and Costa Rica. Travelers can have the peace of mind that every rental property hosted by RentalRetreat has been inspected and approved by a legitimate vacation rental company. RentalRetreat is a subscription based distribution portal, meaning that the Real Estate and property management companies who host their inventory do not pay by the lead or by a percentage of the transaction. “We are pleased with RentalRetreat’s lead conversion rates and how well the distribution portal has been received by the RealTimeRental users. We are looking forward to allowing any professional vacation rental company to participate with RentalRetreat, regardless of their rental software provider,” said Tomasso. Currently the ability to host rental inventory on www.RentalRetreat. com is only open to RealTimeRental clients, but the programming team at RealTimeRental is working towards allowing non users to host their inventory on the distribution portal. About RealTimeRental
RealTimeRental is the premier vacation rental software solution for 200+ rental offices in the United States, Caribbean, Mexico, and Costa Rica. As the first web based vacation rental system on the market in the year 2000, RealTimeRental has consistently provided a comprehensive reservation and accounting system for the past 15 years. As a cloud based application, RealTimeRental vacation rental software clients have the peace of mind that their reservation management system can be accessed 24/7 via the cloud. For more information about RealTimeRental, the Tenant Portal, or RentalRetreat please visit www.RealTimeRental.com or call 888-828-2303.
23
| From Our Partners
Claiborne has been in the software industry for over 25 years primarily focused on marketing. Her favorite thing about the vacation rental industry is getting to make so many friends.
HEART
VERSUS TECHNOLOGY IN THE VACATION RENTAL BUSINESS
I
That’s why I find it so interesting that so many service providers in this industry don’t understand this perspective. Of course they see the potential money to be made in the industry and they run to throw up a shop in a tech hot spot, like Austin. They bring in a few software familiar folks who have been around in Silicon Valley (see a hilarious description of this type in the article “7 Signs Your CEO Needs to Grow Up” from entrepreneur.com from someone who has worked in the valley before). Next, they start to tout the latest and greatest product. They may end up delivering a product or they may just keep delivering the promise of the product. Either way, this isn’t the worst of this scenario. What really ends up missing here is the lack of understanding about the HEART of the vacation rental industry. They don’t delve down into the very real needs of what you have to deal with day in and day out. For example, I recently hosted a breakfast meeting for folks to understand how to get to Airbnb through one of our partners My Booking Pal. A very nice representative from Airbnb delivered an engaging presentation about Airbnb, their intention for how they will work with professional property managers, and the benefits of doing so. The only problem is that the way they structure their payments put them in direct conflict with the real estate law of North Carolina. As one attendee pointed out, “this all sounds great until you are headed for jail because of trust fraud.” To Airbnb’s credit, they understand that they are going to have a learning curve about the vacation rental industry and have devoted a team to figuring out these issues. As our representative put it, “we’ve handled governmental regulations around the world, we have the resources to take care of these issues.” Fair enough. Also, in the case of Airbnb, the principals of what the company was founded upon - local hospitality- does more frequently align with those of the vacation rental management companies. My point here is to be wary of “bleeding edge” solutions and to some extent industry providers who haven’t been in the industry for some reasonable period of time. Because you are a unique tribe, you deserve the in-depth understanding of the heart in this industry. I am not suggesting that innovation shouldn’t be a top priority, just that there is great value in finding good relationships and partnerships with the vendors that should be helping you.
’ve been thinking about this topic for a couple of weeks and wanted to share it with you. As a service provider in the Vacation Rental Management industry, I have the opportunity to have lots of conversations with employees and owners of vacation rental management companies and other providers in the industry. One thing that always strikes me about this industry is how friendly (well for the most part) everyone is. This isn’t surprising given how most vacation rental businesses are started. Someone lives or visits a beautiful vacation location. They decide that they want to buy a second home or they meet a friend that has a second home and suddenly find themselves doing property management and taking reservations. The next thing they know, they are employing 20 people annually and opening a laundry division, or they are passing the baton to their children to run the business or even their grandchildren. For these folks, and there are so many of you out there, HEART is the center of your business. It is how you understand the difference between providing more than just a home. You are motivated every day to help people come and enjoy the beautiful place where you live and work with hospitality. This is so different from so many other industries. When you do your job well, you are offering one of the most important things that people have - their memories. The time that is shared with friends and family cannot be replaced. 24 VRM Intel Magazine | October 2015
Words: Claiborne Yarbrough Director of Customer Engagement Barefoot Technologies claiborne@barefoot.com
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| From Our Partners
They’re Sexy and They Know It:
Don’t Marry the Wrong One
WHAT TO LOOK OUT FOR WHEN CHOOSING A CHANNEL MANAGER FOR VACATION RENTALS
“But why do I even need a channel manager?” you ask.
W
elcome to 2015. The year big vacation rental websites got serious about accurate availability, the year they are ranking properties with real-time booking higher in their searches, and the year they realized channel managers can deliver that flawless availability they are seeking. Without a doubt, this is the year channel management became sexy. Now, if you work “on request” and cannot maintain accurate calendars then you are right, marketing automation is not for you, “you definitely don’t need one!” The promise is this: A channel manager will get you more visibility and therefore more bookings. Although this is a big deal, getting more bookings is not the only reason to automate your marketing. You won’t need to log into 10 websites every day to update your calendars and prices. You’ll lower the risk of over-booking and be able to change your rates more easily. In short, you’ll increase sales, save time, reduce errors, and save effort.
While your existing Property Management System (PMS) may offer a “channel management feature,” the field is actually a real specialization. It takes time and skill to connect to sales channels, sign contracts, implement APIs, to test and maintain relationships. For this reason, if you don’t yet use a PMS, it is highly advisable to go straight to a channel manager. If you do use a PMS, enquire what channel manager they are working with. Here’s a quick guide on what to consider:
1. Barriers to Entry
Firstly and most importantly does the channel manager take 1 property or do you have to have 10 minimum?
2. Niche Marketplaces
How does each channel work? How much do they charge? Should you publish net or rack rates? How much work is involved for you to connect? A good channel manager will have excellent documentation and also a good customer service team that can help customers get set-up and support their success moving forward.
4. Fees and Commissions
You probably experience a low and high season. To even out your cash flow, choose a channel manager that doesn’t charge you a monthly fee but rather a commission per booking. If you have a very large number of properties a fixed price may be better for you. Ask about any hidden fees or fluctuations in the commissions according to sales channels. Find out if you will be charged in case of a cancellation.
5. Push and Pull
A good channel manager needs to be able to both push (publish) inventory to and pull (gather) inventory from online marketplaces. This is the only way a vacation rental owner can use a channel manager to prevent overbookings.
6. Other Integrations
Vacation rental managers and owners use a wide variety of Property Management Systems (PMSs) these days. They don’t want to have to change the way they do business in order to use a new channel manager. This is why it’s important for channel managers to not only connect to many different sales channels but to have flexible integrations with a variety of PMSs. Remember that one day you may want to change your PMS and you won’t want to lose all your relationships with the sales channels.
While you surely have your eyes on the big travel agents, remember that niche marketplaces can be very lucrative. Maybe you have niche properties such as luxury villas, golfcourse properties, or ski chalets. Promote your properties on marketing channels that cater specifically to you! A good channel manager can connect you not just to the big-names that they all should but also the lesser-known niche marketplaces.
7. Property Segmentation
3. Customer Service
Check what other people are saying about the channel managers you are considering. Consider looking at LinkedIn groups, specialized forums, and industry blogs.
It can be difficult for a vacation rental owner to connect all the dots between a channel manager, an online marketplace, and a PMS. 26 VRM Intel Magazine | October 2015
If you are running a hotel you will want to work with a specialized hotel channel manager that works with rooms. For vacation rentals, you’ll need a different beast which works with individual property units. It might sound trivial, but working with the wrong format will make you tear your hair out.
8. Reputation
Remember, unhappy people shout the loudest. No news is not necessarily good news.
9. Ease of Use
Once you are up and running channel management can be a dream come true, but it can be a chore to get set up. Generally speaking, the more flexible the system is the harder it will be to set up in the first place. Try to find out what is involved and decide whether you prefer a simple system with fewer options or not. A simple system may lead to less accuracy in your prices on partner sites, for example, if it cannot handle your discounts or fees for extras. A simple system may not be able to work easily with many identical properties, it may limit the number of images you can upload, or it may not handle the amenities you provide.
10. Business Model
Do you have to sign a contract with each sales channel or can you sign a single contract with the channel manager? Both options have their advantages. It’s probably cheaper to make a contract with each sales channel, but if there is an option to sign only one contract it means any sales channel can sell your properties without you ever having to talk to them. Ideally, you will have a choice to do both so you can make a contract with your favorite sales channels but allow the others to sell you too. Hopefully, we’ve given you a taste of both the benefits and pitfalls of channel management. As always in life what seems easiest at first is usually not the best. A little work today to spread your risk with more sales partners will ease your troubles and earn more profits in the long run.
By Vanessa de Souza Lage CMO Rentals United Vanessa de Souza Lage is the owner of holiday rentals in Barcelona, the founder of the holiday rental agency “Holiday Velvet” and the CMO of Rentals United, a channel manager for vacation rentals. She has a passion for new tech and looks forward taking the conversation further with VRMA members at the event in New Orleans on the 26th of October 2015.
27
| From Our Partners
The Extraordinary Value of the Repeat Guest By Michelle Marquis
A
Vice President, Marketing and Strategic Initiatives at NAVIS
s the volume of vacation rentals and the competition increases, guest acquisition is at the forefront of many vacation rental property management companies’ concerns to increase profitability and marketability. However, what most Vacation Rental Managers (VRMs) need more than new inquiries are better strategies to focus on the leads that have the most conversion potential, as well as the strategies and tools that will convert them to repeat guests. Otherwise, it can be like trying to fill a bucket with a hole in the bottom.
Consider finally that a loyal, repeat visitor will attract even more loyal, repeat visitors. In the hyper-connected world in which we live, creating loyal guests has the potential to open up your vacation rental audience substantially. When a guest posts on Facebook or shares photos of their stay on Instagram-especially those repeat guests who share regularly-that advocacy builds trust within their circles, attracting new business and maximizing your Guest Lifetime Value (GLV).
With an avalanche of leads coming in via email, websites, listing sites and phone, it is becoming increasingly difficult for VRMs to stay responsive. Managing all of the listing leads especially, is time-consuming and sometimes overwhelming. In many cases, inquiries are coming from travelers ready to book quickly and are expecting an immediate response. It’s also a challenge to know exactly which listing sites attract the most qualified inquiries and which are most likely to book. The urgency of following up can often end up taking priority over being strategic and efficient. Without the right tools and process in place, it is scattershot. VRMs need ability to ensure timely response to all the leads managed to maximize bookings, revenue, and guest experience.
The ideal solution to this problem is NAVIS’ suite of solutions for all vacation rentals of different sizes. Comprehensive lead creation, management, tracking and analysis software will transform any call, email, website contact, listing site inquiry or interaction into a current and future sales opportunity. Through NAVIS’ integrations with your existing PMS and HomeAway services, in one convenient place you can ensure prompt, high-quality guest experience and maximum revenue and profit. NAVIS offers the right solutions at the right price for the vacation rental market.
What if, instead of focusing on only filling the funnel with inquiries and the hefty price tag associated with it, VRMs focused on converting more of these existing leads and winning their repeat business? After all, repeat guests are exponentially more prized than new guests are. Repeat guest bookings cost less to acquire, and according to a Gallup study, engaged guests (a category that includes repeat guests) are all around not as price sensitive. In fact, a review of spending patterns across more than 91,000 reservations shows that repeat guests spend from 13%-29% more than first timers.
Consider the following:
Attracting new customers will cost your company five times more than keeping an existing customer (Forbes) There is room to create loyal travelers. Deloitte reports that brand loyalty is relatively low, with only 8% of travelers in their survey always staying at the same brand (NY Times) A 5% increase in customer retention can increase a company’s profitability by 75% (Forbes) When it comes to profitability, there is no reservation more valuable than that of a repeat guest. Consider every first call, first click, and first walk through the door as an opportunity for a lifelong, lucrative guest relationship. World-class service begins with reservations agents who make a quantifiable difference when it comes to guest revenue. Repeat guests who book via the phone channel spend 29% more than new guests who book via the phone channel. Studies also show that new guests who book via phone spend more than those from any other channel because it offers an immediate opportunity to build a personal connection, making it more likely to reap a significantly higher share of wallet. Therefore, VRM’s should ensure that all reservations agents keep this in mind when answering inquiries, and consider increasing agent incentives for repeat-guest reservations. A guest retention program may include all of the above strategies as well as a marketing component that uses lead management to automate and track campaigns to previous guests based on trends (seasonality, weekday, weekend), preferences, and behaviors. Regular nurture campaigns through multi-channel touchpoints to past guests are essential to capture the full potential of repeat guest business. 28 VRM Intel Magazine | October 2015
About NAVIS NAVIS is an award-winning reservation sales system company that increases leisure voice booking conversions and bottom-line leisure revenue for resort, hotel, and vacation rental companies. NAVIS provides a proven system that enables clients to build reservation sales and marketing decisions on accurate, real-time data. The NAVIS system uncovers previously hidden revenue sources. It provides operators with 100% of the revenue source picture, not just online and social media bookings. It implements powerful outbound leisure sales strategies and measures true marketing ROI for each online and offline campaign. NAVIS captures guest and prospect data, tracks key revenue metrics, and provides 24/7 reservation call center services to help operators increase occupancy, ADR, and close more leisure business. To learn more visit www.thenavisway.com About Michelle Marquis Michelle Marquis is Vice President, Marketing and Strategic Initiatives at NAVIS. Michelle joined NAVIS in 2006 after serving as Director of Sales and Marketing at Mount Bachelor Village Resort in Bend, Oregon. As a previous NAVIS “power user”, she successfully utilized The NAVIS Way to help her resort increase their conversion rates and bring in incremental revenue from their existing call volume. Michelle draws on her 20+ years of hospitality sales experience heading up the NAVIS Sales Consultant team. As NAVIS continues to grow at a rapid pace, Michelle also focuses on the company’s strategic expansion and exciting path to international markets. She is a frequent speaker at numerous hospitality events around the U.S., including the Google Travel Conference, HSMAI and Preferred Hotel Group. Michelle has a deep understanding of what it takes to drive revenue in the hospitality industry and is driven to help hotels, resorts and vacation rental companies be more successful.
Vacation Rental / Real Estate / Resort & Destination Photography Services
Interactive Virtual Tours
Joe Mayer
Available Nationwide
850.499.2213 3dspacesandplaces.com Ask for Package Pricing
joe@thedestinphotographer.com 29
REVENUE OPTIMIZATION By Amber Mayer Vacation Rental Consultant www.AmberMayer.com The free version of Google Analytics gives you 20 indices of custom dimensions, and that is more than enough for most vacation rental managers. Each setup will be unique, based on the parameters that you already have setup on your website quick search, refine search and advanced search. Make sure your web company utilizes custom dimensions and not just events. Below is a list of the custom dimensions that I recommend: Location
Bedrooms
Check-In
Bathrooms
Number of Nights
Sleeps/Occupancy
Once you have the custom dimensions setup to collect data on your website, you can easily view your consumer demand trends. Which dates are being searched today versus booked today? What length of stay are consumers looking for in a specific week? Navis
If you are already a NAVIS customer, you do not need any special programming to access your offline consumer behavior. Just run an ELM report and you can export the phone inquiry data including requested check-in date and number of nights for every reservation status.
R
evenue Optimization is the art of selling the right product to the right person at the right price. I did not misuse the word “art” in the previous sentence, even though Wikipedia and other articles will tell you that it is a science. Vacation rentals are much different from retail or even hotel rate management where pleasing the master is a much more “black and white” experience. Professional vacation rental managers live in a grey area – caught between homeowners with expectations and consumers with instantaneous access to competitive inventory and pricing – not to mention that every single vacation rental is unique. The person on your team that you identify as your revenue manager needs to have an extensive background in vacation rental management, understand your owner relations strategy and be able to interpret data quickly, and work with your marketing team to come up with action plans. For years, vacation rental managers have been yielding rates based on booking patterns and there are many new tools coming out based on booking data. That is a great start but it means that you are making decisions with only half the data. In any revenue optimization decision, you need to have both your conversion data (booking trends) and demand data (consumer search trends) to know which levers to pull. Demand Data
There are many tools available for vacation rental managers that help you harvest your demand data, and you are likely already using some of them. I will review two of my favorites: Google Analytics and NAVIS. You need more than one tool to report your demand data because you have consumer behaviors that occur both online and offline (over the phone). If you have not invested in an offline analytics tool/telephony analytics tool like NAVIS, then you can use your online analytics to project your offline consumer behaviors. Google Analytics
Instead of just tracking the number of sessions and traffic sources, you need to start tracking the search behavior of your consumers using custom dimensions. The good news is that you can use the free version of Google Analytics to capture your search data. The potentially bad news is that you need a talented web agency with an advanced web analytics team to help with setup. 30 VRM Intel Magazine | October 2015
360 View of Demand Data
Once you collate the online and offline data, you can see a clear picture of your consumer search behavior and create reports similar to the one below.
Demand Data Arrival Date
# of Nights
Total Searches Current Period
Total Searches Previous Period
Trend
Sarasota
6/29/2013
7
958
482
98.76%
Sarasota
6/22/2013
7
868
622
39.55%
Sarasota
7/3/2013
4
793
328
141.77%
Sarasota
7/20/2013
7
787
388
102.84%
Sarasota
7/13/2013
7
726
416
74.52%
Sarasota
7/6/2013
7
671
322
108.39%
Sarasota
7/27/2013
7
504
209
141.15%
Sarasota
8/3/2013
7
504
185
172.43%
Sarasota
6/15/2013
7
493
337
46.29%
Sarasota
6/13/2013
3
417
208
100.48%
Sarasota
8/10/2013
7
413
187
120.86%
Sarasota
6/20/2013
3
389
204
90.69%
Sarasota
6/19/2013
4
371
189
96.30%
Sarasota
6/8/2013
7
288
286
0.70%
Sarasota
7/14/2013
4
287
41
600.00%
Sarasota
6/1/2013
7
276
268
2.99%
Sarasota
8/13/2013
7
165
103
60.19%
Location
Conversion Data
This is simply your booking data: what check-in dates and number of nights were booked in which type of units. The majority of the vacation rental software in the market today makes obtaining this data simple to access and export to Excel.
Example Booking Trends
Using the Data for Rate Optimization
It is important to have your demand and conversion data before you make decisions. Once you have the data, it paints a clear picture of which strategies you need to activate in your rate and marketing tool kit to have the highest probability of meeting your goals. Too often, when there is a drop in occupancy there is a cry for a promotion or an email blast, when in reality, different issues are at play and need very specific strategic reactions to ensure the expected outcome. Your competitive data is also very important depending on the issue at hand, but knowing your own data is critical before you can make decisions based on what your competitors are doing. If you work with a third party to obtain your competitorâ&#x20AC;&#x2122;s data, keep in mind that they are likely to provide you with occupancy and average daily rates based on what information is visible on your competitorâ&#x20AC;&#x2122;s websites. However, this may not be accurate due to owner reservations or maintenance blocks that change visible occupancy, and booked ADR can vary drastically from retail ADR. Demand
High
Conversion
Issue
Tools
High
You might not have an issue at all but you might want to double check that this is not an opportunity to increase rates on remaining inventory as you approach your occupancy and revenue goals.
The revenue management team should compare the rates left on inventory to your competitive set with similar inventory that is still available for the time period in question. It might even be worth testing slight increase in rates.
High
Low
You likely have an issue with rates or booking rules or you have no inventory left to be booked.
The first item to check is how much inventory you have for the time period, if you do not have any inventory - make sure you are not spending marketing dollars pushing that time period and let your business development teams know immediately what inventory you could have been booking. If you have inventory left then compare your demand data and your booking rules to identify if your issue is that consumers are looking for shorter stays than your booking rules allow. If that is not the case, then compare your rates with the competition but don't stop there. You never know what rates your competitors are actually booking at over the phone, so you need to be smart with lowering your rates if you feel that could increase conversion. This is a good example when changing your rates makes sense versus building a promotion with a code that consumers need to use.
Low
High
You do not have enough demand (searches/inquiries)
You need to create demand. Review your historical data to identify the markets and consumers that usually book that time period and buy strategic ad placements and email insertions to target that audience. You can use a promotion for those ad insertions but sometimes all you need is to remind consumers that it is time to book. You might want to get demand flowing before you give up rate since those that are inquiring are booking at your current rates.
Low
Low
You need to increase both demand and conversion
This is the type of issue that needs ad buys and a promotion to get the revenue stream flowing.
The Domino Effect
This data is not just for your revenue managers. An effective rate optimization strategy also allows your marketing and eCommerce teams to create campaigns that are more effective and use their limited time and budgets most efficiently. Business development can build an acquisitions strategy to target inventory where you have more demand than availability or demand for product types that regularly show no search results. This will minimize your inventory churn and ensure that you add inventory that your consumers will want to book. Rental managers will have real information to share with homeowners who want to know what is going on with the market and how your company is going to drive revenue aside from a shiny marketing PowerPoint. Knowledge is power and harnessing your data to create a true culture of Revenue Optimization across your organization will help you stand out from your competitors. Revenue Management 31
A Tribute to Milton Buehner By Amy Hinote
“I can do things you cannot, you can do things I cannot; together we can do great things.” –Mother Teresa
the recession in the 1980’s, Milton’s entrepreneurial life took a downward turn.
This quote was often used by Milton Buehner and summarizes the paradigm he used to create Buehner-Fry in 1987, the company we know today as NAVIS.
In his own words, Milton Buehner, whom his friends simply refer to as Milt, said in a 2012 interview with the ministry Generous Giving, “At the time we were living in a 21 foot camp trailer after having lost three different businesses, and I looked around in my camp trailer and out the window in the junk yard that we had to park that in, and I realized that whatever plan He had for me had to be somewhat better than the one I was living in.
“You can’t have walked through the history of vacation rentals without acknowledging Milton Buehner,” said industry veteran and revenue management consultant George Volsky.
M
ilton Tobias Buehner was born August 31, 1938 in Mitchell, South Dakota. After graduating from St. Johns High School in Winfield, Kansas, he served in the Navy from 1956 to 1959. He then built and ran several businesses, but during
32 VRM Intel Magazine | October 2015
God provided everything. He provided the idea for a business that had to do with telecommunications.”
And what a business it became.
Laying the Foundation for NAVIS
According to Larry Browning, President at Discover Sunriver Vacation Rentals, “Our company was Milt’s first ‘client’ way back when. Milt always referred to us as clients because clients - as opposed to customers -were folks that you cared for, helped and nurtured. The business started by providing an Amway phone - that oughta give folks my age a chuckle - that would allow long distance calls to be made from the vacation home and transfer those charges to the guest as opposed to having them show up on the owner’s bill. Believe it or not, this was a big deal in the 80’s. Buehner-Fry would take some profit, and their plan allowed for the property management firm to take some profit.” Al Williams, Owner of Cabin Fever Vacations in Gatlinburg and previous President at ResortQuest SW Florida, added, “Prior to Milt introducing the phones, property managers had to hold a guest’s damage deposit for up to two months in order to receive the phone bill from the owner and deduct the charges from the guests deposit before returning the balance. His introduction of the phone to our industry helped solve a major problem for all vacation rental managers.” Steve Fine, who joined Buehner-Fry in the early stages while the company was operating out of a garage, said, “We spent a lot of years trying to figure out how best to help the hospitality business. In hindsight, at the company we were simply living Milton’s core values with a little technology thrown in. We lived them so much they merely became who we were.”
Growth and Leadership by Example
In describing the company’s growth, Browning explained, “The use of the phones grew, and services expanded. Buehner-Fry developed a housekeeping monitoring system allowing us to track the comings and goings of our housekeeping teams and also help with the scheduling. They developed speed dial buttons that local vendors such as the pizza delivery and bike rental companies could buy into. Soon after, the service morphed into ‘free’ long distance calling for the guests which was a really big deal! You need to remember at that time we were all still tied to land
Adapting to Changes in Technology
With the introduction and widespread use of cell phones and webbased technology, many of the products were in danger of becoming obsolete. While several companies shut down with the introduction of new technology, Milton Buehner worked directly with his clients and his team to innovate and find better technology to improve the operations of vacation rental managers. According to George Volsky, “As cell phones threatened the business, Milt began an exhaustive and relentless search for new products and services. He explored new ideas and spoke to everyone. Milt leveraged his company’s expertise in phone systems to accomplish what I believe to be the industry’s most remarkable transformation from one business to another. He laid the foundation for NAVIS’s current suite of products and services which today extends well beyond vacation rentals to hotels and resorts.” Larry Browning said,
“Milt surrounded himself with really good people and built a culture that I and tons of others trusted. They gained our trust by asking us about our businesses and applying what they learned to provide products that would help and nurture our businesses. I have fond memories of lunch with Milt and seeing his eyes sparkle when he talked out about his visions of what could be.” Browning continued, “Then the big changes came. These guys figured out a way to provide us information about our guests that before, was only available to large corporations with huge budgets for market research. All of a sudden we were able to monitor calls coming into our offices, track those calls, get a profile of the caller, create a data base of the caller and break that data base down into finite groups allowing us to spend our marketing dollars more efficiently. Narrowcast! I remember when Milt was explaining the Narrowcast concept to me and that sparkle in his eye appeared bigger than ever. He used several analogies from broadcast, as in radio or TV, to fishing, to mining to explain the concept to me. ‘What if we can take the information we have and find that pocket, that sweet
Innovation, Integrity, Passion, and Servant Leadership lines. Around this time they introduced temperature sensing devices that enabled us to monitor temperatures from our desktop…another big deal.”
spot, that vein of gold that had been overlooked before? What if we can coach our employees to fine tune their skills to enhance even more, our ability to capture more business?’”
“In the early years of my time at Buehner-Fry there were no core values written on the walls and taught to new employees, no strategic planning and barely any meetings of note,” said Mike Hollibaugh, Chief Innovation Officer at NAVIS, who joined the company in 1998. “There was just a way that we all conducted ourselves that mirrored the way Milton Buehner conducted himself. We were expected to act a certain way and treat our clients a certain way, and it was never even really spoken to or about. That’s just how we did it at this little company in Bend, Oregon that provided long distance service to Vacation Rental Companies.”
Handing Over the Reins
Steve Fine added, “Following the Golden Rule, always having integrity in anything we did or said, being innovative - it is so much fun, having a passion to help others succeed, and an attitude of being able to do what is necessary for success is who we had become. By helping others, we always help ourselves in the long run.”
In 2006, Milton Buehner turned over the reins of the company to his son Kyle Buehner. George Volsky said, “Milt knew when it was time to hand the reins over to others. He exited to focus on other interests, enabling his son to build upon the original foundation of expertise and capital.” In the 2012 interview, in his own words Milton said, “He (Kyle) is carrying it on partly because his values are similar to mine. And he watches me like a hawk so it isn’t so much by what I say, but what I do. And I believe he understands who is the Provider for our ideas. What that is doing is meeting mine and Donna’s fondest expectations, which are that we have the opportunity to find a home for what God gave us.” Mike Hollibaugh said, “After we had moved away from long distance and became a software company and the company was rebranded as Feature 33
NAVIS, we began to start doing things like strategic planning, exploring our purpose and deciding on our core values. Although Milton wasn’t at the helm when we did these things, it is astonishing in retrospect how he shaped each of our values that are now posted on our walls, including the Golden Rule, integrity, innovation, passion and attitude.” Browning added, “I think it’s important for folks to understand the transformation that Buehner-Fry/NAVIS went through. It’s nothing short of amazing. Think about it, the business was built around a piece of hardware and technology that is obsolete today. It would have been so easy to say ‘we had a good run’ and that would have been the end of it. What NAVIS did was totally transform from what they started out as to something that is totally different today. The cool thing is every step they’ve taken is relevant to all of us in the Vacation Rental business.”
Impact on the Vacation Rental Industry
John V. Kjellman, President at Victorex, Inc. and founder of the Vacation Rental Managers Association (VRMA) said, “Milt’s big impact on the vacation rental business was in the products and services he made available to vacation rental managers, and the way in which he evolved his business over the years as technology and business practices changed. His impact on the vacation rental industry was huge.”
According to Browning, “NAVIS and others such as First Resort Software (FRS) really helped build the VRMA. While the idea thankfully stemmed from another visionary, John Kjellman and a handful of his clients, NAVIS and FRS saw the importance of our industry getting together as well, and they aggressively encouraged us to join this new group. Every new client they gained was encouraged to join the VRMA. NAVIS has been a supporter of the VRMA ever since I have been involved, providing financial support, hosting seminars and classes, acting as cheerleaders for the organization and gathering and providing data about the industry as a whole.” Kjellman added, “I can’t think of a single person who more influenced the ‘industry,’ over a span of many years than Milt. I’m happy to take credit as the VRMA founder, but I was simply the spark that got things rolling, it was the folks like Milt who developed the industry into what it is today, and while there were many significant contributors along the way, I can’t think of anyone who tops Milt on the list.”
34 VRM Intel Magazine | October 2015
Legacy
Michelle Marquis, VP of Sales and Marketing at NAVIS, said, “At NAVIS, we get a piece of Milton every day. His vision for our company permeates how we interact with our clients and with each other. People that never met Milton Buehner won’t even know that we got that from him, but in the way we grow as a company, Milton’s mission, his values and his passion live on in everything we do as an organization. He’s still here.” Larry Browning attended Milton Buehner’s memorial service. “Milt had an impact on folks from all walks of life. Neighbors who met ‘this smiling man who always waved as he walked by their home on his morning walk’. NAVIS employees ‘who sincerely and honestly knew that a piece of Milt would always be with them.’ Former NAVIS employees who appreciated the fact that he was a part of their lives and remembered his office did not have a door, recovering alcoholics that ‘couldn’t have made it’ without Milt. Missionaries from Uganda and Mexico that have been able to help hundreds upon hundreds of orphans and widows because of Milt and Donna’s support, a Naval honor guard, business associates who Milt helped succeed, church members, restaurant staff from places Milt used to get breakfast and of course the family and close friends. I think one man put it best when he said,
‘I thought I knew Milt, but after being here and listening to all of you today I know I only knew a small part of the man.’” In his own words Milton Buehner said, “I believe that you can be a generous giver without having a lot to give. If you have a heart that follows God’s direction for you, you are a winner if you obey his commandments. I don’t believe God is at all impressed with the numbers. I believe with all of my heart that God is impressed with obedience and blesses obedience.” Speaking for the employees at NAVIS, Hollibaugh said, “The one thing Milt taught us all was servant leadership.
Our employees and our clients are under our care and protection, and our job is to serve them both with grace.”
35
36 VRM Intel Magazine | October 2015
The Barbarians at the Gate By Philip Minardi, Short Term Rental Advocacy Center
Why the Entire STR Industry Must Stand Up Against Onerous New Regulations
O
ver the past year and a half, the Short-Term Rental Advocacy Center (STRAC), a program of the Travel Technology Association, has been active in growing a broad-based coalition of property owners and managers, hosts, travelers and businesses that recognizes the value of short-term rentals to both travelers and the local communities they visit. The Travel Technology Association believes that municipalities and states should embrace this economic opportunity and work with all industry stakeholders to establish a reasonable, pro-growth framework for regulating short-term rental activity so that everyone involved can benefit. Over the past year, the rate at which short-term rental activity across the nation has been confronted with the threat of new, burdensome, and often existential regulatory action has truly been astounding. Small vocal minorities have emerged in towns and cities around the country â&#x20AC;&#x201C; and indeed across the world who advocate for the outlawing of short-term renting. Often bolstered by the network and financial support of commercial interests like the American Hotel and Lodging Association (AH&LA), these anti-STR stakeholders have leveraged exaggerated misinformation and scare tactics to urge local policymakers to act quickly and without proper consideration on laws that stifle the short-term rental industry, property owners and managers, and the travelers who utilize their valuable services. The most unfortunate component of many of the regulations proposed in recent months has been that they are often driven by isolated cases of problem rentals, and count on the fact that most municipal officials are part-time policymakers without the time or resources to gather facts and consider the ramifications of the actions they are about to take. A few years ago, new short-term rental regulations being proposed at the state and local level were a growing concern for the industry. Today, they represent the proverbial barbarians at the gate for all those involved in the short-term rental ecosystem: travelers, managers, hosts, homeowners, local businesses, and the community. The simple reality is that with easy access to technology and more choices than ever before, travelers are increasingly looking for short-term rental accommodations that provide flexible housing options and allow them to spend longer periods of time in communities, in a unique setting, all while contributing to the local economy. As such, itâ&#x20AC;&#x2122;s only logical that municipalities embrace this economic opportunity by working with industry stakeholders to establish a reasonable framework for regulating short-term rental activity so that all may benefit.
As we work toward improving the regulatory environment at the state and local level for short-term rentals, it is essential that such regulations are developed to protect the community, property owners and managers, hosts and travelers. But
it is only in an environment where all parties are part of the ongoing discussion that fair and reasonable regulation can be achieved. Absent this collaborative effort, we will continue to see instances where groups of small vocal opponents call for swift and baseless action that undermines the industry and limits choices for travelers. It is our responsibility as stakeholders to understand that reality and work to counter the threat we now face. Unfortunately, such collaborative discussions rarely take place. This must change. In the meantime, policymakers continue to move quickly to adopt oppressive or limiting regulations on short-term rentals, creating laws and ordinances that lead to the detrimental effect of driving our valuable industry underground, effectively eliminating accountability and depriving communities of any corresponding tax and revenue benefits. We know that communities throughout the United States rely on local taxes to promote travel and tourism, and the fair and reasonable regulation of short-term rentals has the ability to ensure increased compliance, and in turn, increased tax revenue. What does smart short-term rental legislation look like? At its core, effective and sensible short-term rental regulation allows municipalities to easily identify and contact a short-term rental owner, make the tax collection and remittance obligations clear, and ensure that short-term rentals remain an option for owners, managers, and travelers. Just as importantly, smart regulations balance the needs of long-term residents and the community as a whole. In order to do so, they rely on fact based methodology and collaborative efforts in developing fair and reasonable regulations. Over the last year, Travel Tech has worked extensively with groups throughout the country to help reinforce the important core concepts that policymakers should consider when crafting or amending any short-term rental regulations. While many local policymakers are often willing to recognize the value of short-term rentals in providing flexible accommodations to visitors, it is the questions surrounding safety regulations, tax collection and remittance, and the ultimately accountable party that often drive any short-term rental conversation. Now, more than ever, the willingness of all parties involved in the short-term rental industry to work together is vital to the success of the industry. Working in concert, we can help develop an open and transparent dialogue among policymakers, industry stakeholders, property owners, and our local communities. Such a collaborative effort is the best and only chance at stemming the tide of poorly contrived short-term rental regulations. So, letâ&#x20AC;&#x2122;s talk.
Regulations 37
The Important Role
of Owner Service Providers in the Sharing Economy
I
t would be virtually impossible for anyone involved in the sharing economy or vacation rental industry to be unaware of the increasingly complex and growing body of government regulations. Short-term rentals are a very attractive lodging solution for families and groups, and improvements in the ease of finding and booking them over the past several years have enabled more and more travelers to take advantage of them. The increase in popularity has come with increased scrutiny from local governments as well as from lodging alternatives like hotels or B&B’s which view vacation rentals as competition. Recently, local governments and the American Hotel and Lodging Association (AHLA) presented at the FTC Sharing Economy Workshop and made fair points about vacation rentals that virtually all professional vacation rental property managers agree with: They should be a positive influence in the community. They should pay the same type of taxes any lodging provider pays.
By John Banczak Co-founder and Chairman, TurnKey Vacation Rentals
They should be licensed and regulated to promote these goals.
What Are Illegal Hotels?
The AHLA uses the phrase “illegal hotels” in a lot of situations. The origin of this phrase seems to stem from large apartment buildings in major metro areas that have been converted to handle short-term rentals. They often resemble hotels in just about every way – multi-story buildings with multiple units per floor, elevators, and a single investor/owner. The AHLA defines them as “individuals or companies operating multiple properties as a business.” While we believe the AHLA understands the difference between a true “illegal hotel” and a traditional vacation rental manager like Wyndham; however, there is some concern that the general public does not. The “illegal hotel” definition more and more often is starting to be loosely applied to the traditional vacation rental management industry, which is entirely different from a metro-area illegal hotel. Unlike an illegal hotel operator, traditional vacation rental managers do not own units at all – they provide services to individual home owners much like any local service provider. The decades old vacation rental management business can be thought of as having two broad categories. The first category includes Resort Managers (RMs) – folks like Wyndham, Marriott, and Westin that might manage a vacation rental structure that resembles a resort or hotel and may have individually or corporate-owned units. The second category includes Owner Service Providers (OSPs) – folks like TrueGreen, Lawnlove, America’s Swimming Pool Co, Merry Maids, TurnKey Vacation Rentals, Evolve, Handy, ARS, PayPal, Square, HotSpot Tax, even Wyndham in many areas, and thousands of small businesses across the country that provide some type of service for an individually owned primary or secondary home. OSPs help most vacation rental owners in some aspect of the process (such as a housekeeper, electrician or lawn service). Should an individually-owned, single-story, single-family home rented for part of the year be required to
38 VRM Intel Magazine | October 2015
have the same type of sprinkler-system, earthquake reinforcements, and healthcode inspections as a thirty-story hotel in downtown San Francisco that has multiple restaurants and event catering? Few would agree. Should it pay the same taxes and not be a nuisance to neighbors? Absolutely. Does a two-hundred unit, twenty-five story apartment building in Manhattan owned by a REIT seem more similar to the twenty-five story hotel across the street than it does a stand-alone single-family home in Austin, TX? It sure does, and the AHLA would have a good argument that the fire code of the hotel and the apartment building in Manhattan should be similar, while the fire code on the single family home should not. Do resort managers with multi-floor/multi-unit structures seem a lot like hotels? They sure do – many are owned by the same hotel companies represented by the AHLA. Does an OSP that helps an individual home owner take care of their property in some way resemble an illegal hotel? No, individually owned homes - whether rentals or not - hire all sorts of OSPs to help maintain their property.
Professional Vacation Rental Managers are Owner Service Providers (OSP), not Illegal Hotels A traditional, professional property manager doesn’t run illegal hotels, they are an OSP that may provide a few focused services to owners, or they may provide a wide range enabling an owner a single point of contact for most of their needs. The easiest way to understand traditional managers is to compare three examples of similar properties in an average coastal community. The first owner does everything on his own, the second owner uses a couple of different OSPs, and the third hires a full-service professional property manager to be their single point of contact. Each home is a single family residence, should have the proper permit to be a vacation rental, and should pay all transient occupancy taxes due.
The first owner – Joe: owns a three bedroom home a few blocks from the
beach. Joe is retired and spends about four months a year at his vacation home. His primary residence is a three hour drive away. Joe manages most everything on his own: he has listed his home on VRBO since 1999, handles all of his email/phone inquiries, takes payment in the mail by check or online through PayPal, and serves as the guests’ only contact point. He contracts out to local cleaners, a local lawn service, a pool service, a plumber and electrician, and uses a contractor for larger repairs. He runs his own finances and is responsible for paying his own local taxes each month. He keeps things like spare sheets on site, extra lightbulbs, and has guests bring their own amenities such as toilet paper, shampoo, etc. For the most part, the rental runs smoothly, save for the occasional instances when Joe is not available to answer the phone in an emergency or there is a problem with the quality of housekeeping or pool service. Joe has plenty of time on his hands to handle all of the scheduling and has always been more of a do-it-yourselfer.
The second owner – Susan: owns a three bedroom home right next door to
Joe. Susan spends less time at the home than Joe, as she lives a few hours away by flight. Susan is an EMT and cannot be reliably available to answer emails or phone calls, so she contracts with Evolve Vacation Rentals – a professional service that lists her property on VRBO, provides 24/7 phone and email support, and handles payments from guests. Susan likes that guests can always reach someone and she doesn’t have to worry about sleepless nights. She also contracts with Hotspot Tax to handle all of her tax filings. She’s always used H&R Block to do her taxes, and she likes the idea of a professional filing each month so it is accurate and verifiable. Susan uses the same local lawn service and pool company as Joe, but has a different housekeeper that she schedules herself, along with her own plumber and electrician. She is looking for a new general contractor as hers recently moved out of town. The rental runs smoothly, except for the occasional issues that arise when the plumber is busy or the old general contractor couldn’t be found. Susan doesn’t mind doing a little work now and then, but feels that paying for phone, email, and tax services are well worth it.
The third owner – Fred: owns a three bedroom also next door
to Joe. Fred uses the home just as much as Susan, and lives in the same hometown as Joe. He eventually plans on retiring there to live full-time. Fred used to manage his home on his own, but got promoted to a regional sales rep and is on the road most of the week with no time to schedule any of the services. Fred started using Beachwise Vacation Rentals as his OSP. Beachwise acts as a single contact for owners, providing a VRBO listing, phone and email services, and payment handling like Evolve does. Beachwise uses the same housekeeping company, electricians, and plumbers as Joe, but does all the scheduling for them, so Fred doesn’t have to spend time on this task. Beachwise also provides regular inspections of the home and keeps basic supplies on hand for renters like toilet paper, shampoo, garbage bags, and paper towels. Beachwise handles things like tax payments, verifies each guest’s photo ID, puts digital locks on the doors for added security, and hires a local private security patrol on weekends and during big events. Fred likes having one local point of contact, since he is busy at work and feels better having someone manage all aspects of his home. After all, he spent years saving enough money to afford a second home and wants to make sure it is well looked after. Each of these home owners has chosen a set of OSPs that work best for their own situation. Whether a home owner is the doit-yourself type, or they want to have one single point of contact – the combination of OSPs doesn’t change the characteristics of their homes in the community. The homes are identical, all providing the same type of rentals to guests. Each home owner is free to switch their plumber, housekeeper, or electrician if a newer, better, or less expensive provider comes along. Competition among service providers is strong in the USA and owners benefit from that competition. Beachwise, a single point of contact OSP, simply bundles up services for owners that need more convenience. The mere bundling of services doesn’t change the home itself. Nor does this bundling of services imply that full-service managers like Beachwise are running illegal hotels in their area.
OSPs vs. Illegal Hotels
We doubt that the AHLA’s intention is to group traditional fullservice professional managers into the same category as illegal hotels. We would urge them to clarify this position. Making it difficult to bundle services for home owners or reducing competition among service providers wouldn’t do anything to curb the type of illegal hotels mentioned in the larger metro areas. It would only serve to hurt the hundreds of thousands of second home owners. Professional property managers have been providing bundled owner services to individual owners for decades in a thriving, competitive local marketplace serving as a valuable OSP to almost half of all vacation rental home owners. We hope that all of those discussing the issues in the sharing economy
make it a point to fully understand that traditional vacation rental managers are not running illegal hotels and to further define the type of lodging that has become problematic.
Regulations 39
Your Success Depends on Theirs AN INTRODUCTION TO HOMEOWNER RELATIONS
By Tim Cafferty GRI, ARM
R
ecently, I was requested to reprise a seminar I first conducted in 2006 on behalf of Vacation Rental Managers Association (VRMA). The original title of the three hour course that I taught in San Diego at the annual conference was “An Introduction to Homeowner Relations.” The challenge to make this course a webinar for a 2015 audience was to convert the material from paper handouts to colorful PowerPoint slides and to trim the time to 50 minutes. Now, for the purposes of VRM Intel Magazine, I’ve got just 1800 words that you can peruse in less than 10 minutes! With this in mind, here are some key points to consider on this vital aspect of vacation rental management.
We are the Middle Man
One of the very basic points of vacation rental management is to understand that we are paid to be the middle person in the relationship between guests that wish to experience a vacation rental property and the property owner that has the desire to profit from their investment. The key to success is remembering the property owner provides us the platform for our business while ensuring you communicate expectations to your business partner (the property owner). Just as in life, successful partnerships require clear communications and a common bond of a positive outcome in the relationship.
Failure to set expectations from the start is often the key element in a relationship going bad. What is Your Why?
Before any partnership with a property owner can take place comes the courtship phase. Much like a life-partner relationship, you need to differentiate yourself from all other prospective suitors. I call it the why. Why you? Why should I place my future in your hands? Why are you going to be a better choice for me than the company down the street (or than I can do for myself )? Is it your delivery of service, superior housekeeping, above market income generation, technology, or outstanding staff ? What exactly is your why? Remember when you got your first contract from a property owner that chose your vacation rental firm? That was a wonderful time! You provided information, probably met several times, and your charm and business acumen won the owner over. It was a time when you felt vindicated and energized about your work. It was also a time when you focused on the why. As time goes on many of us forget that wonderment, and it may behoove some to step back and answer the tough questions just as we did in those golden days. What was it that set you apart? And is that same why valid today as prospective new business partners put you and your company to the test? I submit that it is more competitive today in the vacation rental business than ever before. Not only do you have the threat of business loss to the company down the street who promises half price commissions, rebates, or other creative 40 VRM Intel Magazine | October 2015
inducements, but the shared economy has property owners believing that the value of a professionally managed property may be overblown. Never before has there been such a forum for do it yourself vacation rental owners as there is today. If you are finding, as I have, over the last few years that many new vacation rental owners are new to the experience, then you indeed have to have a steely focus on your why.
Delivering on Your Promise
Once you resolve the meaty issue of your why comes the phase of the relationship I will call the operations phase. Things are going along as expected. You are delivering your promise of performance. Bookings are good, housekeeping is performing perfectly, guests are doing their part, and in short the operations of the vacation rental are percolating like a fine tuned Proctor Silex (that is an old school coffeemaker for you younger vacation rental managers out there), but then something happens. Just as with a life-relationship that hits the rocks, a business partner relationship can also have issues that can be drilled down to poor communications. The owner starts to feel differences in how they are valued by your firm. Maybe a work order or four are charged incorrectly. A blip in their housekeeping happens, or heaven forbid a guest review makes them question what “you people” are doing. “I don’t know you anymore.” “You don’t care like you used to.” “You’ve gotten too big.” These are all comments that may be stated by a property owner that starts to experience doubt. I firmly believe many issues that surface can be traced directly to poor communications. The truth is that you HAVE lost focus on communicating that value proposition (the why) back to your property owner on a daily basis. Maybe you didn’t have “the talk” with them about what expectations they should have, and you were unfairly expected to perform to a standard that you never realized was in place in the mind of the property owner. That’s when you need to hold the proverbial mirror up in front of you and determine how you cannot only recover the once trusted relationship with that owner that believed in you, but also deliver the value proposition each day to all of your property owners. That mirror often does not provide a flattering image. Consider the five W’s of news reporting: Who? What? When? Where? Why? How do you communicate with your owners? Is there another way? What are you communicating to your owners? Should you be communicating more often and in different ways? When are you communicating? Are you communicating in a timely and appropriate forum? Probably the most important one (again) - why are you communicating? What is the purpose of your contact?
If You Don’t Tell Them, Who Will?
I submit that if you do not advise your owners of what you are doing for them, then no one else will volunteer for the job. Isn’t that a self-serving philosophy? You bet, but again your job is to ensure that your business partner feels good about your relationship whenever they think of you. Communication is so vast and varied these days that you should explore this with your team. From owner’s statements to social media we have so many channels of communication with our property owners that we should be clear on which are best and how they will be used. I never thought, for instance, that I would be text messaging a homeowner when I first wrote this course 10 years ago, but I do it every day now. One time-consuming but potentially valuable tool you may consider implementing is an Owner’s Manual that you would present to your business partner at an appropriate time in your relationship. This booklet might be 10 pages or 100 pages, and it would outline how you do business. This is what we do, and this is something we do not do. This is who you call to get this done, and please don’t call us to do this for you because we don’t do that.
Creating an Owner’s Manual is something to consider no matter if your company is just getting started or has been around for decades. Building Loyalty
One of our last points to consider in the discussion of property owner relations is the idea of building loyalty. Obviously, delivering on your mission is a key in how you are perceived by your owners. If you consistently deliver on your promise of performance, certainly you will build loyalty. Over time there are numerous opportunities you will have to point out to your owners just how lucky they are to have you as their Vacation Rental Manager (VRM). There are countless ways you can outwardly show appreciation for your business partner including: annual homeowner gatherings at your office complete with a band and booze, discounted services from local vendors, gifts, no charge work orders, and even something as simple as a hand written anniversary card marking when they joined your program. Making your owners feel appreciated is a great way to build good word of mouth, and what better referral can you hope for than one from a happy and satisfied business partner?
Analyzing the Relationship
When speaking of property owner relations there comes the point of analyzing the relationship. First, you should analyze your business plan. Amy Hinote delivers thought provoking articles on her website www.vrmintel.com. In the article entitled “Tweaking Your Homeowner Acquisition Strategy: PMs give Advice and Lessons Learned, she had a great discussion about whether VRMs should look at quantity versus quality when it comes to building their footprint. For example, growing your firm solely by adding properties to your inventory may not be the most profitable or appropriate philosophy. Bigger is not always better, especially when you consider the wear and tear on your staff with some owners. Whether you analyze relationships automatically each year or not there should be a point in time when you take a hard look at not only your delivery on the promise of performance, but also analyze what your business partner has brought to the relationship. In short, are they doing their part in the relationship? If the answer is not a resounding “yes,” then you should go back to the portion of this article that deals with communication and read that carefully to ensure you are not to blame, but short of that you need to make a hard decision regarding the future of your relationship. Have you considered not only how you are treating your property owners, but also how they are treating you and your staff ? If you conducted a poll of your staff of the top protagonists and disruptions to their work would certain owners be at the top of everyone’s list? If so, you may need to consider the reality that your staff and your firm may be better served without this particular business partner. The proverbial scales of justice may come into play in terms of the amount of money you make from a property verses the angst your team has to deal with. I can tell you from experience that the loss of one property owner may open the floodgates of productivity for your team.
In Summary
As you consider the myriad of property owner relations (note: I never used the term “home owner” in this article….these are not their homes, and that is another article altogether), the key points to remember are to know your “why,” communicate with owners, and constantly evaluate your company and your business partners. If you build off of that base you can’t go wrong!
Tim Cafferty GRI, ARM President
Outer Banks Blue Realty Services Sandbridge Blue Realty Services
41
THE CHANGING LANDSCAPE OF
CHANNELS
THIRD PARTY BOOKING The Evolution of Third Party Distribution Channels By Amy Hinote
42 VRM Intel Magazine | October 2015
L
ove them or hate them, third party distribution channels have fundamentally changed the way consumers shop for vacation rentals and the way property managers find new guests. When HomeAway purchased VRBO.com in 2006, the idea of paying a third party to market homes to guests seemed like a feasible idea to boost shoulder season bookings and fill hard-to-sell inventory. But paying a third party channel for peak season bookings seemed…well…foolish. But in 2006 listing a home on VRBO.com was cheap. At $299 per listing, it only took a handful of bookings to produce an acceptable return on investment, and VRBO.com had traffic from guests looking for a deal. As a result, HomeAway continued to sign up properties by the hundreds and then by the thousands, and when possible, HomeAway acquired other third party websites with thousands of properties. As Amazon and others have proven, consumers like to shop where there is the most selection, and with increased supply came more guests which further increased supply, and so on. In 2007 another third party channel launched which initially focused solely on professionally managed vacation rentals with an added element of reviews. This distribution channel was called FlipKey, and it attracted investment from TripAdvisor in 2008 - in the same year that Brian Chesky and his roommate Joe Gebbia were selling “Obama O’s” and “Cap’n McCains” cereal to raise enough money to get their idea off the ground for a company called Airbnb. Fast forward through a plethora of fundraising, acquisitions, successes, and failures including: Orbitz’s failed entry into vacation rentals via a partnership with Zonder, HomeAway’s transition into a publicly traded company, Expedia’s spin-off of TripAdvisor, the VRMA’s defunct Switch initiative, TripAdvisor’s purchase of FlipKey, Booking.com’s 2012 introduction of vacation rentals, Expedia’s 2013 slow-moving partnership with HomeAway, the launch of metasearch via Tripping.com, HomeAway’s partnership with Kayak, and Airbnb’s steady and uninhibited ability to raise capital. Now we find ourselves in present-day 2015 with third party channels that are almost essential in attracting new guests to vacation rental properties.
Vacation Rental Listing Growth 2011-2015: TripAdvisor, HomeAway, Airbnb, Booking.com
TRIPADVISOR
Homeaway
Listing Growth of Third Party Channels
While there are hundreds of third party channels for vacation rentals, the market is becoming slightly less fragmented with four major channels taking the lead: Airbnb, Booking.com, HomeAway, and TripAdvisor. When TripAdvisor entered the vacation rental industry with FlipKey in 2008, FlipKey had 50,000 professionally managed listings. By 2011, they had opened up their model to owner managed homes and had grown to over 160,000 listings. This year the company began adding shared accommodations and increased inventory to a reported 720,000 listings by the middle of 2015. HomeAway purchased VRBO.com in 2006 with 65,000 listings. In 2011, HomeAway took the company public and expanded to 641,000 listings by the end of the year. With a steady flow of market-leading acquisitions and growth in inventory, HomeAway reported 1,185,000 listings in the second quarter of 2015. Founded in 2008, Airbnb fought their way into the short term rental market game. With small funds and big ideas, the founders joined Y Combinator’s winter incubator session in 2009 for three months of training. In 2010, they raised $7.2 million and in 2011, actor and partner at A-Grade Investments Ashton Kutcher announced a significant investment in Airbnb. Today, Airbnb reports 1.5 million listings, is the third most valuable venture capital-backed company in the world, and is currently valued at $25.5 billion. Booking.com entered the vacation market in late 2012 and by the end of 2013 had accumulated over 100,000 listings. Their model requires “instantly bookable” vacation homes. In 2014, they launched Villas.com, which has grown to over 350,000 listings as of August 2015, proving to the industry that an online marketplace can build a large supply of verified, instantly bookable vacation rentals.
AIRBNB
booking.com
Pricing Models
A variety of pricing models exist among the four major vacation rental marketplaces. Airbnb charges a 3-5% transaction fee to owners/hosts/ managers and a 6-12% fee to the traveler. Airbnb collects money from the guest upfront and released payment to the “host” 24 hours after check-in. Booking.com also operates solely on a performance-based pricing model with owner/manager fees of up to 15% of the transaction. HomeAway and TripAdvisor offer both subscription and performancebased pricing to vacation rental managers, and as of August 2015, TripAdvisor also still offered a Pay-Per-Lead Model, a model HomeAway phased out earlier this year.
Trust “By offering side-by-side comparisons, access to the growing array of travel options and competitive prices, online travel companies have empowered travelers to search, compare, and book from the palm of their hand from anywhere in the world,” said Steve Shur, President of the Travel Technology Association. “It is clear the American public not only relies on the convenience of shopping across multiple travel brands in a single place, but they continue to trust online travel companies with their vacation and business travel itineraries.” Third party channels have been able to gain trust in the vacation rental marketplace by focusing on and continuing to improve the following components: selection, reviews, professional site design, advanced search capabilities, high quality images, updated availability calendars, accurate property information, mapping, easy online booking, and instant confirmation of transactions. Building a marketplace with these elements requires an increasing amount of time, money, and expertise. As a result, the industry is seeing a
Feature 43
consolidation among the third party channels and an expanding barrier to entry for new players in maturing markets such as the U.S. and Europe. For the first time in ten years, in 2015 no disclosed seed funding was raised by a new U.S. third party channel. Furthermore, every U.S. channel that received funding in 2015 has been around since at least 2010. How much are property managers willing to spend on third party channels?
As business models transition and these online marketplaces evolve, investors almost unanimously believe vacation rental owners and managers are willing to spend 10-15% to secure a booking. As a result, the industry can expect to see distribution costs creep upward over the next few years. Today’s property managers are faced with the decision to: 1) absorb the third party fees, 2) pass the fees on to the owner, or 3) pass the fees on to the guests by raising prices on channels.
However, the third option of passing the costs of distribution on to the guests may not be sustainable. With the introduction of metasearch, the industry is likely to see rate parity become more encouraged and enforceable by the channels in the future. At least one channel (Booking.com) has already included rate parity requirements in their user agreements. To determine how much to spend on third party channels, vacation rental managers should calculate their cost of acquisition of a new customer. “I use my PPC costs as a gauge for what I am willing to spend on a third party channel, said Steve Milo, Founder and Managing Director at Florida based Vacation Rental Pros. “If we are spending 7% or 10% in a market, we consider that our cost of acquisition. In some markets it is higher because of the increased competition.” Milo added, “It is also important to determine your true cost of using the channels. Some channels are easy to work with while others require an enormous amount of time and manual effort.”
44 VRM Intel Magazine | October 2015
MAXIMIZING THE USE OF THIRD PARTY CHANNELS
W
ith the rising costs of listing on third party channels, it is critical that vacation rental managers formulate a solid plan for making the most out of using these middle-man marketplaces. A successful strategy for the use of third parties for bookings involves maximizing the use of the channel, implementing a plan for lead capture, and retaining guests obtained through the channel.
8
Ways to Maximize Channels
Partner with the channels that appeal most to your target audience. It is not necessary to list on every channel in order to be successful.
Find ways to maximize your presence on the channel with upgraded listings, promotions, advertising, and deals.
Promote your individual properties. Invest heavily in high quality photos and outstanding content. Make sure all of your amenities are being attributed to the property, and test listing titles frequently and seasonally.
Monitor the channelâ&#x20AC;&#x2122;s ranking criteria and your individual rankings. Most channels in the vacation rental industry publicly list and update their ranking factors. Think of optimizing your listings on channels in the same way you optimize your web pages for SEO.
Capture and retain lead information whenever and wherever possible.
Acquire guest emails and find ways to capture the names and emails once a guest books with you. For example, require wifi sign-in access or collect emails to send keycodes.
Send special offers, promotions, and event announcements to leads and guests.
Create an automated communications plan based on the guest/leadâ&#x20AC;&#x2122;s first contact with you, the booking date, and dates of the stay.
45
W
hen it comes to information, the balance of power has shifted to the caller’s side of the equation. In the not so distant past, those planning a vacation had very little information. Some only had the name and 800 number of the rental company they got from the phone book or a small advertisement. Others might have looked at a thumbnail picture and a few bulleted features listed in the company’s “annual planner” directory. Alternatively, today’s callers are armed with a seemingly infinite amount of information prior
TRAIN YOUR RESERVATIONS TEAM TO USE A “CONVERSATIONAL” VS. “TRANSACTIONAL” SALES APPROACH
46 VRM Intel Magazine | October 2015
to dialing our phone numbers. Many have read online guest reviews specific to the rental home they are interested in. Most have viewed numerous photographs. Some have even taken virtual tours. If your company is really up on innovations, they might have even seen 3-D floor plans. The research callers have conducted often results in them knowing more about a specific rental home than the reservations agent who fields their call! Yet, still they call our 800 numbers! If we surveyed marketing professionals in the vacation rental industry in the early 2000s, when everyone was rushing to put everything online, and asked them whether they believed people would still be calling in to book in the year 2015, most would have answered, “no.” This begs the question: Why do they still call? With most vacation rental companies offering online booking systems, one thing is for sure, they are not calling to find what is available. They can already see that online. Being in the mystery shopping business, when I call VR companies most agents seem to have what I call a “website search support” paradigm. These agents perform as if they were in a technical support department that exists to help people search availability. In other words, they approach their job as if they were supposed to help callers find a list of homes that are available for their requested dates. As I often exclaim to my participants, “THEY DON’T NEED US FOR THAT!” Still other agents have been trained by well-intentioned marketing executives to approach their job as if they worked in a “marketing data collection” department. These agents start off a call by asking right up front for contact information such as a full name, a phone number (even though it likely displays in caller ID), and an email. It is certainly a good idea to ask for a caller’s name so that it can be used to personalize the call; however, it should be up to the caller to self-identify by their first or last name. If a full name is given, then use their surname to err on the side of being too formal. Likewise, after you have connected with the caller, secure the caller’s email address to follow up on non-booked inquiries by sending an email to recap what was discussed. It is also important to ask for a phone number for a follow-up call, “Just to see if you have any questions or what else we can do on our end to help you plan your vacation.” When agents are trained to ask too many of these “marketing data collection” questions up front before building rapport, it sets the tone for a “transactional” as opposed to “conversational” interaction. Today,
guests and customers are looking for genuine authentic connections.
This seems to be the hottest topic at recent lodging industry conferences. For example, at the Southern Lodging Summit held in Memphis in August 2015, several executives shared their ideas in the article “Hoteliers Embrace the Age of Authenticity” in HotelNewsNow.com: “There’s no question the authenticity of an experience is what drives guests…,” said Robert Cole, President and COO of Atlanta-based Hospitality Ventures Management Group. “Guests are demanding authentic experiences in locations where they’re staying,” added Michael Tall, President and COO of Charlestowne Hotels. “In terms of uniqueness and authenticity … it’s about pulling back the magic curtain of operations…,” said Dana Shefsky, Director of Digital Product Innovation for Hilton Worldwide. Perhaps, Jordan Bartells, who is GM of the Hotel Indigo Pittsburg East Liberty, said it best in his quote from a HotelNewsNow.com article on July 6 of this year, “Our goal is to make things less of a transaction and more of an interaction. …You can almost tell when people are going through the motions. Engaging the guest is the most important part.”
Therefore, the best approach circa 2016 is for reservations agents to use an engaging, customer-focused, and conversational sales style. Here are some training tips for agents: Begin calls by listening to the caller’s opening remarks. This can be done by paraphrasing and restating whatever they are saying and adding a hint of enthusiasm about their plans. This shows the caller that you “get it” and makes them feel that they are special, not just another squeaky voice coming through the earpiece. For the agent, it might be the third family reunion call in a row, but for the caller, the first time they are reconnecting with relatives in many years. Use an investigative questioning process. Some callers are “call gushers” who spew out their whole story right up front. Others need a little more prompting to reveal their details. Here are some examples: “Do you have a property in mind or are you looking for help in selecting?” If they do not have any property in mind, ask, “Are you looking for something more upscale or a traditional accommodation?” “As I’m checking availability, what questions can I answer for you about the location or amenities?” “Is there something special you are looking for that I’ve not mentioned yet?” Conduct guest empathy training. Hold a discussion about the various types of “guest stories” being lived out every day on the other side of the front doors. Often those who work in a reservations position have not yet lived out the same experiences as those they are speaking with. Help them understand why callers ask seemingly “annoying” and “clueless” questions such as: “How many steps are there between floors?” “Exactly how far of a walk is it to the beach?” Maybe the party includes an elderly grandparent or very young children. Understand how important a vacation is to the person planning it. Recognize the various special occasions people are looking to celebrate. This can be accomplished by asking how it feels to be planning a vacation for the last summer vacation before a teenager heads off to college, the first trip with a newborn baby, or the first time coming back to visit without bringing grandpa this year.
Understanding always fosters empathy.
Offer personal recommendations, suggestions, and endorsements. This should be done only after an agent has connected with the caller and investigated “the story” behind their call. These techniques help reassure the caller that they are making a good choice. By Douglas Kennedy President Kennedy Training Network www.KennedyTrainingNetwork.com 2514 Hollywood Boulevard, Suite 406 Hollywood, FL 33020 Mobile: (954) 558.4777 Office: (866) 922.4662 Customer Service 47
48 VRM Intel Magazine | October 2015
Lead Management Xtreme + Integrated Phone Control Trust Accounting Distribution Channels Auto Responders Custom Guest App Housekeeping Mobile App Maintenance Mobile App Owner Mobile App Responsive Websites Website Map Searching Electronic Signatures CRM / Guest Marketing Home & Lock Automation Yield Management Wordpress Plugin / API Dashboard / Advanced Reporting Guest Reviews / Surveys Social Media Automation Search Engine Optimization (SEO) Coupons / Gift CertiďŹ cates Concierge QuickBooks Integration Travel Agent Portal Point Of Sale
www.streamlinevrs.com
49
T
ucked in the fast-paced heart of downtown Austin, HomeAway’s World Headquarters occupies the corner of 5th and Lamar. Just forty-eight hours before his final day at HomeAway, I went there to sit down with Carl Shepherd and ask about his thoughts on the vacation rental industry today, his predictions for the future, and to find out what is on the horizon for the entrepreneur-in-residence. His office shelves were bare, empty of books, files and memorabilia. Half-packed cardboard boxes filled the room. The smooth desktop was devoid of its owner’s belongings. I was immediately struck by the thought: The idea of Carl Shepherd retiring from HomeAway is surreal. It is impossible to imagine what the vacation rental industry would look like today without the influence of Carl G. Shepherd.
Carl Shepherd Retires from HomeAway
As most of our readers know, online vacation rental marketplace, HomeAway, was launched in February, 2005, by Carl Shepherd and Brian Sharples. As Chief Strategy and Development Officer, Shepherd engineered the company’s acquisition binge. During HomeAway’s first two years of operations, he quarterbacked the purchase of eight leading vacation rental marketplaces including TripHomes, A1Vacations, GreatRentals.com, CyberRentals, Rent101.com, Germany’s FeWo-direk, the UK’s Holiday-Rentals, and the U.S. flagship site VRBO.com. Since that time Shepherd has initiated and completed acquisitions of top vacation rental online marketplaces throughout the world, and helped to lead HomeAway to a successful IPO in 2011 resulting in the company becoming the number one vacation rental marketplace in the world. Not bad for a 1970 graduate of Woodrow Wilson High School in Dallas.
Q:
What trends do you see impacting the way the vacation rental industry is shaping up today?
CS:
Right now there is a euphoria surrounding all things associated with the sharing economy. As a result there’s a lot of new inventory coming into the market. At HomeAway 95% of our rentals are second homes primarily in vacation destinations with more than two bedrooms; by contrast, 95% of Airbnb’s listings are primary residences in urban centers, and more than 75% of those are rented, not owner-occupied, one bedroom or less apartments or simply a room. What this means is today there’s more inventory in a whole lot of urban markets which has resulted in a lot of younger, millennial travelers experiencing alternatives to hotels. This creates an interesting conundrum. As an industry, how do we differentiate what we do from someone’s apartment, complete with his underwear in the hamper, and food in the refrigerator? At HomeAway, we like the notion of privacy and ownership, we like the traveler to feel like the home is theirs while they’re on their stay, not someone else’s home they’re camping out in. The experience of staying in a dedicated, private vacation home versus the experience of staying in someone’s personal residence is very different. Second, there is a generational shift; people now expect to do everything online. This is having a real impact on owners and property managers who have been in the business for a long time. Today, 30% of travelers have stayed in private homes as opposed to less than 8% when we started HomeAway in 2005. That means the audience for vacation homes has more than tripled during the age of online transactions. Many owners tell me that they don’t believe travelers want to book online, but Booking.com has proven that travelers instantly book a private property if given the chance. It’s clear to me that the traditional vacation rental provider will have to move to online booking in order to survive. Our strength has
50 VRM Intel Magazine | October 2015
always been a high degree of customer satisfaction due to our selection, and that has been good for us and the owners who use us. But in the future we’ll see both large selection and instantly bookable homes. Owners who won’t accept online bookings will see intense competition from those who will. Right now our competitors don’t have many individuallyowned, second homes. We may see that change. Travelers are driving the industry in this direction, not HomeAway, not Airbnb, or Booking.com. Demand drives all industry. Owners who ignore what the traveler is demanding do so at their peril.
Q:
What has driven HomeAway’s slowdown in acquisition? Our scale has changed. For an acquisition to be meaningful today it has to be much larger. We have acquired the world’s largest vacation rental marketplaces in every country where the industry is fully developed. For the emerging markets in vacation rentals, there are not market yet. They are Development Officer leaders still trying to build up industry and they are not yet profitable.
CS:
with Co-Founder, Chief Strategy and
At HomeAway, we believe part of our responsibility is to prepare owners for a future they may not see coming. Rapid change in the industry will continue. There are going to be many more options and lots of competition, and when we inevitably see the vast majority of private homes become bookable online we want our owners to be ready.
Q:
For example, PMs often maintain a set of inventory that ranges from one to five stars. They need to ask, “What do my properties say about me? Am I putting 5-star travelers in 3-star properties? And if I do, why would they come back or recommend me?” They can also learn to use sites like HomeAway to bring new people to them who are the best match for their property: when they do that, their brand will benefit.
and Director, HomeAway, Inc.
What was your most challenging acquisition at HomeAway?
CS:
Australia’s Stayz. I wanted to buy it in 2005, but I was ten days late in meeting the owner and he had already committed to sell it to Fairfax. Luckily for us, Fairfax eventually decided to divest itself of Stayz. We had the opportunity to purchase it in 2013, but because it was the last crown jewel in the Vacation Rental (VR) industry, a bidding war developed. It took eight years to buy that company and the last 24 hours took 10 years off my life!
For example, VRBO. com founder David Clouse reached profitability, not because he had venture capital to burn, but because he and Lynn didn’t spend more than they made. In today’s world, small companies need a lot of money to get started to buy traffic, attract supply, and differentiate themselves from many well-funded competitors, so few have reached a profitable state. The money is spent on getting big, fast. In acquisitions, we are now looking at what can add value to our customers. Instead of outright purchases, we’ve invested in companies that add selection for the traveler such as: TravelMob (Singapore), CanadaStays (Canada), HemenKiralik (Turkey), Bookabach (New Zealand) and Tujia (China).
Stayz did not rely on a subscription model. Their business model was essentially pay per booking on the honor system. It worked in Australia, but can you imagine that working here? We still have not integrated the site into the HomeAway technology.
Q:
When you look at what is coming in the vacation rental industry, what are your predictions? First, I predict what I call the “Revenge of the Property Manager”. Over the next few years we will see property managers, as we say in Texas, in the cat-bird seat.
CS:
Screening guests, managing credit card payments, arranging for housekeeping, differentiating properties, all the related tasks and services that travelers expect are getting harder and harder to manage for individual home owners. This is occurring at the same time that new and progressive property managers (PMs) are looking to re-invent the property management business model. Even though there will be a big opportunity for professionals, yesterday’s property management methods are going to have to adapt. I foresee PMs will find new revenues by opening up their models: accepting inventory that is available for less than a full season, offering a la carte services while dropping the base percentage fee, providing only housekeeping supervision, etc. I see room for full-service options, but I think that will work best for high end homes where the owner is willing to sacrifice his margin for his lack of involvement. And I foresee a new emphasis on the PM’s brand. We’ve all heard people wax poetic about the word brand at vacation rental conferences, but I don’t think it’s been done in a way that benefits the VR professional. Brand, for a vacation rental manager, cannot be sustained if you don’t have repeat guests. Today PMs need to piggyback on larger brands that can reach new travelers, and then double down on providing the best service to inspire repeat guests and direct word of mouth bookings.
Q:
What was the most surprising challenge you faced during the rapid-growth of HomeAway?
CS:
The most surprising thing, and frankly one of the biggest hurdles, was discovering the Hatfields/McCoys relationship between professional property managers and owners back in 2005. The level of distrust between For Rent By Owners (FRBOs) and PMs took Brian and me completely by surprise and delayed the consolidation of the industry – exactly what travelers wanted – by years. It wasn’t until we acquired Escapia and Instant Software that we could tackle this problem head-on, and I think everyone – owners, PMs, and travelers – have benefited from the unification of the industry. Feature 51
Q:
What is next of the horizon for Carl Shepherd? All retired people grapple with how to be involved, but not consumed as I have been over the past ten years. I’m hoping to find that balance. I remain on the board of HomeAway. I’m also an angel investor in several companies in our space, including TurnKey Vacation Rentals and OnceThere.com, a marketplace for vacation activities. There’s a lot of opportunity in the activities industry, and, in a way, it has similarities to the vacation rental industry. I also plan to do a little traveling myself. With the relationships I’ve formed with our homeowners I would like to stay in several of the properties we market on HomeAway.
CS:
Most importantly though, is our youngest son, Jack, who has Down syndrome. My wife Suzanne and I are very active in efforts to educate parents and help families understand intellectual disabilities so that they can help their children reach their full potential. Jack graduates from high school this year and even though we’ve been involved in learning how to help children with intellectual disabilities find their place in the adult world, it is much more urgent now that Jack is an adult. Can you imagine the poor guy who hires Jack and gets me as the work-coach?
Q:
What do you consider your greatest accomplishment while building HomeAway?
Most people will talk about the way HomeAway enabled the CS: world to see the size and scale of the vacation rental industry, and the way we introduced this type of travel to a larger, worldwide
audience. But what I’m most proud of are the men and women who have found careers here, the families that we enabled to have a great quality of life, the children that just keep coming and the future they represent. It’s the families I’m proudest of and the families I’ll miss the most. Carl Shepherd has succeeded in understanding the vacation rental industry and all of it eccentricities. He found a way to bring together, on a common platform, owner-managed and professionally-managed homes. Thus, he helped create a marketplace that offers travelers the largest selection of vacation rentals on the planet. While we can expect to see Shepherd pop up from time to time to add insight and experience that will help further the industry, his consistent, full-time presence and strategic direction at HomeAway will be direly missed.
We wish him well in this new stage in his life, and we find ourselves most grateful to have participated in one of his final interviews as a vacation rental industry pioneer.
By Amy Hinote 52 VRM Intel Magazine | October 2015
53
Injection of Capital into the Vacation Rental Industry
$2.1B CAPITAL INJECTED INTO VACATION RENTAL INDUSTRY IN 2015 STARTUPS IN THE VACATION RENTAL INDUSTRY RAISE OVER $2.1 BILLION IN DISCLOSED FUNDING IN 2015, BRINGING THE TOTAL TO $3.2 BILLION IN 5 YEARS.
O
ver $3.2 billion in disclosed angel and institutional funding has been raised by startups in the vacation rental industry since 2011, and 96% of that investment is being used to build up online marketplaces including Airbnb whose most recent round totaled $1.5 billion and catapulted Airbnbâ&#x20AC;&#x2122;s valuation to $25.5 billion.
According to Fortune Magazine, over the past year Venture Capitalists (VCs) have increased their funding of tech startups in virtually every corner of the economy by 92% compared to two years ago. In contrast, the vacation rental industry has seen a 750% increase in funding compared to two years ago.
54 VRM Intel Magazine | October 2015
TOTAL FUNDS RAISED 2011-2014
TOTAL FUNDS RAISED IN 2015
$ 1.17
$ 2.1
BILLION
BILLION
The market is enticing. In the U.S. alone, the percentage of people over 18 who have stayed in a vacation rental has quadrupled from 8% to 32%, and it is now estimated that there are approximately 1.3 million vacation rental properties in the U.S. and 4.3 million vacation rental properties in Europe. With the size and opportunity of the market along with the fragmentation within the industry, VCs are finding attractive investment opportunities with companies innovating in the vacation rental space. At the time of publication, $2.1 billion has been raised in 2015 in the vacation rental industry year to date. This includes the jaw dropping $1.5 billion funding round that Airbnb finalized in June of 2015, which set the company’s value at a mind numbing $25.5 billion.
One online marketplace receiving funding in 2015 is Tripping. com who brought to market a metasearch platform for the vacation rental industry. With its model of providing a Kayaklike experience to consumers, Tripping.com raised $16 million bringing their total raise to $21 million.
95.95%
0.70%
3.35%
VC Funding Raised in Vacation Rental Industry By Year (in millions)
2011 2012 2013 2014 2015
......... 154.5 ...... 102 .................. 277.7 ...................................... 633 ............................................................................................. 2,083
VC Funding Raised in Vacation Rental Industry By Year Excluding Airbnb (in millions)
2011 2012 2013 2014 2015
...... 42.5 ............. 95.3 ........... 77.7 ..................... 158 ............................................................................ 583.5
Funding in the Vacation Rental Industry by Business Type 2011-2015
98.90% Funding by Type of Business
0.66%
0.44%
Funding in the Vacation Rental Industry by Business Type 2011-2015 (in millions)
Online Marketplaces Services Technology Tools
.................................................. $ 3,119 .... $ 109 .. $ 22.7
One factor is the costs associated with getting an online marketplace that can compete with Airbnb, HomeAway, Booking.com, and TripAdvisor are enormous. In addition, differentiation is becoming increasingly challenging and expensive. With new and varied types of inventory being introduced to consumers – from someone’s futon to an Eastern European castle – aggregated marketplaces are struggling with the decision to represent all property types or to focus on a piece of the short term rental accommodations pie.
Funding in the Vacation Rental Industry by Business Type 2015 Only
Funding in the Vacation Rental Industry by Business Type 2015 Only (in millions)
Online Marketplaces Services Technology Tools
.................................................. $ 2,060 .. $ 13.6 . $ 9.2
Online Marketplaces Services Technology Tools
Feature 55
International Funding
Capital Raised in Vacation Rental Industry By Country 2011-2015
The United States isnâ&#x20AC;&#x2122;t the only country seeing an increase in venture capital funding in the vacation rental industry. Internationally, Chinaâ&#x20AC;&#x2122;s online marketplaces TuJia, Zhubaijia, and Xiaozhu made their presence known this year collectively raising $470M in 2015.
Comparing Funding of US and China Online Marketplaces
Country USA China UK Canada Germany India Spain Singapore France Israel
.............................................................................................................................................. 2,429 ................................................................... 633,6 ............... 146,5 .... 19 . 10 . 4,5 . 2,7 .2 . 1,7 . 1,5
18
18
16
16
14
14
12
12
Capital Raised in Vacation Rental Industry By Country in 2015
10
10
8
8
6
6
4
4
2
2
0
0
Country USA China UK Canada Germany France Spain
2011-2014
2015
........................................................................................................ 1,525 ................................. 469,6 ........ 65 .... 11 . 10 . 1,7 . 0,75
USA CHINA In the UK, London-based OneFineStay, which focuses on private luxury homes, most recently added $40 million in a Series D round - bringing their total raise to $80 million and lists Hyatt as one of its investors. In Canada, Luxury Retreats recently raised $11 million bringing their total to $15 million, and in Germany HomeToGo closed both Seed and Series A rounds in 2015 bringing their total funding to $10 million.
56 VRM Intel Magazine | October 2015
Capital Raised in Vacation Rental Industry By Country in 2015 | Excluding Airbnb
Country USA China UK Canada Germany France Spain
...... 25,4 ................................. 469,6 ........ 65 .... 11 . 10 . 1,7 . 0,75
New Entrants
Less than half of the companies who secured capital in 2015 were first time investees. Interestingly, out of the group of newcomers to the space only one was an online marketplace. Among this group were vacation rental pricing tool providers Beyond Pricing and Smart Host, European Channel Managers Xotelia and Lodgify, and San Francisco-based property management service provider Pillow.
Raising Funds
2015 Funding By Company
Looking to raise funds for your vacation rental startup? Most advisors use some form of analogy to dating and getting married when describing the process of raising capital. In his Entrepreneur article “8 Things You Need to Know About Raising Venture Capital,” Alex Iskold, Managing Director of Techstars in New York City said, “VCs want to get to know the founders, watch them execute, and make progress before committing to invest. The check is not going to come after the first meeting (unless you are a serial entrepreneur with lots of success and the VC is worried about losing the deal). Successful founders take advantage of the dating game by making it a two-way street. They aren’t just looking for money; they are looking for partners in their journeys to build businesses. They recognize that not all firms and not all partners are the same, and use the ‘dating’ game to get to know the firm and the partner to assess if there is a mutual match.”
Company
Amount
Airbnb
$1,500,000,000 USA
Online Marketplace
Tujia.com
$300,000,000
China
Online Marketplace
Zhubaijia.com
$78,300,000
China
Online Marketplace
Xiaozhu.com
$60,000,000
China
Online Marketplace
OneFineStay
$40,000,000
UK
Online Marketplace
Zhubaijia.com
$31,300,000
China
Online Marketplace
OneFineStay
$25,000,000
UK
Online Marketplace
Tripping.com
$16,000,000
USA
Online Marketplace
Luxury Retreats
$11,000,000
Canada
Service
HomeToGo
$7,500,000
Germany
Online Marketplace
In an INC. article “Insider’s Guide to Silicon Valley’s Investors,” Cindy Padnos, Founder of Illuminate Ventures said, “With a growing number of options to choose from, selecting the best type of investor is an increasingly complex and strategic decision for entrepreneurs. An uninformed choice can have unexpected outcomes. Unlike most flirtations, it would be wise to consider the long-term strategic fit early in the courtship. The type of investor you ‘marry’ will likely affect your exit strategies and outcome, and should be chosen wisely.”
BookingPal
$5,000,000
USA
Technology Tools
Pillow
$2,650,000
USA
Service
HomeToGo
$2,500,000
Germany
Online Marketplace
Xotelia
$1,721,460
France
Technology Tools
Beyond Pricing
$1,500,000
USA
Technology Tools
Lodgify
$750,000
Spain
Technology Tools
For the full list of companies who raised capital along with the VCs who led the funding, go to VRMIntel.com/2015funding.
SmartHost
$277,500
USA
Technology Tools
Country
Type
By Amy Hinote
2015 Acquisitions of Vacation Rental Management Companies In addition to the injection of angel and institutional investment into the vacation rental industry, the following vacation rental management companies have been purchased in 2015. While the industry is ripe for acquisitions, there are many consideration in selling a vacation rental management company. According to Heather Weiermann, who sold her San Diego area property management company, “My best advice would be to have your ducks in a row prior to starting any discussions about selling. You should know the value of what you have and where you stand in the marketplace. You will never come out ahead in a negotiation when you don’t know your facts and the other side does. Purchaser
Acquired
Units
Month
Year
Vacation Rental Pros
Five Star Vacation Rentals
Vacasa
Chelan Vacation Properties
60
Sep
2015
180
Aug
2015
Natural Retreats
Mammoth Front Desk
Wyndham Vacation Rentals
ResortQuest Whistler
70
Jul
2015
600
Jul
2015
Mike Harrington
Topsail Realty
170
Jun
2015
Wyndham Vacation Rentals
Vacation Palm Springs
Wyndham Vacation Rentals
Corolla Classic Vacations
450
Jun
2015
200
Apr
2015
Resort Collection
Laketown Wharf Resort
Pacifica Companies
Sterling Resorts
300
Mar
2015
1000
Jan
2015 Feature 57
Jen O’Neal Takes the Vacation Rental Industry
I
f you haven’t heard of Tripping.com before, you will very soon. Founded by Jen O’Neal in 2010, Tripping.com has become the world’s largest metasearch platform for vacation rentals. Partnering with major vacation rental sites such as HomeAway, Wimdu, VRBO, FlipKey, Housetrip , Interhome, Roomorama, Booking.com, and more, Tripping.com aggregates over five million listings in more than 100,000 cities into a Kayak-like model and allows travelers to easily compare vacation rentals across providers. Co-Founder, Jen O’Neal knows a little about building up online marketplaces. O’Neal was one of the first employees at StubHub, which was acquired by eBay for $310 million. After spending a year in Costa Rica launching the North American Marketing Division for ParadisePoker, O’Neal was invited by StubHub’s Co-Founder to head up marketing efforts for Viagogo. While living abroad, she developed a passion for the industry while hosting well over a hundred travelers through various hospitality exchanges. We reached out to Jen O’Neal to find out more about her motivation to start Tripping.com, where the company is heading, what challenges are present for online distribution, and what opportunities she sees in the future for the vacation rental industry.
58 VRM Intel Magazine | October 2015
Largest Players Still a Small Slice of the Addressable Market $78,987
Source: Company data, Evercore ISI Research; HomeAway & Priceline bookings from 2Q14 disclosure. Our TRIP Vacation Rental Bookings estimate, utilizes a calculation whereby we divide our estimate of $68m in 2014 VR revenues by a 3% commission rate, in-line with what is disclosed on Flipkey/TripAdvisor sites.
Vacation Rental Bookings (SM)
$100,000
$100,000
$80,000 $60,000 $40,000 $20,000 $0
$11,000 AWAY
$4,000
$2,267
PCLN
TRIP
$3,747
AIRBNB
OTHERS
Q: What motivated you to start Tripping.com in 2010?
Q: How did your experience with StubHub and Viagogo help in your
for travelers. I’d been a fan of sites like CouchSurfing, but I felt there was room for improvement on both the technology and safety fronts. Travelers seemed to agree. When we launched the company from TechCrunch Disrupt in 2010, we grew rapidly and had users in 175 countries within the first 30 days.
J.O.: As an early employee at StubHub and Viagogo, I developed a love of marketplace businesses. I also got to see exactly what it takes to build billion-dollar companies both in the US and internationally, which has proven to be a solid blueprint for what we’re building at Tripping.com.
J.O.: The original concept for Tripping.com was a social network
In addition to the viral nature of Tripping.com, our growth strategy centered around creating partnerships with organizations such as travel groups and study abroad programs. Soon after launching, we had over 40 partners including Ivy League schools, the Peace Corps, AmeriCorps, AARP, and more. Those partnerships enabled us to not only grow at breakneck speed, but they also gave us a highly vetted, high quality userbase. Although we pivoted a year later, our new model resonated with our original users and they continued to engage with the site. Those early users formed the core of our current user base, which helped us transition into our new business model.
Q: How has the idea behind Tripping.com evolved over the last 6 years? J.O.: We made a major pivot in 2011. At the time, the vacation rental industry was catching fire thanks to the growing buzz around Airbnb and HomeAway. My cofounder and I are data-driven people, so we did an analysis on the market. Three things jumped out to us immediately: the market was enormous, the existing VR technology was easily 10 years behind hotels, and the entire space was intensely fragmented.
The fragmentation caught our attention more than anything. We reasoned that building a metasearch site would solve fragmentation, both giving consumers an easy way to find vacation rentals and giving rental sites additional traffic. In late 2011, just 30 days after reviewing our initial data findings, we relaunched Tripping.com as a metasearch site for vacation rentals.
vision for Tripping.com?
Q: With your experience in aggregating the eccentricities of the vacation rental industry, what strikes you as being the biggest challenge facing the industry?
J.O.: The shift towards instant bookings is a major challenge for the industry right now. This isn’t just from a technological standpoint. While users seem ready to whip out their credit cards and book rentals, we still see a significant amount of resistance on the part of property owners and managers. Major brands are trying to push hard for online bookings, which will ultimately advance the industry. With that said, it will still be a few years before the vast majority of properties can be booked with a click of a button. Another challenge centers around calendar availability. In aggregating data from top rental suppliers, we often see inconsistencies in rates and availability. We work closely with our partners to solve these issues and we reward properties with updated availability data by moving them up in Tripping.com’s search results. That’s the beauty of a search engine; we can ensure that the best properties always go to the top of our results.
Q: To add to the question of aggregating vacation rental data, what if anything - was easier than you expected?
J.O.: We only had a handful of partners for the first three years. This is because rental sites either didn’t have the capability to build feeds or they weren’t interested in working with us. Now we have a growing queue of over 200 rental sites that are waiting to get on Tripping.com. This has been a really nice surprise and it makes building partnerships easier than ever before.
The only problem was that we were three years too early.
Q: What does having a successful metasearch platform mean for
The market wasn’t ready for metasearch, but Jeff and I could clearly see where everything was heading. We pushed forward. Our cash was limited (most investors weren’t willing to fund an unproven model), which made us scrappy and creative. By the time the market was ripe for a metasearch player, we were perfectly positioned to capture the opportunity.
J.O.: Vacation rental managers who list on sites like VRBO and Booking.com (among our other great partners) are getting more bookings thanks to Tripping.com. We’ve really nailed the marketing side of the equation, which means that we’re sending highly qualified traffic to our partners. This traffic converts into bookings, which means that managers are filling up their calendars and making more money.
Q: Is the market still fragmented?
J.O.: Yes! A report published by Evercore (see chart) earlier this year shows that there is still intense fragmentation in the vacation rental industry. To point, the top four players - HomeAway, Priceline, TripAdvisor, and Airbnb still only have about 22% market share. This underscores the value of metasearch and what we’re building at Tripping.com
vacation rental managers?
One important distinction is that metasearch increases the quality of users. This is because users can do an initial comparison on Tripping.com, find the property they want, and then click over to our partner’s site to book it. Since they’ve already done their research up front, they’re more likely to convert once they hit our partners’ sites. And of course this translates into more bookings for vacation rental managers. Feature 59
With their latest round in funding, Tripping.com delivers metasearch for vacation rentals to a broad audience. Q: (In the preceding “funding” article, I am reporting on your Series
B raise of $16M) Tripping recently raised $16M bringing your total to over $21M. What are your plans for the company over the next 12-24 months?
J.O.: We were excited to announce our Series B earlier this summer.
The round was led by Steadfast Venture Capital out of New York and other investors including: 7 Seas Venture Partners (founded by Jeff Xiong, former Tencent CTO), Enspire Capital out of Asia, Fritz Demopoulos (Qunar founder), Erik Blachford (former Expedia CEO), Monte Koch (board member at Choice Hotels), and Drew Goldman (Head of Real Estate Investing for Deutsche Bank), among others. We’re also happy to have the continued support of Recruit Holdings in Tokyo and Quest Venture Partners, a Silicon Valley firm that led our Seed round. We’re using this funding to fuel our growth, enhance our product, and aggressively expand into international markets. Since closing the round, we’ve substantially grown our teams in both San Francisco and Europe.
Q: How does Tripping.com fit in the overall vacation rental
marketplace in relation to HomeAway, Airbnb and other distribution channels?
J.O.: An investor recently compared us to a spoke in a wheel. As the top metasearch site for vacation rentals, we sit in the middle of the industry by sending bookings to rental sites such as HomeAway and Villas.com. Though there is always a natural tension between metasearch sites and their partners (as we’ve all seen with Kayak, Trivago, and Expedia), our team is ruthlessly focused on helping our partners grow. We work closely with them to optimize conversion funnels and ensure that travelers have a great experience booking vacation rentals.
Q: Looking at the industry from your unique perspective, what
do vacation rental managers need to do in order to be successful in marketing their properties online in 2016/2017?
J.O.: Great question. Based on what we can see, this is what I’d recommend for vacation rental managers who want to increase their bookings:
Update your calendars to show when your property is available. Properties with fresh availability get higher placement in search results on Tripping. com and other sites, so you’ll be rewarded with more bookings. Use data to price your listings competitively. Before setting your nightly rate, do some research to see how other owners are pricing their listings. You can also look at nearby hotel rates to get a wider view of the accommodations market. Additionally, be aware of big events and conferences that could positively affect the price of your listing: if the area is sold out, you should be able to charge a premium for those dates. Strategic pricing will help increase your bookings and revenues. Show high-resolution photos to increase conversation. Our data consistently shows that property listings with many high-res photos are far more likely to convert into bookings. Be open to taking online bookings. It could save you a lot of time and hassle. Given that most rental sites now offer insurance, the risk is pretty low. List your property on multiple rental sites. Ensure you have the bandwidth to update multiple calendars. This will immediately increase your exposure to potential guests and enable you to test things like pricing. Managers often approach us directly, asking if we can help them price their listings to make sure they’re getting the most money for their properties. Our team is always happy to help with this, since our data enables us to actively and simultaneously increase revenues for both managers and our partners.
Q&A
by Amy Hinote 60 VRM Intel Magazine | October 2015
12 Months: 12 Fabulous Homes-Away-from-Home
H
alloween 2014, an early Chicago snow left powdery flakes on my Hyundai as I packed to leave on a year-long Vacation Rental Road Trip. Career goals in flux and a bucket list of places to see, I set out to explore vacation rentals around the country and to learn as much as possible about our fast-growing industry. Harboring an admitted aversion to crowds and conscious of budget constraints, I hopped off-seasons and was able to visit twelve great locations during the year. From one destination to the next, I encountered a level of professionalism I did not expect. A few of the many discoveries: superior housekeeping, keyless entry, and 24/7 customer service. What was the most important payoff of the entire road trip? A network of amazing, lifelong friends I cannot wait to see again.
61
12 Months: 12 Fabulous Homes-Away-from-Home II
I
III
Austin, Texas
Bethany Beach, Delaware
Deep Creek, Maryland
ustin, chock-full of top-notch music and culinary creativity, is a vibrant, eclectic mecca for free spirits. While I didn’t think of it as a traditional vacation rental destination, Austin-based TurnKey Vacation Rentals has found a highly lucrative, short-term rental business there. My Austin home was a clean, cozy cottage off South 1st in what I later learned was the highly esteemed “78704 district.” From there I could easily access the downtown area, South 1st, Lamar and South Congress. From 6th Street’s hipster-meets-Bourbon-Street flair to amazing restaurants, live music, and funky shops in the SoCo area…from bats under the Congress Avenue Bridge to the food trucks’ gastronomic artistry, Austin is never boring. And staying in a vacation rental makes it all the easier. If you don’t have a car or don’t want to risk driving, both Uber and Lyft are inexpensive and fast in Austin, and there is never a lack of things to do. Hands-down, Austin has the friendliest population I’ve found. The most difficult thing to work into your Austin plans – time to sleep!
ocated just a few miles north of Ocean City, Maryland, Bethany Beach provides a safe, traditional, family-friendly, beach destination within a four-hour drive of some of the largest cities in the country. I stayed across the street from the beach at Sea Pines Village, in a townhouse managed by Sandcastle Realty. The centrally located destination made it a snap to explore areas near Bethany Beach, Ocean City to the south and Lewes, Delaware to the north - then drive home to enjoy the pool, patio, grilling area, and super-clean accommodations. The rental was a short walk from the Bethany Beach boardwalk and only a block away from Mickey’s Family Crab House where I can vouch for the crab dip, crab cakes, steamed crabs and snow crab. When in Rome…
as I the only one who didn’t know how amazingly beautiful Deep Creek is? I stayed in a very private townhouse aptly named Amazing Views, managed by TaylorMade Deep Creek Vacations. My intent was to accomplish much work in the serene environment. But the falling November temperatures added to the temptation of a private hot tub overlooking the lake, plus two fireplace levels forced work to take a back seat to relaxation. Taylor-Made owners Joe and Jodi Refosco were wonderful hosts and made time to show me the area, talk over drinks/dinners about the way they built their business, and what the area means to them. I followed their recommendation to hike Swallow Falls. It was, without a doubt, one of the highlights of my trip to the Deep Creek area. If my schedule hadn’t forced me to move on, I might still be in Deep Creek today!
A
62 VRM Intel Magazine | October 2015
L
W
Road Trip IV
VI
V Fayetteville, Texas
Gulf Shores, Alabama
Harbor Springs, Michigan
ayetteville was an unplanned offshoot of my trip to Austin and turned out to be one of the most special getaways of the entire journey. Located in central Texas between Austin and Houston, Fayetteville was settled in 1844 and is known for the biannual antique shows held in nearby Round Top. Visiting Fayetteville is a trip back in time. It’s a unique Texas town complete with an ice cream parlor, a diner, a corner market, a tavern, and a courthouse centered on the town square. I stayed in a private home owned by Sand ‘N Sea’s Claire Reiswerg and managed by Country Butler. The historic farmhouse was charming! A few of the perks: original hardwood floors, high ceilings, and deep, inviting porches. For a girl raised in a small town in Mississippi, Fayetteville was a great place to rediscover the charm of roots. When the road trip began I had not considered including a small town snapshot of Americana, but I am so glad I did.
ulf Shores, with its 32 miles of breathtaking beaches, is home base for me. It’s where I got my start in the vacation rental industry and most of my family lives nearby. Spending the holidays at a condo at The Colonnades Condominiums, managed by Meyer Vacation Rentals, was truly going home. The Colonnades is located right on the Gulf of Mexico at the east end of Gulf Shores. It is surrounded by two miles of uninhabited, sugar white beaches – total relaxation to savor and enjoy! Ground-floor facilities include in- and outdoor pools, solarium, gym, private theater, library, grilling area, and plenty of private beachfront. Another plus: The Colonnades is within walking distance of several good restaurants. While there in December, I was treated to a meteor shower. I grabbed a bottle of wine, a quilt, and headed to the beach where I sat undisturbed for hours, entertained by a natural fireworks show. The sky was alive with shooting stars and their reflection in the gulf waters sparkled like diamonds. Sweet Home Alabama!
f you’re in the market for a waterfront escape from the summer’s heat, North Michigan is the ideal. I invited a couple of Chicago friends to join me on the trip to Harbor Springs for some peaceful R&R on Lake Michigan. Our cooler stocked with meats and veggies for grilling and wine for drinking, we headed for the lake. Our destination: Eagle View, a large, 3-bedroom, private, lakefront home rental, managed by Holiday Vacation Rentals. Located along the road known as the “Tunnel of Trees,” the house was well equipped, quiet, and serene. Holiday Vacation Rentals owner Alan Hammond and his wife Kathie went to dinner with us at Legs Inn, a Polish restaurant a couple of miles further down the Tunnel of Trees. There I heard the personal story of their experiences in the vacation rental business. We also had a lively discussion regarding the next direction the industry is taking. During the next few days we explored nearby Harbor Springs, relaxed on the shores of Lake Michigan, grilled our meals under the stars, and read by the fire. My hope is to one day add an annual vacation in North Michigan to my August calendar!
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12 Months: 12 Fabulous Homes-Away-from-Home
Credit: Sarah Black, North Myrtle Beach
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VII Nenagh, Co. Tipperary, Ireland
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s a presenter at the VRMA 2015 European Seminar in Dublin, I had the grand experience of staying in several Irish vacation rentals. The first was Ashley Park House in County Tipperary, just a wee bit north of Ardcroney. I discovered Ashley Park through hiddenireland.com and treasure making the acquaintance of 93-year old owner, Sean Mounsey, during my stay. A narrow lane winds from the gatekeeper’s cottage, beneath an archway of trees. Suddenly, the limbs part and an enchanting country home emerges, complete with whitewashed stone walls, mullioned bay windows, a green tile roof, two sections of which are turrets, and verandahs reminiscent of Savannah’s. In addition to sightseeing green Irish hillsides, thatched-roof villages, castles and abbeys, hill-loads of sheep, and sampling crisp fish ‘n chips in a variety of pubs, daily activities also included morning walks on the 90 acre estate, afternoons spent rowing peaceful Lough Orna, and tea in the parlor by a welcome fire. Evenings brought luscious meals, a local play, wine, and international conversation around the fireplace. My ancestors were from Ireland – is that why I feel so at home there? 64 VRM Intel Magazine | October 2015
IX Dromoland Castle, Newmarket-on-Fergus, Co. Clare, Ireland
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ne of the most famous baronial castles in Ireland, Dromoland doesn’t actually fall into the category of a vacation rental, but my experience there was just too good to leave out. Arriving at the castle, I felt like a 21st century Cinderella. Ancient blue limestone with chiseled workmanship, heavy wooden doors, ornamental grounds, gardens and woods extending over 1500 acres of land, and panoramic views of two rivers - the Shannon and the Fergus, are just a few of the delights. A castle stay is not cheap by any means, but there are off season deals to be found on the website. My room was huge with a 15’ ceiling and crystal chandelier, a lovely sitting area with fireplace, and a huge bay window overlooking the castle entrance. The dressing room/bath was spacious; marble and decorative tile appointments functioned as well as they looked. All drapes and furnishings in the castle were upholstered in designer fabrics. Morning coffee in the gallery, afternoon tea in the drawing room, wine and hors d’oeuvres in a cozy, fire lit pub, and five-course meals in the dining room. Even in February the grounds were immaculate. I enjoyed a horse-drawn buggy ride, strolls by the lake and in the ancient walled gardens, and watched as the crows made their daily sunset flight, returning to the rookery beside the lake. What was the toughest aspect of staying at Dromoland Castle? Stepping back into reality when I had to leave.
North Myrtle Beach, South Carolina
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ollowing the VRHP National Conference in Charleston, I drove to North Myrtle Beach and stayed at Ocean Bay Club, managed by Elliott Vacation Rentals. The beachfront condo had all the bells and whistles: indoor and outdoor pools, fitness room, grilling area, private balcony, jetted tub, and walking proximity to the downtown area. From sunrises over the Atlantic (worthy of a top-notch artist) to high-energy shag competitions downtown, North Myrtle Beach proved to be a great beach getaway from morning till night. Owner Rick Elliott and GM Brandon Cox met us for a fabulous dinner at Joe’s Bar and Grill where we talked about Rick’s father, Senator Dick Elliott, who started the company and marveled at the way Elliott Vacation Rentals has grown to become one of the top ten largest vacation rental management companies in the USA. This was another place I could have stayed longer.
Road Trip X
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XI Orange Beach, Alabama
Sandestin, Florida
Winter Park, Colorado
y January, I was ready for an off-season blend of wide-open Gulf front beaches and proximity to restaurants and nightlife. I found both at Regency Isle Condominiums, managed by Meyer Vacation Rentals. The large, 3-bedroom condo boasted a fabulous Gulf front and a corner balcony with amazing sunset views. The sugar sand beaches in Orange Beach are expansive and Regency Isle is located next to a state park with a mile of unspoiled coastline to the west. I stayed for a month and enjoyed every moment. Meyer offers renter-pleasing, weekly housekeeping services in which they clean, change sheets, and replace towels. Hotel services with all the perks of a vacation rental. It didn’t hurt at all that the condo was within a quick walk of the legendary FloraBama Lounge!
he Sandestin trip was all work…well, mostly work. Several colleagues and I had planned a meeting in the Destin area. We opted to rent a 4-bedroom, penthouse condo at Sandestin’s Baytowne Wharf. The condo, located in the Bahia building, proved to be pure luxury with rooftop balconies, resort amenities, plus all the activities and fun Baytowne has to offer. Downtown Baytowne is an enticing combo of upscale shops and restaurants, including the Marlin Grill, the Funky Blues Shack, Hammerhead’s, Lumpy’s Wine Bar, Poppy’s Seafood Factory, and the Village Door Smokehouse. The huge dining table in our penthouse easily transformed into a boardroom table for our meetings and the balconies offered great areas for entertaining after hours.
arch in Winter Park is pure magic. I stayed at the Zephyr Mountain Lodge condos in Winter Park Resort, managed by Winter Park Lodging Company. Zephyr offers easy access to one of Colorado’s most popular ski destinations. Being a less than Olympic skier myself, I looked for a way to enjoy the area without breaking a leg. Snowmobiling fit the bill! At Winter Park’s Grand Adventures I was able to ride the Continental Divide on Colorado snowmobiling trails that top out at nearly 12,000 feet. Panoramic views of the entire Winter Park ski area and Fraser Valley were spectacular. I loved it so much I made the trip three times and can’t wait to go back on a future vacation. Winter Park Lodging Company has the friendliest, most cohesive team I encountered in my travels. They all genuinely care about each other and their guests, and it shows in everything they do. From special flower arrangements to team get-togethers, WPLCO operates in a team environment and ensure their owners and guests are part of that team.
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Decades of experience Hundreds of success stories Industry-specific consulting services for your toughest decisions. Software Selection Buy/Sell Transactions Marketing Technology Management Consulting
VrmConsultants.com 66 VRM Intel Magazine | October 2015
A Partnership With Benefits
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he goal of a Destination Marketing Organization (DMO) or a Convention and Visitors Bureau (CVB) is to increase vacation and business visitors by promoting a town, city, region, or country. According to Destination Marking Association International (DMAI), DMOs are responsible for supporting the long-term development of communities through travel and tourism strategies. Even over the last 20 years, while helping many in the professional vacation rental industry with their marketing and promotional efforts, I’ve observed the benefits of partnering with local DMOs/CVBs. Following are some benefits that Vacation Rental Managers (VRMs) can derive from building relationships with DMOs.
Partnership Benefits:
Expand ways for potential guests to find you. DMOs work with local and national organizations to drive visitor awareness in what a specific area has to offer. Alastair Morrison explained, in his 2013 book, Marketing and Managing Tourism Destinations, “A DMO has many potential partners that it can call upon for collaboration and cooperation.” Often you can find complimentary or low fee services to list your accommodations in various online and print publications that reach a variety of audiences through DMOs. You can also meet and build relationships with fellow industry partners that can benefit from discounts or referrals between your vacation rentals and local attractions. Make strategic decisions for your marketing and outreach plans. Understanding the hopes, trends, and attitudes of visitors coming to your area can help you make decisions that drive your business. DMOs often provide statistical data on their websites which can be a valuable resource to VRMs including: destination growth indicators, visitor profiles, annual reports, economic updates, presentations, tourism summit results, lodging studies, and other research. Such data can help you focus and describe your offerings that would most likely appeal to visitors when developing marketing materials. For example, on the Gulf Shores and Orange Beach Tourism website you can find the “Summer 2014 Visitor Profile Report” which vacation rental professionals can use to learn the average household income of visitors, top origin states, percent of pet owners, average number of people in travel parties, and other useful visitor demographic information. Contact your local DMO to find out what is available in your area. Stay informed of local economic development plans. Take on a holistic view in what is occurring in your area and consider how this might change your business strategies. For example, are sports complexes in the plans for your local area, if so, how will this affect the demographics of your target audience? In a recent interview, Joanie Flynn, Vice President of Marketing for Gulf Shores & Orange Beach Tourism explained that the number one industry in the southern Alabama area is tourism, so those in the vacation rental industry can work together with their local DMO, chamber of commerce, and economic development agencies to ensure the local economy is healthy, expanding, and growing.
By J. Gary Ellis, CEO of Compass Media, Inc.
Dive into using social media. To stay on top in the vacation rental business you must learn to transact digitally with your customers. Flynn revealed that over 60% of user traffic on the GulfShores.com website is currently from smart phones and mobile devices; therefore, her organization started a social media university to help educate industry partners in the area on best practices for using social media and responsive web design. “People can come and have a great experience with what we offer on our website, and as they click on our industry partners that same experience needs to carry over,” explained Flynn. The trend in the field is moving toward having a responsive website for cell phone users and effective social media campaigns. It is important to be up to speed with how technology is used by visitors and how audiences are changing. Such progressive initiatives offered by this CVB can benefit local rental companies by keeping them in the know on the positive impact social and digital media can have on their businesses. Provide current information and get involved. Be sure to talk with your local DMO to find out what they need from your company. “Consider what you offer to visitors to enrich their stay and get involved with meetings and events such as showcasing programs and educational opportunities outside of the main seasons,” said Flynn. Attend meetings and question DMO representatives to discover how your niche could be useful to visitors both on and off-season. I have personally observed the benefits that professionally managed vacation rental companies can offer DMOs such as timely responses in communications, increased security and safety, and fraud protection for visitors. As you connect with your local DMO/CVB, be sure to highlight such benefits and others your company offers to make your guests’ vacations more memorable. Gone are the days of throwing ideas at the wall and hoping something sticks to bring in guests. Now, VRMs can make data driven decisions in marketing and guest service initiatives by using demographics, lifestyle factors, media habits, and visitor trends provided by DMOs. Times are changing in the vacation rental industry. To stay current, partner with your local DMO for insight into making your vacation rental business strong for the future. Compass Media has been practicing leisure travel marketing for almost 30 years by helping clients tell their stories with innovative marketing and promotional materials including website design and development, search engine optimization, digital and print advertising, documentaries, and vacation guides. Marketing 67
| Customer Service
From Small Beginnings…
Developing an Owner Acquisition Strategy
that prospective owners can give their email address in exchange for additional information. Create a must-have giveaway. Most owners have little knowledge of the business of vacation rentals, and the more help and knowledge you can share will create a foundation of trust. It doesn’t need to be a 100 page e-book. A simple list of resources and local information would be a great offer, as would a start-up checklist or a spreadsheet on projected expenses and cash flow. Build a follow-up sequence. The biggest mistake a new PM company can make is failing to follow-up after an initial inquiry. That email address is valuable, so use it well and respectfully by building a follow-up email sequence that provides additional information, not only on your services, but with useful knowledge that can help owners make a decision on which company is best for them. Once you have hooked them in with the value of information you are providing, it’s a much easier task to move them to a commitment to you. Using Video
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rowing a small property management company in a crowded market can be tough. There’s competition from other agencies as well as the ease in which independent owners can market and manage their own reservations. The cost of marketing is rising as the jostling to gain exposure comes at a higher price, and on top of that, navigating the onslaught of restrictions and potential rental bans can take a toll on all but the most persistent and optimistic managers. But here’s the good news. More and more second home owners are appreciating the opportunity to gain income in renting out those homes instead of letting them sit empty. Just as guests look for uniqueness in a rental house and want to avoid sterile, cookie-cutter options, so owners are seeking management companies that will treat them as individuals and create a relationship with them. You just need to find them. Build Your Base
Given the growth of the vacation rental business, homeowners have more choice than ever before in the ways they can promote their properties. They are courted by listing sites, other boutique agencies, and the mega-property management companies, so to get in amongst the contenders requires a solid base. It’s not enough to be enthusiastic and motivated; you need to demonstrate a strong knowledge of the local business and the strategies involved in marketing to a wider audience. You also need the foundation of a great website (that’s mobile responsive), a robust reservation system, and a commitment to serving client needs proactively and responsively. Your Email List
With a wealth of choices, prospective owners are looking for companies that can do much more than just deliver bookings. They want value for the commission they are paying and want to see that up front – not have to push for the details of how the Property Manager (PM) will manage the rental of their pride and joy. It’s surprising how many vacation rental websites pay scant attention to owners with poorly presented information and little encouragement for them to ask for more. Motivating a new owner to sign up for more information should be a primary goal in an acquisition strategy. Following are some ideas to help you make your vacation rental website more appealing to this target audience: Enhance the owner landing page. This is the page on your website that delivers the key benefits you are offering, your unique selling points, and what makes you different from the competition. It should intrigue them enough to ask for more. In order to encourage this, you need to create a great lead magnet, a system to allow the download of your giveaway, and a series of follow-up emails. Sign up for an auto-responder/email marketing service. A resource such as Aweber or Mailchimp will allow you to create an opt-in box on your landing page so 68 VRM Intel Magazine | October 2015
There is no doubting the power of video in building trust and confidence. Create video testimonials from your current clients, a walkthrough of your office to introduce your staff, and a series of educational videos showing how to set a property up for rental. You can even use this medium to create digital handshakes. These are short 30-second videos that take the place of a written email response to an enquiry. They can be produced quickly and easily and embedded into an email to thank the owner for their interest in your company and to introduce yourself. It is a powerful strategy that requires minimal time and equipment yet will set you apart from the competition. Referrals
Smaller companies rarely have the budget for the wider marketing campaigns to attract new owners, so they need to find creative ways of getting the message out. Offering a referral program to your current clients is an effective method. Provide them with an incentive to refer you to their friends, family, and network who may also have second homes. This might be a cash incentive, a commission reduction, or other give-away. What works for an agency in one area might not be as effective elsewhere, so give some thought to a motivating offer. Make it easy for them by providing a physical folder they can share for personal referrals or a page on the owner section of your website (not public) that describes your referral program. Develop Strategic Partnerships
The relationships you develop with local vendors and suppliers can often result in the best referrals. Realtors, insurance agents, plumbers, electricians, and independent cleaning companies are all people who can carry your business card and recommend your services, so work on creating great relationships with them. This should be symbiotic, so you should also recommend their services to your new owners verbally or via your website. Knowing who your ideal clients are and what they want from you, then showing how you can deliver outstanding results is the key to developing a powerful owner acquisition strategy. You cannot be all things to all people and won’t convert every prospective owner who comes your way, but by exploring every marketing opportunity you’ll have a much better chance of doing so. Heather Bayer
is CEO of Ontario based CottageLINK Rental Management with 190 registered properties. She is an independent consultant to vacation rental owners and agencies, the host of the Vacation Rental Success podcast and founder of Cottage Blogger, an information site hosting over 375 VR-related articles and downloads at
www.cottageblogger.com
Guest Communications
Is Your Brand at Risk? By Vince Perez Co Founder / Fetch My Guest
brand a·ware·ness noun
the extent to which consumers are familiar with the distinctive qualities or image of a particular brand of goods or services.
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ustomer engagement is the lifeblood of any successful business relationship. This cannot be more evident than in the vacation rental business. Before all the advertising, listing sites, and everyone telling you what you need to do there was just you and your guests. A decade later we find it is those same relationships that have fueled the growth of this industry. It is the stories created by families enjoying their vacations and forming bonds with communities outside of their own. These bonds with your guests begin and end with your Brand. In order to become a successful “professional host” one must develop that intimate relationship with the guests - before, during, and after the stay. In each phase of the relationship your Brand should be front and center. These days it is becoming more of a challenge due to outside influences interfering with these very important relationships. What can we do to stay front and center and continue to nurture these all important relationships?
A lways communicate through your Brand.
Every Brand is unique, from your website, to your location, to your services. Be sure that each and every communication with your future guests highlights your Brand. Hotels have been doing this successfully for many years. Every vacation rental management company is its own unique Brand - make sure your guests never forget this.
Brand awareness drives intimacy.
Vacation rental and hotel travelers have different expectations. The level of communication needed to transact a vacation rental is much higher than that of a hotel. This provides multiple touch points from prebooking to asking for that highly coveted review upon checkout.
Communicating through your Brand + intimacy = Repeat Guests
One of the key value metrics for any vacation rental business is repeat guests. The valuable metric allows you to look at other opportunities to expand your existing business. It is much more cost effective to manage a repeat guest than it is to acquire a new one.
Invest in activities that will bring your Brand closer to your guests. It will be the best investment you will ever make! Understanding the relationship between guests and your brand will open up opportunities to expand your existing business - from making yield management decisions to taking on new owners. This will also give you a greater perspective when selecting how your Brand is distributed in the future. Marketing 69
Top 5 Vacation Rental Management Company Website Launches of 2015 By Amber Mayer and Amy Hinote
70 VRM Intel Magazine | October 2015
VRM
Intel asked social media followers and industry professionals to submit their favorite vacation rental management company websites that launched in the last 12 months to compete for VRM Intel’s Best VRM Websites of the Year. We received over two dozen entries and spent several weeks reviewing each site for 20 articulated metrics, including site performance, website features, user experience across multiple devices, and overall aesthetics.
The inaugural winner of VRM Intel’s Best VRM Website 2015 award is
Midgett Realty in Hatteras, North Carolina.
Other winning attributes: % Optimal “Refine Search” experience % Smart availability calendars MidgettRealty.com was built by Bluetent and scored 142 out of 200 possible points.
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% Simplified booking process
he creation and launch of a successful vacation rental management website is a true partnership between the property management company and the website development company. A critical and delicate balance must exist in the relationship that includes clear requirements, open dialogue, and an actionable feedback loop. The Midgett Realty team clearly worked hand-in-hand with Bluetent to ensure a seamless experience for their user, and as a result, MidgettRealty.com had the lowest number of technical errors among the submitted sites.
What Our Winners Did Better than The Rest: Simple/Smart Site Search Experience
The websites with the highest scores had intuitive “refine search” or “advanced search” capabilities with a display of the number of rentals associated with each attribute. With an optimal search filter, when the user selects an attribute, the results automatically refresh to ensure that the user doesn’t choose a combination of attributes or amenities that would show zero results.
Smart Availability Calendars
Smart availability calendars appear when the user enters travel dates on the individual property detail pages. We encountered a few sites that did a fine job ensuring users could only choose arrival and departure dates that were valid. We believe the industry will see improved capabilities of smart calendars in the coming months. As one judge said, “If you can display an error when someone chooses dates that are not within your booking rules, why can’t you make the calendar not allow that to happen? Errors are never a positive experience.”
Site Speed/Performance
Our top websites loaded quickly and scored very well in Google’s Page Insights test.
Beautiful Websites
When clients have large, beautiful images and video footage, you can really tell that it inspired the web designers to create photojournalistic experiences throughout the web design.
Other: Videos, Virtual Tours, and Floor Plans Obvious Lead Capture Lead and Requested Dates Capture When a Search Yields “0 Results” Live Chat or Push to Talk Site Feedback Forms 71
VAC AT I O N R E N TA L M A N AG E R S
Turn Your Booking Engine I N TO A
Hospitality Engine
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Oceanfront
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Pet Friendly
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Bike Rental
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Yoga Class on the Beach
Grow Your Business by Providing Complete Vacation Experiences to Your Guests. With our hospitality-powered websites you can package everything from tours, activities, transportation, and even yoga lessons, so your guest can plan less, and relax more.
Packaging doesnâ&#x20AC;&#x2122;t need to be hard. Contact Bluetent today and see what a hospitality-powered responsive website can do for your business!
Responsive Web Design Web Development Search Engine Marketing Email Marketing Design and Branding Social Media Online Advertising 72 VRM Intel Magazine | October 2015
bluetent.com | 877.704.3240
5th PLACE TIE Brindley Beach Vacations and Sales Outer Banks, North Carolina Visual Data Systems
BrindleyBeach.com Winning Attributes:
% Most unique homepage experience with beautiful opening video % High scores on page load speed (great for SEO and User Experience)
% Best lead capture design throughout the site
Winter Park Lodging Company Winter Park, Colorado Streamline Vacation Rental Software
WinterParkLodgingCompany.com Winning Attributes: % Smart site search experience
% Consolidated, simple booking experience
% Total rate displayed on date-based search results (very unique!)
5th PLACE TIE
Taylor Made Deep Creek Vacations Deep Creek, Maryland InterCoastal Net Designs
DeepCreekVacations.com Winning Attributes:
% One of the best integrations of photography and video throughout the site % One of the few managers to integrate interactive tours and floor plans % Lead capture opportunities throughout the site experience
Park City Vacation Rentals Park City, Utah Blizzard Internet Marketing
ParkCityLodging.com Winning Attributes: % Beautiful imagery
% Integrated floor plans
% Live Chat and Push to Talk Capability
Bluetent
Tybee Vacation Rentals Tybee Island, Georgia
TybeeVacationRentals.com Winning Attributes:
% Evident and strong branding throughout the site
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ongrats to Midgett Realty, Bluetent and the top 5 finalists and their developers, and thank you to the team that helped score the website submissions.
Want to be ready for VRM Intelâ&#x20AC;&#x2122;s Best VRM Website 2016? To be eligible for entry, your site must be launched between October of 2015 and September of 2016.
% Consistent and simple search experience
% Straightforward and easy to understand rates Feature 73
Do you have a winning vacation rental
website?
Grade your own site based on the 20 attributes we used to judge VRM Intelâ&#x20AC;&#x2122;s Best VRM Websites of 2015.
20 1 19 2 18 3 17 4 16 5 15 6 14 7 13 8 12 9 11 10
Does the availability calendar on your property detail page allow you to choose dates that are not available resulting in an error?
Are your rates easy to understand with explanations for fees?
Does your booking process take your guest through three pages or less? How do you rank in Google for the common search queries used for guests who visit your destination?
Is your Website Responsive? How fast do your website pages load on a desktop? Tip: Run your site through the Google Page Insight Test.
How fast do your website pages load on a mobile/cell phone?
How fast do your website pages load on a tablet?
Does your Homepage clearly display your destination without scrolling or clicking to another page?
Is it easy for your consumers to refine their search to find the right set of homes to compare?
How easy is it for guests to sign up for your deals, promotions, or newsletters? Do you have several places to collect lead information?
Can you sort your search results in a logical way based on price, bedrooms, and occupancy?
Do a search from your Homepage for something that you know goes against your booking rules like a onenight stay. Do you get a page with an error message?
Do you have site search?
Do you have Live Chat and/or Push to Talk features on your website?
Do you have large, beautiful images of your properties?
Do you have a Site Feedback Form on your site, so that your website visitors can tell you about their online experience in real-time?
Do you have floor plans on your site?
Grade the overall site aesthetic appeal? Does it promote your brand, your destination, and your homes in a professional way that communicates professionalism and trust?
Do you have Videos, Virtual Tours, or Interactive Tours on your site?
74 VRM Intel Magazine | October 2015
VacationRentPayment TRIPADVISOR Update: Notifies Customers Personal Info Was “Potentially Exposed”
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Over 100 Vacation Rental Managers Unite to Address Service and Support Issues with FlipKey/TripAdvisor Vacation Rentals
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ayment services provider YapStone (VacationRentPayment) sent out a letter last month notifying property owners and managers who had applied for merchant accounts through HomeAway that personal information in their applications may have been compromised between July 15, 2014 and August 5, 2015. Reportedly, the VacationRentPayment application was stored by YapStone using an inadequately secured URL and may have been accessed by unauthorized users during this timeframe.
hroughout the second half of 2014 and into 2015, vacation rental managers have been reporting a multitude of support issues with their listings on FlipKey (TripAdvisor Vacation Rentals). From customer service to technology integration flaws, inability to address reviews and pricing complaints, property managers have been struggling with listing their properties and are questioning TripAdvisor’s dedication and direction regarding professionally managed vacation rentals.
In the letter dated September 11, 2015, YapStone CEO Thomas J. Villante wrote, “Unfortunately, due to this application being available, your email, Social Security number, driver’s license, date of birth, and bank account were potentially exposed.”
One property manager said, “I’ve talked to several other managers around the country and they all agree FlipKey’s service to property managers is absolutely horrible. When you call their office their voicemails are always full and they’re always traveling around the country. Somebody needs to bring attention to them so they can get their act together.”
When YapStone discovered the problem on August 5, they immediately blocked unauthorized access to the URL and began an investigation. In a statement provided to VRM Intel by Steve Davis, HomeAway Chief Information Officer said: “ YapStone, one of HomeAway’s payment providers, notified us that a private URL containing vacation rental owner’s and manager’s personal information was made publicly accessible, resulting in an information disclosure that occurred on YapStone’s systems. The issue was immediately corrected and potentially impacted customers were notified. No exposure of credit card information or passwords occurred, nor were HomeAway systems compromised in any way. We continue to support YapStone through this process and work closely with their team to ensure they continue to meet HomeAway’s high standards for security and data protection. HomeAway and YapStone sincerely regret any inconvenience this has caused our customers.” As a result of YapStone’s failure to protect their customer’s application data, the company is facing a data breach class action lawsuit filed by a customer who claims the company is negligent and in breach of contract because it failed to protect customer data from a possible breach. In the complaint, Plaintiff, Jonathan Koles alleges YapStone failed to take reasonable measures to protect its customers’ personal information, promptly notify them of the possible breach and specify exactly what information may have been compromised. According to the lawsuit, “As a result of Defendant’s ongoing failure to notify consumers regarding what type of [personally identifiable information] has been compromised, consumers are unable to take the necessary precautions to mitigate their damages by preventing future fraud.” According to BigClassAction.com, “Because VRBO customers were required to accept payments online and provide their bank account information, YapStone breached an implied contract with customers in failing to safeguard their financial information, the complaint adds.” In an email posted to HomeAway’s Community forum, HomeAway also said, “YapStone has sent letters to customers who were affected. Each letter includes personalized information and a detailed FAQ that addresses many of the questions you may have. If you did not receive a letter, your information was not exposed.”
In Maine, Justin Ford, owner of On the Water in Maine Vacation Rentals, said, “The biggest issue we had with FlipKey and TripAdvisor was that a property that had previously been managed by another rental company switched to us for management. We, of course, listed it on FlipKey as we have a relationship with them. FlipKey ‘identified’ that the property was the same one listed with the previous agency and not only re-attached previous negative reviews for that property to our new listing of it, but they also copied over the horrible responses to those reviews from the previous agency, and attached our logo to those responses making it out that we responded to the negative reviews.” Annee Martin, founder of Sanctuary Vacation Rentals in Pacific Grove, CA, said, “We have been thoroughly disappointed in the fundamental lack of stability in their service and technology. Uptime is something that we have come to expect from marketplaces, and we do not have these issues with any other providers. The folks at FlipKey have developed a business model that is counter to the goals and practices of professional managers. Their current model may be better for RBOs.” In an effort to bring to light the service and support issues, over 100 property managers representing 15,000 properties crafted and signed a formal letter of complaint to TripAdvisor CEO Stephen Kaufer. According to the group, “Our intention is to offer feedback on the Vacation Rentals division of TripAdvisor with hopes to make TAVR executives aware that there is a serious problem that many managers are talking about with the hope that ‘mismanagement and technical issues’ will be addressed and customer communications and response time can improve.” At the time of publication, there had been no response to the letter from TripAdvisor CEO Stephen Kaufer. Go to vrmintel.com and search “Letter to TripAdvisor” to read the letter in its entirety.
Business 75
| From Our Partners
BLUETENT TIPS TO BETTER BOOKING
IN 2016 A
s 2016 quickly approaches, we are encouraged to revisit marketing strategies and discover ways to increase overall revenue throughout the upcoming year, to create plans designed for long-term, sustainable growth. While driving more qualified traffic to your website is essential, refining your current presence to convert more travelers to guests is equally important. By doing so, you will effectively leverage your marketing channels and generate the highest return on investment. The five tips listed below are just a starting point to help you improve your existing web presence. In order to successfully optimize, you must understand your audience and what motivates travelers to book. Then, use this information to hypothesize, test, analyze, and make data-driven decisions to better improve the user experience and increase online bookings. You will notice some of the tips require small changes while others require a bit more planning and budgeting. Often, major improvements happen when you implement minor enhancements to your digital presence.
By www.bluetent.com
76 VRM Intel Magazine | October 2015
With an optimized booking experience and website the traffic you drive through search, email, advertising, and social will convert at a much higher level, thereby exponentially increasing your overall revenue. Always remember that your website is living and breathing; it requires continuous refinement to make sure it is performing at its best.
1.
Enable Guests to Share the Love: We see about 3x more conversions on properties that have been shared or marked as a favorite. Since trip planning is highly emotional and often very social, provide your guests the tools they need to create favorites as well as share and plan trips collectively.
2.
Be Flexible: Create a search that always has an answer. Often, trips don’t need to fit into a perfect box, so allow guests to be flexible with their travel dates when searching for a property. Additionally, improve their experience by providing alternatives based on price, location, or amenities. If their original request is unavailable, be sure to differentiate results that are outside their actual selections.
3.
Embrace Mobile & Multiple Devices: Don’t lose your brand as you shrink screen sizes. Vacation planning occurs across a myriad of devices. That said, provide consistent, yet device optimized planning and booking.
4.
Create Compelling Calls to Action: Truly know and understand your audience. Be sure to empathize with your guest’s booking experience with calls to action that change as these travelers dive deeper into the booking process.
5.
Introduce Urgency Marketing: Honest and valuable urgency marketing is welcomed by your guest. Provide helpful insight, inform your guests exactly how many people are searching, and establish custom rules for when availability is tight.
Words: Andrew Vick Vick and Company President 970.319.7614 andrew.vick@gmail.com
HOW TO SHOP FOR A SUPPLIER?
Y
ou have decided to find new software, a new marketing agency, a new travel insurance solution, or whatever the case may be. Maybe a company has approached you with a new idea, service, or offering. How do you go about making a decision? Is the best solution the cheapest or most expensive? Is it best to go with what everyone else is doing? Following are some suggestions on how to proceed based on what I’ve seen by being on both sides of the equation. While running a sales and marketing division, I typically ran into two scenarios: we either needed to find a better way of doing what we were doing (pain) or someone introduced us to an entirely new concept (opportunity). Identifying and understanding which scenario we were dealing with was step one due to a variety of factors, but either one usually boils down to a cost/benefit or return on investment (ROI) analysis. Let’s take an in-depth look at the two scenarios pain and opportunity - and discuss some possible approaches to each.
Scenario One - Pain
We’ve all been there – something about a product, service or technology no longer works. While on the surface it can often seem to be the actual deliverable, many times there are more subtle instances that cause us to seek alternatives. These instances can be personalities, response times, or increasing costs. The bottom line is that there is pain associated with this supplier, so the replacement process goes into motion. This scenario is usually the easier of the two – you know what you’re currently getting (or not), what you’re paying, and the specific things you are unhappy with. The way to approach it is to define the list of pain and seek other potential suppliers about those specific things. Ask open questions, but stay focused. This will enable you to shorten the list based on the supplier’s responses, without getting into a full blown “THIS IS EVERYTHING WE CAN DO FOR YOU FOR HALF THE COST” discussion. Be wary of those suppliers that only want to introduce anything and everything, unless they specifically address the pain that is causing you to seek a better solution. This keeps emotion down and critical thinking involved.
Scenario Two – Opportunity
As vacation rental managers, we’re often introduced to cool, new, shiny things at conferences, through direct marketing and by word of mouth. The conversation in your head typically goes something like, “COOL. WE HAVE TO HAVE THAT.” Wait, how much is it?” You then begin the internal debate that includes questions such as: Is it worth it? Do I have the budget set aside (usually not)? How can I justify it? This scenario typically requires more openness than Scenario One. Let’s say there are two companies that provide similar whiz bangs, and you set up a conversation with each. Look for two distinct approaches – the first one focuses on you and your business, how you do things, and looks for opportunities where either their product or service will drive value. Let them ask questions and answer honestly and you’ll quickly gain a sense for how much they care. The opposite approach is similar to the Scenario One conversation and is sometimes known as the “show up and throw up” approach. This supplier has gone to great lengths to make sure they have all of the latest and greatest features, that they know and understand what is best for you, without asking a single question. They simply don’t need to.
Making a Decision
So how do you make a decision? In my experience,
you stop looking for a supplier and instead focus on creating a relationship where everyone has a vested interest in the success of each other.
In Scenario One, if a supplier will honestly and openly answer the questions that address the pain, I’m more apt to trust them. In Scenario Two, they demonstrate they care by showing that they are interested in my business and how we do things. They care enough to make sure that their whiz bang will provide value to my business by asking intelligent questions. Care and trust are two foundations of a great relationship, and that’s where the focus should be. Rather like dating, no? Technology 77
| From Our Partners
As the web continues to expand and reach new users, mobile devices have quickly become the tool through which many access websites, engage with businesses, make reservations, and purchase products. This development, in accordance with Google’s endorsement of mobile as the future of web traffic, has made responsive design crucial to website development and digital marketing. This most recent change to the Google algorithm shows that Google is all in on putting mobile users first. The key ingredient in this transition is the use of responsive design in website development. As mobile friendliness becomes one of the most important factors in search engine rankings, it is key to make sure your site is optimized as such.
Not having a responsive site means users will face a difficult and frustrating experience when accessing your site from a mobile device.
Is Your Website
Mobile Friendly?
The practice of pinching on the screen to zoom in again and again will make a user very reluctant to continue exploring a site and severely decrease the chances for conversion or online booking. Users who experience a non-mobile friendly site will likely see text that is too small to read or navigation buttons that are too small to click on and freely move throughout the site. Furthermore, important content can be relegated to non-strategic positions on the site. Responsive design works hand in hand with content in providing the user the best interface and experience which will drive conversions and bookings. According to Google’s guide for mobile friendliness, a responsive site that can be used across mobile devices should aim to highlight and prioritize the most important and common tasks on your site. Property managers are able to quickly find out if their sites are mobile friendly with a test offered by Google. The rest will analyze your site and generate a report telling the owner if the site and its pages have a mobile friendly design. According to Google’s standards, your site earns a “mobile-friendly” badge if it meets the following requirements: Avoids the use of software that is not common on mobile devices, such as Flash.. Uses text that can be seen easily without zooming. Sizes content to the mobile screen so that users don’t have to scroll horizontally or zoom in. Places links far enough apart so that the correct one can be easily clicked.
The Importance of Responsive Design
I
n April 2015 Google introduced the mobile-friendly update to their algorithm. This update meant that a website’s mobile friendliness would be included as a ranking factor in search engine results on mobile devices. In the reaction that followed, some feared this change would disrupt years of effort and hard work in harnessing the power of search engine marketing. While this “mobile-pocalypse” did not pan out as some had predicted, it has had considerable effect in the Vacation Rental Management (VRM) industry, and prompted many businesses to reevaluate their website and how they engage with their largest emerging user interface: mobile. According to Google, 94% of American smartphone users search for local information on their phones. Further, 77% of mobile searches occur at home or at work, suggesting that even when traditional desktops computers are available, many people prefer to use their smart phones to access the web. These figures show that rather than slowing down, mobile traffic is speeding up and with it the opportunity for Vacation Rental Managers (VRM) to claim market share across a new medium. 78 VRM Intel Magazine | October 2015
What does this mean for next steps? It is important that VRMs find out immediately if your site is responsive, and you can easily do so with the Google Test tool. But that alone is not enough; it is recommended that companies develop website engagement strategies that include mobile devices. This trend will continue to grow as consumers demand ease of purchase for, not only rentals, but experiences as well. When it comes to your vacation rental website, be sure your site is responsive and mobile friendly so that users can book their vacation from start to finish on a mobile device. Not sure if your site meets the mobile-friendly requirements? Realtech Webmasters offers no-obligation website reviews. Stop by our booth at the VRMA National conference in New Orleans, or visit our website at realtechwebmasters.com.
By Ray Miller
79
Changing Technology Providers
What You Need to Know Is it Time to Change that Property Management System?
C
ompanies have a variety of reasons why they decide to change Property Management Software (PMS). If you can’t think of at least three, then maybe now isn’t the time to change. In the majority of circumstances your existing system will be like a pair of nicely worn-in shoes. You know you might not be able to sprint after a bus, but they are pretty good for wearing all day long. You see and hear about all the shiny new things that are out there and available and think that you cannot compete unless you have them as well. Whether it is cloud based systems, dynamic pricing, mobile housekeeping, or just the next evolution to integrated accounting and tighter security, knowing that now is the correct time is the most important thing to decide before you embark on the process. 80 VRM Intel Magazine | October 2015
Do you have the staff resources to select and change software? Are you prepared for the pain involved to change/migrate systems? Do you have the budget? Will you need a new website or new productivity tools, and can you afford these? These are just a few of the questions that you should ask yourself before even considering to move forward with the selection and implementation of a new PMS system. Few decisions you’ll ever make will have as much impact on the operation, profitability, and overall success of your business than what PMS you’ll use for the future. You need to do everything in your power to ensure you select and implement correctly.
The Four Pillars of a Successful Software Change
Consider the four pillars as equal contributors to the success of your project. Each represents a corner, and if any is weaker than the other the whole will probably fail.
Understanding Understanding Your Business
The first part of the process is to completely understand your business and the people that make it a success. It is essential to listen to all the people that make up the company and not just those that can get their point across in the most vociferous manner. Using a non-partisan, data gathering approach to the process is the best methodology in establishing your business needs. You should look deeply inside every aspect of your company to determine how you do business and produce a document (spreadsheets are best) that concisely describes what each part of your operation needs or wants from new software. Start with each department head and have them monitor the existing system uses during a regular day, week, or month. You must understand what the system does or doesn’t do for you at all points of your business. Log every Feature/Activity/Process and be sure to note whether this is a Must Have feature or a Would Like feature as far as the department is concerned. Prepare a spreadsheet with the Feature/Activity/Process details from each department and consolidate the data in a logical flow by department/ business area. This becomes your Needs Document. This should be a lengthy iterative process. The more data points that you collect, the less you will be surprised later on down the road. Include each person that is a stakeholder in the process. You will need their input and assistance to get through the process and have a successful transition.
Analyzing Your Needs
Establish the stakeholders. They may be your C Team, your department heads, or just the people you respect that should assist in the decision making process.
By Doug Macnaught The VRM Consultants
Tom K
The VRM Consultants
Analysis
Once you understand how your business interacts and falls short with your existing systems, then it is time to analyze the results and determine the importance of each aspect.
Make sure everyone knows that this is not a democracy and that they are not going to get everything they want. Send a copy of your Needs Document to all your stakeholders and have them rank the importance of each item in the document (irrespective of whether they operate in that area of the business or not). Make sure there is a place to mark the Must Haves. If your business depends on this feature, then it is crucial to keep this to the fore. Once complete, collect the information from each person and overlay the responses into the columns of your spreadsheet. It is essential to know how highly each stakeholder ranks each aspect. Develop the Final Company Ranking of each aspect. Using a scientific weighting system is preferable, but no matter how you arrive at your final ranking, it is crucial that it reflects the true level of importance of each aspect to your company. Meet with the stakeholders to review, explain, and adjust your final Needs Document. This should be a spirited meeting - the last chance for the shareholders to lobby for their priorities! This meeting is also where you get complete “buy-in” from all your stakeholders. Once the priorities are decided upon, they all need to commit to them as a team. It is now or never for you to get the correct level of commitment for the next two additional phases of the project. If you need to review and revisit, do so now.
Technology 81
Selection Selecting Your Next Partner
The selection process is the most difficult phase to navigate because the information that you need to make your decision is not in your control. The vendors will not want to expose their weaknesses and will try as much as possible to paint a positive slant on features. (That’s not a bug, it’s a Feature!) It is crucial that you approach this process with your eyes wide open and firmly fixed on the task at hand. Separate this process into four stages: Search, Review, Negotiate, and Decide 1. Search
Return to your Needs Document and create a smaller initial Request for Information (RFI) that deals with the most critical requirements that you have. Review the software companies to see which ones meet your core criteria. As there are at least 25 different software vendors in our space this will require significant effort, but it is a worthwhile and necessary effort. In many instances the initial review process will narrow down the list of potential vendors quite quickly, for example:
The vendors will want to use the demo to highlight the features of their product that pop, those that help to sell their product. You need to focus the vendors on showing you how their product addresses the core functionality or Must Haves that your team has identified. Rate the vendors on their responses and demos of the items that you identified in the initial phase. You have to be dispassionate and evenhanded in your review, so don’t think badly of the vendor if you don’t like their tie or perfume. And don’t think more of them because they took you somewhere nice for lunch. At this stage it is all about their product. (You might think this is obvious, but you’d be surprised...) Nominate at least one person to be involved in all the demos and collate the scores from the participants. This will be crucial when you come to the final review. 3. Negotiate
You should already know the business model each vendor is offering from the RFI they responded to. This will enable you to get a rough idea of what the costs will be. Be sure to gather all the costs involved in the process. It may not be enough to simply get a good deal on the system. Don’t neglect the other costs involved: What is involved in changing my website? This can often be the largest additional cost and one that is often overlooked. How much is the cost of Training and Implementation? What’s included and what is additional? What are the ongoing costs of Support and Services?
If you need real estate commission approval.
Are there any hosting costs?
If you must have distribution links to a particular channel or partner.
What about your existing IT infrastructure? Even if the system is hosted in the cloud, what are the costs likely to be to upgrade your infrastructure?
If you require access to your native data. If you want to have your system in the cloud. You must be dispassionate about the search. At this point in the process you are not selecting your system, you are preparing a shortlist. Focus on how your business operates. Do not be swayed by the things that do not matter: It is not important how shiny their booth was at the tradeshow. You wouldn’t buy a house based on the restaurant your realtor took you to, so don’t buy software that way either. Don’t assume! Things change very quickly in this business and what was true last month is not necessarily the case today. Reach out to see what they offer today. 2. Review
Ideally you should be able to narrow the field of prospective products to no more than three. This is a good number and you should expect to invest a minimum of a day on the initial review of each system.
Will your data be converted? What will the vendor convert? What will you need to manually convert? How much time and resources will you need to devote to review and double entry? Knowing all this information will allow you to make the most informed decision and know the true cost of the process. Cheapest isn’t always the best and neither is the most expensive. This is where you should negotiate the best price you can. Note that price should be a consideration, but you also need to consider the overall reduction in operating costs and increase in productivity that the new system may bring. 4. Decide
Once you have all the pieces in place, decide which vendor you are going to move forward with. The following should act as a guide to help with that decision: You will not find a vendor that gives you everything you want. Be prepared to compromise, but do not lose sight of your Must Haves.
Send out a much larger RFI to the three that you select, and make sure you include as many of the details as you can. This will help the vendor decide how best to demonstrate their systems and give them a good idea of how serious you are in the process.
If you can’t see it, you can’t use it. If you have a feature that you need and the software company promises to provide it in the future, make it part of the contract now or you may never see it.
Decide who your demo participants are, they could be all the stakeholders, or just a subset. No matter what you decide make sure every one of them sees at least their focus portion of the system from each vendor.
Get references, talk to your peers, talk to their clients.
It is very important that each person gets the same information from each demonstration. You don’t want to give an incomplete picture to anyone. Do not go ahead with a demo unless all the demo participants can be present for all demos. 82 VRM Intel Magazine | October 2015
Review all aspects of the vendor from best match on your features to price and your confidence in their company. Make sure all the stakeholders are on board. If you set the expectations correctly at the beginning, each may not be getting their favorite system, but it must be good enough to justify the change. Expect to spend at least 20% of the system cost on Training and Implementation.
Implementation Implementing for Success
The final part of the process is as critical to the success of the project as any of the other three. Do not minimize the investment in training; a poorly trained staff will destroy a successful software change quicker than anything.
Nominate a project manager from your staff to manage the project for your company. Require the software vendor to give you a single point of contact and set up regularly scheduled meetings and calls to monitor progress both weekly and after key milestones. Ensure there is a written implementation plan. This can come from the vendor or from you, but it should include all aspects of the process from setup to data conversion to training and go live dates. Make sure dates are assigned to all milestones, and track those dates. Consider attaching penalties to missed targets. Don’t forget to include your external critical systems if they integrate to your PMS. What is the lead-time for them to change to your new platform? Expect to pay overtime to your staff during the process. In most cases, you are not adding to your staff, but they will be required to do their existing jobs as well as attend training and do data entry or double entry during a parallel switch over. Practice, Practice, Practice – make sure that your staff know your new systems and run mock sessions so that they can handle the system under pressure. Do not convert financial data! Expect to enter and verify it manually. Open a new bank account. This is essential in certain states and advisable in all installations. Balance the money between both systems and transfer that amount into the new account. What is left over is what you have to reconcile to your old system but will not impede the successful balancing of the new one. Review and measure regularly. Get help from your software vendor if you start to fall behind. They do not want you to fail! It is not in anyone’s interest for that to happen. Communicate, Communicate, Communicate! It is impossible to over- state the value of regular communication: Internally with your whole team to quickly see where the project is succeeding and failing. Externally with your software vendors and other people involved in the process. Finally with your homeowners, vendors, and incoming guests. Let them know you are changing; they may cut you some slack. As can be seen, each of the four pillars is an intricate, complex, time consuming process. The level of success of any pillar is dependent upon the successful completion of the previous pillars. You should seek as much assistance as possible to ensure this success. When selecting your team, consider working with someone who has extended experience in PMS selection and migration projects and has intimate knowledge of the numerous PMS products available. Between the complexity, scope, and impact of these projects, having people on your team who have “been there and done that” is invaluable. Technology 83
| Technology
Got Interfaces? Integrating your technology
S
everal years back, when I opened my Twitter account this was my first tweet, “Don’t let software vendors hold your data hostage!” It was seen by all four of my followers worldwide. As you can tell, this is a subject I am very passionate about, and my tweet was an indication of my frustration with cloud-based software providers. Not so long ago, we all ran software systems that resided on servers and networks in our own offices. While this meant we had to purchase and maintain equipment, apply updates regularly, and have the local IT shop on speed dial, it did have its advantages. Vacation Rental Managers (VRMs) often have to run 10 - 20 different pieces of software to effectively and efficiently run their businesses. There may be vendors claiming to do it all, but rarely is this the case. Accounting, payroll, reservation software, lead management, call tracking, distribution channel management, marketing automation, business intelligence, website design, and booking engines are just a few of the tools needed to run a successful Vacation Rental Management Company.
Having all of these different systems running creates data silos and can make it nearly impossible to get the information you need to make good, data-driven decisions. When we housed all these systems in our own environments, it was easier for one vendor to create custom extractions of another vendor’s data. The other vendor may not have liked that, but it was the way to quickly create interfaces. This made integration simpler in most cases and meant that the originating vendor of the system, whose data was being extracted, didn’t have to spend time creating and integrating Application Programming Interfaces (APIs) for other vendors and could focus on enhancements to their core product. The World Wide Web has changed all of that. Most of today’s systems that we use to run a Vacation Rental Management Company are cloud-based. Cloud-based software has some very distinct advantages over on-premise software, which I won’t go into here; however, there is a down side. The data captured by cloud based software is also stored somewhere in the cloud. While this also has some appealing advantages, such as better security and hopefully good backups, it means that third party vendors cannot get to your data without the original software vendor creating an API to access the data. Over the last 17 years that I have been a part of this industry, I have seen most software vendors create APIs to easily access the data in their systems. Yet, there are a few who lock this data away as if it were their own and refuse to let you use your data as you see fit. I think we can all understand not letting your competitor have access to your client’s data, and I certainly think it’s fair to charge a fee for custom interfaces. Nevertheless, vendors should view the data in their cloud based systems as belonging to you to do with as you see fit. How can we avoid getting our data trapped in the cloud? Following are some things you need to ask before buying software to help ensure you have access to YOUR data. Does the software vendor have published interfaces? If so, ask for specific documentation. 84 VRM Intel Magazine | October 2015
Will the software vendor share your data with whomever you choose at your direction? Is there a fee associated with another vendor gaining access to your data that is charged either to the other vendor or to you? Does the software vendor require data sharing agreements with third party vendors that assures the security of your data? Does the software vendor charge for custom interfaces? If so, how much do they charge and what is the time estimate for completion? Will the software vendor supply relevant data to any industry organizations you belong to at no charge? Does the software vendor currently have interfaces to other software vendors and partners? Does the software vendor have a list of competitors they refuse to interface or provide access to? If so, who are they? Will the vendor export your data and give it to you if you decide to stop using a current software system? These are just a few questions you should be asking current or future software vendors to verify that you can use all the data that you have spent days, months, and years gathering in a manner that you see fit. If your vendor answers “NO” to any of these questions, I suggest you keep looking for the best open solution to drive your business in the future. Cloud based systems bring many advantages over traditional, on premise solutions. The key for Vacation Rental Managers (VRMs) and cloud vendors is to confirm that interfaces exist between all these disparate systems. This will ensure VRMs have access to all of the relevant data to make solid, timely business decisions.
By Mike Hollibaugh
NAVIS | Hospitality Sales and Marketing Optimization T: 1-541-617-2930 M: 1-541-410-0870 www.TheNavisWay.com
Trip Insurance: To Offer or Not to Offer? By Carie Leyden
Offering trip insurance protects your guests, safeguards your homeowners, and increases your bottom line.
V
acation rental property managers who offer trip cancellation insurance to their guests understand its value in more ways than one. Most have become keenly aware that insurance sales can also be a meaningful source of income. Some companies offset operating expenses, pay employee bonuses, and fund other costs with income generated by the sale of trip insurance. Everyone in the vacation rental industry takes revenue increases seriously. It pays to increase the percentage of reservations that include the purchase of trip insurance. Pay close attention to the often overlooked detail of selling insurance. If your business does not yet provide this significant product, consider adding it to your total package. Number one, it affords protection for your guests when cancellation cannot be avoided due to unforeseen events. In addition, it generates added income. We can all use some of that! Consider the following scenarios: You have guests scheduled to stay in one of your properties; their reservation is paid in full. Two days before check-in, they call to cancel. A family member has been hospitalized, or there’s been a death. The bread-winner just lost his/her job. The children’s school year has been extended. Inclement weather caused a flight cancellation and your guests are unable to re-book at this late date. All are life events that vacation rental managers hear about on a regular basis. When events like these occur during a high-rental time of year, the manager may have no trouble re-booking the property. But consider the result when a last-minute cancellation comes at a slow-rental time. The chance of re-booking drastically decreases and the likelihood of your satisfying property owners, guests, and your own company goes downhill quickly. During peak season or off-season, you do not need this problem. Trip cancellation insurance not only protects you and your valued guests, it safeguards your homeowners by providing further assurance their investment is secure. Those homeowners look to you to provide income and to keep their homes rented. When a last-minute cancellation occurs they still look to you to bring in the money. An added bonus: When a guest purchases trip insurance for a small percentage of the reservation fee, the insurance company works directly with the renter, further minimizing time you and your staff work to satisfy both guests and homeowners. Insurance not only protects everyone’s monetary investments when a guest cannot avoid a last-minute cancellation, it becomes paramount when unforeseen events interrupt a long-awaited vacation after it is underway.
Your guests have checked in; everyone in the family is happy and enjoying a great week. Suddenly, Dad cuts his foot on a piece of glass while playing with the kids on the beach, or he twists his ankle showing off on the slopes after a fifteen-year hiatus from skiing. The family has health insurance through Dad’s employer, but it carries a $3000 deductible with a non-payment penalty of being dropped from the health plan network. Bad news for everyone! Dad now has an injured foot and spends the rest of an expensive vacation day at the local emergency care center. Mom and the kids forfeit a perfect beach or snow day to stay with him. Both parents are worried about how they will pay the unexpected medical expenses. After all, they just spent their savings on this vacation. In most cases, if the guests are covered by trip cancellation insurance, they are covered for this type of emergency. An added plus: Paperwork is handled by the insurance provider, not the property manager. Trip insurance can also cover more serious medical conditions, as well as dangers associated with natural disasters like hurricanes and earthquakes. It can help in the case of delayed flights and lost or stolen items. It provides peace of mind for everyone involved. Vacation rental managers who explain the key benefits of coverage at the time a guest is considering a reservation can help turn a less-than-great situation into an acceptable one for all involved. Today the vacation rental market is experiencing a boost in several ways. The interest level of travelers seeking vacation rentals is on the rise. There is unprecedented growth in the industry itself, and companies are committed to serving both the guest and the homeowner. It’s thrilling to watch this growth occur and to be a part of the excitement. At the same time, success breeds imitation. More and more large companies want a piece of the pie. Many property managers are beginning to feel a strain on their profits. Since most managers keep only a small portion of the rental reservation amount, it becomes more important to look for additional ways to increase profit. Trip insurance can provide a welcome answer. It becomes part of the revenue your company keeps, revenue that is not shared with a distribution site, another property manager, or the homeowner. As our industry becomes increasingly global and attracts more and more international guests, it is a fact that everyone in the industry has an opportunity to profit by providing vacation rental homes. In turn, U.S.-based companies that manage global inventory are seeing more and more U.S. citizens traveling abroad. If travel insurance, along with close attention being paid to the value insurance brings your guests, is not already a vital part of your vacation rental business, then it should become an important element in your revenue growth plans for the future.
Business 85
Selling Your Vacation Rental Company I
t has been an exciting few years in the Vacation Rental Management Industry and the next few years look to hold as much, if not substantially more, prospects for growth and success. An overall improved economy, low interest rates, and an increased awareness in the Vacation Rental Management space has led to many significant acquisition transactions. The industry and, more importantly, well-managed companies within the industry are clearly recognized as stable and profitable ventures. At the same time Vacation Rental Management Companies face new and increasing challenges that are applying significantly more pressure to their ability to run a successful and increasingly profitable operation. Does this environment of acquisition activity and increased challenges for independent Vacation Rental Management Companies mean it is time to consider selling? The simple answer might be YES, but are you prepared to maximize your net proceeds and exit the business successfully? The answer to this question is as much about the current industry environment, the business you have built, and just as importantly, the process you leverage in considering an acquisition. Let’s dig deeper into all three…
Market Conditions
It may be one of the best times to sell, but are you ready?
Clearly an improved economy has benefited the travel industry as a whole. Occupied nights are up significantly and average rental rates continue to improve and increase on an annual basis. Visibility and recognition for the Vacation Rental Industry, as a whole, also continues to grow which has led to new found popularity among companies looking to invest or increase their holdings in the industry. As mentioned, vacation rental operations are increasingly seen as a stable and profitable venture when reasonably managed.
These economic and industry specific factors have led to a significant increase in acquisition activity and will continue to drive substantial buyer interest for profitable and well run independent Vacation Rental Management Companies. The increase in demand makes now an excellent time to capitalize on a sale and secure a successful exit strategy. New Pressures
Running a successful Vacation Rental Management Company can be as challenging as ever. Business owners are feeling these pressures in the form of new technologies, new business models, additional regulatory scrutiny, increased operational costs, and increased marketing expenses. At the same time, the challenge to acquire and retain rental owners is more competitive than ever. As expenses continue to increase, certain revenues are not increasing at a commensurate rate, creating a need to financially manage at a more granular level. 86 VRM Intel Magazine | October 2015
Talking Tech
Of course, technology is playing a larger and larger role in the day-to-day operation of Vacation Rental Management Companies. Never before have there been so many solutions to enhance revenue, mine data, and market to past and potential guests. New products and integrated solutions for property management software, customer relationship management and responsive web technologies give Vacation Rental Managers (VRMs) the power to operate on the cutting edge, but at a cost. Ben Edwards from Weatherby Consulting states, “Many VRM’s are behind the curve relative to new technology. Incurring the capital expense to purchase and incorporate the often necessary upgrades can be daunting. In some situations, this may drive an acquisition transaction where the buyer has already implemented newer technology and can onboard additional inventory into their platform fairly seamlessly.” In addition to new technologies that drive and improve the overall business, there is an increased necessity to be in compliance with enhanced security measures. Of course, you need to accept on-line bookings, but are you fully Payment Card Industry (PCI) compliant and prepared for a cyber-attack on your data? The days of tape charts and hand written registration cards have been gone for years, but in our new cloud based reality what does it cost to protect you, your owners, and your guests?
Increased Operational Costs
Everyone has felt the pinch over the last number of years and we all know the drill. Costs are rising, and as the unemployment rate drops, operators are forced to increase wages to attract and keep good employees. The cost of supplies and services provided by vendors are also on the rise. At the same time, commissions continue to remain static, or worse, may even drop in certain competitive landscapes. Increase in Marketing and Distribution Costs
New Models
As always, the internet is both the best thing and the worst thing at the same time. As stated previously, Vacation Rental Management Companies have more internet based technologies available to them than ever before, but on the downside cutting edge internet based solutions and new stripped down business models allow easy entrance into the market place. Owners that turn to self management often apply downward pressure on rate integrity while forcing traditional full service Vacation Rental Management Companies to be more competitive on commission rates. Rash of Regulations
For years, typical Vacation Rental Management Companies have been the stewards of following the rules while new entrants and entirely new business models have flown under the radar. In an effort to ensure the full collection of sales, lodging, and other applicable taxes, local, regional and state authorities have become more aggressive when it comes to short-term rentals. In addition, local officials are feeling the pressure from primary home owners to “control” situations such as excessive occupancy, parking, trash collection, and other issues. Again, Ben Edwards from Weatherby Consulting states, “I’ve noticed an increase in regulations, and the costs associated with those increases, throughout the industry. Whether it is restricting rentals to a minimum of monthly stays in parts of California to reducing the availability of parking in beach markets of Florida these additional regulations can hurt revenue while increasing costs.”
New technologies have brought an almost endless array of paths to reach potential guests, but the costs to access these paths can be staggering for a Vacation Rental Management Company utilizing older technologies. Leveraging responsive web design is critical in delivering content across all platforms, but most importantly mobile platforms. In May of 2015, Google officially announced what we all knew was coming - more web searches occurred on mobile devices than on desktop computers. Fully responsive websites with integrated booking engines bridge the device gap but can come with a premium price tag. Even with responsive tool sets, the cost of Search Engine Optimization and Search Engine Marketing continues to grow. Not only have the Search Engine Marketing costs increased, in general, with an increase in market specific competition, but new forms of SEM have been added to the mix. Rebranding display ads that provide impressions and conversions throughout the relevant Google Display Network are becoming more effective and a necessary way to stay with, or ahead, of the pack. The squeeze is also felt from the distribution side of the business. The largest and most effective channel partners continue to push for higher net rates or larger commission structures. While 10% to 15% had been common place for these distribution avenues in the past, 20% to 25% is becoming the standard. All this leads to a significant increase in the cost of acquiring a guest. Getting & Keeping Owners
As these pressures build, it seems one of largest challenges operators face is obtaining and keeping quality rental owners and their rental properties. Not only do Vacation Rental Management Companies have more options, paths, and opportunities via new technologies so do owners. It is easier than ever for an owner to “jump ship” in favor of listing based self management or a hybrid of listing services and reduced local services. This forces operators to consider reduced commission rates or adjustments to the services they provide. Are You Ready to Sell?
Chances are you built your Vacation Rental Management Company from the ground up with ample amounts of sweat, long days, and more lost weekends and holidays than you can count. Understanding why you may be interested in selling is the first step, and maybe the hardest, but if you are sure then applying a strategic plan is critical. At this point, it is highly recommended to seek the help of a transaction advisor that is intimately familiar with the Vacation Rental Industry.
Business 87
What is your Vacation Rental Management Company Worth?
Ben Edwards with Weatherby Consulting has facilitated many acquisition transactions in the Vacation Rental space and says the help a consultant can provide often is the difference between a good deal and a bad deal. Edwards explains, “There certainly is a list of critical items to address. Creating a grounded and sound market valuation for the business based on past financial performance is key to a successful start to the process. Having the proper non-disclosure agreements and a confidential offering package to articulate the value, culture, and story of the business brings the best potential buyers to the table. Understanding the differences in closing options in relationship to your goals ensures the transaction will meet your needs.” Establishing an accurate valuation and offer package involves many elements. Edwards continues, “Having a top-tier financial package certainly makes a difference, and taking the time to normalize the financials of any expenses unrelated to the direct operation of the business can result in a large increase in the purchase price. In my experience, most Vacation Rental Management Companies have a very compelling story relating to their success. It is imperative to tell that story. It is also important to take the emotion out of the 88 VRM Intel Magazine | October 2015
transaction and allow the advisor to secure the highest value for the business possible.” Valuations are most often based on multiples of EBITDA making a solid presentation of normalized financials critical to obtaining the best purchase price possible. The Art of the Deal
The difference between a good deal and a bad deal is often understanding your goals and the possible options. Ben Edwards explains, “There are generally three types of Vacation Rental transactions in today’s market: 1) Transactions that involve all cash at closing; 2) Transactions that involve a material down payment with guaranteed cash payments, plus interest over a set period of time; and 3) Transactions with an amount paid down and payments tied to some form of operating metric or earn-out over time. Transactions with purchase price payment terms similar to type 1 and 2 are the best course of action for Vacation Rental Companies. When an earn-out or contingent payment is involved, all of the risk lies solely on the Seller.
By Greg Herr, Weatherby Consulting
Taking that amount of risk is not prudent, as it clearly favors the buyer, creating a heavy handed scenario, while leaving Vacation Rental Company owners with significantly less value. Should I Stay or Should I Go?
Of course the most obvious factors in this decision are financial. Is the purchase price appropriate and are the closing terms favorable and acceptable? Will the offer satisfy your financial goals for the next phase of your career or retirement? However, in considering an offer to sell, you should consider all factors including nonfinancial factors. As an example, how will the business be managed moving forward and how will current staff be transitioned? Are you ready to move on and let go of the business? Often times aligning with a buyer that shares a similar business philosophy and vision for the business will provide the seller with the peace of mind to move on. Indeed, it may be one of best times to consider selling a Vacation Rental Management Company and with the assistance of a trusted, experienced, and knowledgeable transaction consultant and a sound strategic plan, maximizing your net benefit is certainly within reach.
Revenue Management for Vacation Rentals:
?
Ask the
Experts
I
n 2015 the vacation rental industry is seeing a race begin to become the market leader in revenue management tools. However, property managers are reporting they donâ&#x20AC;&#x2122;t know where to start in evaluating the validity of the pricing methodology, effectiveness of proposed algorithms, and the accuracy of competitive sets. In the next issue, we will take a deeper look into how these tools work along with the anticipated benefits and potential pitfalls. We wanted to start the discussion by asking the experts the three most common questions we hear regarding vacation rental pricing tools.
What is the difference between yield management and dynamic pricing?
What metrics should vacation rental managers be examining to determine their pricing strategy?
There are a lot of tools that have recently been developed in the revenue management space. What criteria should vacation rental managers be using to choose a platform? 89
By Ian McHenry, CEO | Beyond Pricing By Doug Rein Co-Founder, Development Lead and Robert Simmons Co-Founder, Marketing Director | PMT
1. What is the difference between dynamic pricing and yield management? The industry is still not using a common nomenclature, and it results in confusion. The reason for the confusion is that yield management is a kind of dynamic pricing. Based on that, here’s how to understand it: Dynamic pricing is just the common description for pricing that goes up or down to give the Vacation Rental Manager (VRM) the best advantage in all situations – such as lowering prices when demand is weak and raising prices when demand is high. There are two forms of dynamic pricing: • Y ield Management – looks inward at your own inventory to manage prices. For example, raising the price on the last few rentals because you have no more once they are gone. A significant shortcoming of yield management is that it overlooks the competing units – possibly right next door – that are still unbooked and bargain-priced. Based on successful sales, a VRM may raise rates on their few remaining units and price themselves out of the market • Market Driven Dynamic Pricing – looks at how the consumer sees your product as a part of the whole set of options. It is much more fluid and complex and considers the VRM’s own pricing strategies. As a VRM’s competitors raise and lower pricing, the VRM can automatically stay 10% below the average market price. This lets them show up higher in a low-tohigh price sort. When 80% of all of their units are booked, then they can automatically jump to 30% above the average for the best advantage with the dwindling number of choices. Many dynamic market driven products have “algorithms” to recommend pricing changes. Others let you set how and when your pricing changes in relation to the market. Many of those products produce reports suggesting price changes. One (ours) works with your booking engine to change the prices automatically.
2. What metrics should vacation rental managers be examining to determine their pricing strategy? VRMs need to consider the nature of their market and how much risk they want. Some locations are very bargain driven, but keeping prices high might result in good profits in the last minute scramble – if you can stomach it. In another market, that could lose big. We believe the market rate and occupancy combination gives the best measure, since it’s what guests see when comparing similar vacation rental properties. With real-time rate adjustments and the introduction of the low-to-high sort feature, guests have better tools to understand their options on online travel agent (OTA) sites.
3. There are a lot of tools that have recently been developed in the revenue management space. What criteria should vacation rental managers be using to choose a platform? • Data sources: Does the tool even have your market? Can you choose specific locations and units? Are they diluting your vacation rental pricing with hotel and AirBNB data? • Analysis: Do they consider other factors, like occupancy? Can you filter by attributes, such as separating ocean-front from ocean-view? Do they let you see the specific data or just their summary? • O utput: Do you want to use the tool to make decisions, let it suggest rates for your employees to change, or go fully-automatic for volatile seasons? • Automation: Does it notify you of market changes? Can it change your rates for you? Will it consider your strategies when changing those rates? 90 VRM Intel Magazine | October 2015
1. What is the difference between dynamic pricing and yield management?
The two are often used interchangeably, but yield management is focused on perishable inventory like vacation rentals or airline seats, whereas dynamic pricing can be applied to non-perishable goods like cars or toilet paper. Dynamic pricing means changing prices based on supply and demand. Yield management can cover a broader array of activities meant to sell inventory to the right customer at the right time and the right price. This can include channel strategies such as opening up inventory to last-minute channels, product differentiation including stricter cancellation fees for discounted bookings, etc.
2. What metrics should vacation rental managers be examining to determine their pricing strategy? Managers need to get the best data on supply and demand that they can. A manager can start with historical data to understand trends in seasonality, day of week, and event-based demand measured by local, market-wide occupancy as well as the manager’s own units. This can be used to project expected changes in demand going forward. As stay dates approach, managers will want to switch from relying on historical data to what they are seeing in the market. Forward-looking occupancy rates can help them project whether demand is following a similar pattern. Competitors’ prices, while important especially in low-season, can be misleading especially if your competitors are not using sophisticated yield management. Likewise, using the occupancy of your own units and waiting until 80% of your units are filled for a given night before increasing prices on the remaining 20% can lead to those early owners whose prices you didn’t increase getting upset. Where possible, you should use market-wide data. Obviously, there are services to help you collect and analyze this data.
3. There are a lot of tools that have recently been developed in the revenue management space. What criteria should vacation rental managers be using to choose a platform? First and foremost, if you are using a tool that recommends prices you should look for one with a team that has a lot of experience in revenue management and dynamic pricing. You want a system that is predictive and uses external data to make predictions. There are many different approaches and tools. On one extreme are the predictive systems that automatically tell you what to price, like Beyond Pricing. On the other end are the rule-based systems in which you decide what you want the system to do under certain criteria (if the stay is three or fewer days away, reduce price by 20%). These simply do what you tell them to do and are just tools to implement your own judgment. Subsets of these are the ones that look at the occupancy of your own units for a given night and allow you to set rules based on that occupancy. While this is better than not changing prices at all, it’s derived from the hotel industry where the hotel owns all of the rooms and they can manage it like a portfolio where the first rooms that are booked at a lower price are made up for with the later rooms booked at a higher price. With vacation rentals, each “room” or home usually has a distinct owner who wants to make sure you’re not underpricing her place. Finally, there are tools that simply give you data to help you make decisions on your own. These include comp set tools that tell you what your neighbors are charging. This can be useful if used correctly. The main thing to be wary of is copying the prices of an unsophisticated owner or manager, who might be pricing irrationally. A good example is Airbnb hosts who frequently under price their place. As we like to say, it’s better not to copy and if you do, make sure you’re not copying off of a D student. At the end of the day, however, find a tool that works for you. Ask for a free trial and use it on a couple of units and evaluate whether or not your occupancy, average nightly rate, and revenue per available night (RevPAN) are improving.
By Evan Hammer, CEO | Smart Host
1. What is the difference between dynamic pricing and yield management? In the vacation rental industry, yield management is a system where managers regularly update their prices based on the occupancy rates of their own inventory. The available tools allow managers to use triggers to set prices but do not provide price recommendations. For example, a manager can decide to automate lowering their prices by 20% if their occupancy rates are below 60% with one month left before the stay date.
?
Q&A Experts Ask the
Dynamic pricing is a much more comprehensive system. In addition to a manager’s own inventory, dynamic pricing systems evaluate comparable properties to evaluate supply and demand changes. Some systems include other factors like weather, events, and nearby hotel prices. With this many factors being reviewed, price recommendations are often made for specific nights instead of specific weeks or seasons.
The biggest difference between dynamic pricing and yield management tools is that dynamic pricing tools recommend prices based on a statistical analysis of the market. Instead of a manager having to figure out prices each week, dynamic pricing tools change their price recommendations whenever the underlying market conditions change.
2. What metrics should vacation rental managers be examining to determine their pricing strategy?
You should monitor prices and occupancy rates to determine a pricing strategy that maximizes revenue. You’ll want to review these metrics for your inventory and your competition’s. Group your properties into Property Groups, based on location, number of bedrooms, and property type (e.g., home, apartment, or villa). Then, create a set of Comps - i.e., comparable properties in your neighborhood - for each Property Group. The key is how frequently you review these properties. Each week, review the occupancy rates, available prices, and booked prices for your Property Groups and their Comps.
The most comprehensive method is to compare current trends against historical trends to predict your final occupancy rates. For example, if you’re doing a price review on March 3 for the stay date of September 3, then you’ll be comparing occupancy rates and prices for dates that are six months out. There are many scenarios to consider. But the two simplest rules are:
• If your market is performing better than usual, try raising prices. If your market is performing worse than usual, try lowering prices. • Revenue is booked price multiplied by occupancy rate. Whenever you’re thinking about raising or lowering prices look for evidence in your competition and historical data that you’ll be maximizing revenue.
3. There are a lot of tools that have recently been developed in the revenue management space. What criteria should vacation rental managers be using to choose a platform? Here are my top three questions to ask when selecting a revenue management tool:
• Does it provide pricing guidance? Many tools don’t analyze market conditions so they only provide an automated way for Vacation Rental Managers (VRMs) to set their own prices. Make sure you know what the tool does. • Are its Comps spot on? Getting the Comps right is one of the hardest technical challenges for any of these tools. If your Comps are wrong, your pricing guidance will be as well. You know your neighborhood best, so have the vendor show you Comps for a handful of your properties. • How will you receive the price recommendations? Some folks want the price recommendations to sync with their property management system (PMS). Other folks want email alerts so that they maintain control of their prices. Remember, a revenue management tool is only valuable if you’re using it.
By Julian Castelli, CEO | LeisureLink
1. What is the difference between dynamic pricing and yield management?
Yield management is the umbrella term for a set of strategies that enable capacity-constrained service industries to realize optimum revenue from operations. The core concept of yield management is to provide the right service to the right customer at the right time for the right price. In other words, yield management is using variable pricing strategies to maximize profitability. Dynamic pricing is one aspect or tool that is often used in yield management. Dynamic pricing means that a vacation rental will change its room rates daily or even within a day if up-to-the-minute market information reveals the need for adjustments. The key to yield management is to forecast or predict consumer behavior and construct price points or variables that change based on demand and supply. Seasonality, time until arrival, units available, and buying trends are all considered. Dynamic pricing adjusts based on many factors to capture the most revenue and deliver the most value to guests.
2. What metrics should vacation rental managers be examining to determine their pricing strategy? Some common factors to include in pricing decisions include: Seasonality, the day of the week, last minute booking trends, competition pricing, area events, packages, amenities, and inventory available. The key to a profitable pricing strategy is data, research, and the ability to forecast. Doing it blind will leave money on the table, or worse yet, lose bookings to the competition. You have to have insight not only into how your own business is doing but also the overall economic health of the region you are in. If you are sold out, is everyone else sold out?
3. There are a lot of tools that have recently been developed in the revenue management space. What criteria should vacation rental managers be using to choose a platform? • A tool that allows you to move last minute unsold inventory, promotions, or specials. • The ability to leverage data and insights to track competition. • The capability to easily update prices when inventory changes in relation to demand. • The need to focus on RevPAR not just occupancy. Revenue Management 91
Coaching Staff A Lesson from Vince Lombardi
O
ne of the greatest NFL football coaches is Vince Lombardi. At the beginning of each season he would take grown men, some of whom had played football for decades, and hold up a football and say “Gentlemen, this is a football.” He would then explain the basics of the game. After a while they would move to the football field and the explanation of how the game is played and the objective of the game would be explained.* As leaders and managers we need to do the same thing with returning seasonal staff and fulltime year round staff. We need to cover the basics of what we do and why we do them. Here are a few housekeeping basics to cover:
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Housekeeping Kit: Discuss how and why each chemical or tool is to be used. Take the time to do demonstrations of proper ways and improper ways, so they can see how it is to be used. The basic housekeeping kit should have: • • • • • • • • • • • • •
rags (microfiber are the best ones to use) bathroom disinfectant cleaner all purpose disinfectant cleaner a room deodorizer a mild wood floor cleaner razor blades for smooth cook top stoves oven cleaner pumice stone magic eraser gloves trash bags doodle bug a large lint roller
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Vacation Rental Housekeeping Professionals 92 VRM Intel Magazine | October 2015
Inspection Kit: Talk about the necessity of the inspection kit and how it can help them be effective at doing their inspections. What is inside the kit is going to vary on what guest amenities are provided and what expectations you have for your inspectors? Some of what should be included would be: •
toilet paper
•
paper towels
•
guest amenities (if provided)
•
batteries
•
multi tool
•
laundry soap
•
dishwasher soap
•
any guest specific items that your company provides
Specialty Cleaning Products: I call them specialty cleaning products because only certain people have access to them and are trained to use them. There are two types of products I would like to highlight today: • •
an enzyme product that eats proteins, such as urine, blood, vomit, and beer just to name a few a product to address mold and mildew that includes Australian Tea Tree Oil
Piece Rate: All housekeepers should be paid piece rate. This motivates the housekeeper to clean with speed and quality. Inspections: Every arrival must be inspected for housekeeping quality and guest readiness. This inspection allows the inspector to make sure all is in order in the home. Some items include:
• • • • • • •
pillows are staged right blinds are set appropriately thermostats are double checked and temperature is set correctly for the time of year doors and windows locked kitchen pots/pans, plates, cups, utensils, and all other items placed neatly in the cabinets correct number of hangers in closets and placed in the correct location on rod appropriate number of towels in each bathroom
Standard Property Appearance (SPA): Every company should have a document that illustrates and explains how the property is to be left when the housekeeper and inspector have completed their work. This document is not easy to create. It takes a lot of thought and work, with many people and departments collaborating for the final product. Once complete, everyone knows how the property is to look when the housekeeping staff have completed their work. Some of the items this document addresses are: • • • •
how the towels are hung and where how many rolls of toilet paper are left and where how many paper towels are left and where how the blinds are set for an arrival or departure
Follow the wall: This procedure is a foundational housekeeping principle and every housekeeper and inspector should use it every time they clean, inspect, or check a property. One last item for you to consider, every housekeeper is a memory maker. Every time a housekeeper or inspector does work in a property they are a part of memories made in the property. We need to remind our staff of this. If you have any questions you can visit www.VRHP.org or reach out to me for more information.
* Vince Lombardi, in Donald T. Phillips, Run to Win: Vince Lombardi on Coaching and Leadership (2001), 92.
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Employers Beware Overtime Rules are Set to Change
B
e aware there are major changes coming with how you pay your employees. If you have salaried employees earning less than $50,440 per year ($970 per week) they will be eligible for overtime, if the Department of Labor’s (DOL) new Fair Labor Standards Act (FLSA) regulations take effect in 2016. Under the proposed rules the salary threshold would be set at $50,440 per year for the executive, administrative, and professional employee.
Three scenarios provided below demonstrate how raising the salary threshold could significantly increase direct payroll costs, impact employee morale and engagement, and increase administrative costs and burden if you aren’t prepared to address these changes before they occur.
The overtime rules have not been updated since 2004 when the threshold of $23,660 ($455 per week) was established, and under the current regulations the salary threshold is below the poverty level for a family of four. The DOL intends to continue to raise the proposed salary threshold of $50,440 on an annual basis to keep pace with inflation.
Scenario One: Raising the salary threshold will increase direct payroll costs. Consider the following example of how reclassifying a salaried employee as non-exempt can very quickly increase your payroll costs.
The DOL stated that at “the proposed salary level, the number of overtimeeligible salaried white collar employees paid at or above the salary level would be reduced by more than 50%.” The DOL projects that the proposed rule will extend overtime protection to nearly 5 million white collar workers within the first year of its implementation. This will significantly impact the retail and hospitality industries and greatly affect small businesses.
You are currently paying a salaried employee $35,000 per year. Dividing the employee’s salary by the standard number of work hours in a year (2080) equals an hourly rate of pay of $16.83 per hour. If the employee works an average of 45 hours per week, the employer will be required to pay 5 hours per week of overtime. Assuming the employee takes 3 weeks off for vacations and holidays the employer would only pay overtime for 49 weeks a year. In this situation, your payroll could increase by $6,185 ($16.83 an hour x 5 hours a week x 1.5 x 49 weeks). This 17.67% increase does not include the additional payroll taxes employers will pay on the increased earnings. Scenario Two: Raising the salary threshold will have an impact on employee morale and engagement. Consider the following example of lowering hourly rates of pay to leave an employee’s total amount of pay unchanged (keeping both the employer and employee whole).
The new regulations are coming and businesses will have to comply. It is just a matter of when. A chief concern employers have with the proposed overtime rule is how they will afford the overtime for additional people, assuming the salary threshold for exempt positions is raised and more employees become eligible for overtime. Research from the National Retail Federation and Oxford Economics study suggests that employers will minimize the impact of the additional labor costs by: Lowering hourly rates of pay to leave total pay amounts largely unchanged Cutting bonuses and benefits to increase base salaries above the new threshold Reducing some worker’s hours to fewer than 40 per week to avoid paying overtime, cutting compensation proportionally Hiring new, lower-wage and largely part-time hourly workers 94 VRM Intel Magazine | October 2015
Using the same example from above, the employee will be paid straight time for 2,080 hours each year. The employer will also pay the employee 245 hours of overtime annually (49 weeks x 5 hours). Because overtime is paid at time and a half, the 245 hours of overtime equals 368 hours of straight time (245 hours x 1.5). This means that the employee will be paid the equivalent of 2,448 straight-time hours per year (2080 + 368) or an hourly rate of $14.30 ($35,000 divided by 2448 hours). This keeps both the employer and employee whole, since the employee will work the same number of hours and make the same amount of pay as before the change. What this doesn’t take into consideration is the impact on the employee’s morale and engagement. Think about this. The employee was salaried coming and going without recording their time. There was inherent flexibility and perceived “status” built into being paid a salary. Now the employee is required to record the hours he/she worked and be paid an hourly pay rate that could be perceived as a “decrease” in hourly pay, even though mathematically the employee is earning the same amount. Most employees will take their salary and divide it by 2,080 hours to determine the hourly pay rate. In this situation, dividing $35,000 by 2,080 hours equals an hourly pay rate of $16.83, not $14.30 ($35,000 divided by 2448 hours). As illustrated above, employees are going to have a hard time digesting this rationale. Scenario Three: Raising the salary threshold will increase the number of employees classified as non-exempt which, in turn, increases administrative costs.
Nearly all employers, whether large and small, will incur significant time and expense evaluating whether their positions currently classified as exempt will still qualify for exemption and, if not, determining what actions to take. The potential increase in labor costs, in many cases, will be significantly less than the hidden costs of resources necessary to manage the additional recordkeeping and payroll administration, difficult employee issues, employee morale and engagement, scheduling complications, expanded training, and other human resource considerations. For example, a major administrative burden and potential employee relations issue will be training formerly exempt employees on how to accurately complete timekeeping records, educating them on what they need to know about complying with meal and rest breaks, and informing them of restrictions on working outside of their normal work hours, overtime rules, travel time, and other compensable time issues such as on-call pay, etc. As revealed by these three scenarios, the proposed changes not only impact the financial aspects of your business they also have a significant impact on employees morale and engagement. Now is the time to get creative and develop strategies to incorporate into your business to minimize the impact of these changes. Make a plan now so that you don’t absorb additional labor costs and you continue to keep your employees engaged. Listed below are some proactive steps to consider as you begin to plan for these changes. Take time to review and re-evaluate exemption classifications. This will ensure you are compliant with the upcoming changes and prepare to reclassify salaried employees who do not meet the new salary threshold. Budget for salary increases and/or increased overtime costs. When the rules become final and exempt employees fall below the new salary threshold, employers will have two options: (1) reclassify the employees as non-exempt and pay them overtime whenever they work more than 40 hours in a workweek; or (2) raise their salary to meet the new requirement. Remember, as an employer you are not required to guarantee that an employee will receive overtime work. Create a clearly articulated overtime policy and educate employees. Include procedures in the policy such as requiring prior authorization for working overtime. Inform employees that working unauthorized overtime will result in disciplinary action. Train formerly exempt employees on timekeeping systems and the importance of accurately recording time worked. Train management on the importance of reviewing and signing off on time worked and authorized overtime. Address disciplining employees for unauthorized overtime with management. Inform and educate employees on changes to help address issues and concerns before they turn into bigger problems. Employees who are reclassified from salaried to hourly often view the reclassification as a “demotion” and may resent being converted to hourly pay. Therefore, frequent communication with employees regarding their reclassification is key. The DOL ended a 60-day review period for the proposed rule September 4, 2015. The final rule is expected to take effect sometime in 2016. For more information and updates on these changes visit the following websites:
Department of Labor Overtime Pay Resources at http://www.dol.gov/whd/overtime_pay.htm Department of Labor – Frequently Asked Questions at http://www.dol.gov/whd/overtime/NPRM2015/faq.htm Society for Human Resources at http://www.shrm.org/pages/default.aspx
Sue Jones By
About Sue Jones Sue Jones, Founder and Managing Director of KLS Group, is passionate about creating strategic human resource programs and services to effect positive change in organizations. She is an innovative HR leader experienced with both large and smaller businesses. Sue has worked in many different industries and is adept with transferring her knowledge, skills and abilities across business channels. An experienced HR professional, Sue brings a fresh approach to her clients, addressing their needs in a personalized 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.
About KLS Group Today’s business landscape is complex. Companies rely on KLS Group for all of their human resource needs, from consulting to training to recruitment. Based in Bend, Oregon, KLS Group serves businesses large and small throughout the US. The KLS Group, keeping life simple. Please visit us at www.theklsapproach.com
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| Customer Service
Why Not A Hotel?
A Guest’s Perspective: There’s no place like home. Or is there?
S
ince the late seventies our family has opted for vacation rental homes over hotels. We are well into the fourth generation of vacation rental fanatics and we find ourselves drawn to the same places year after year. For us, it is tradition boosted by the enticement of a well-stocked kitchen (helps defray restaurant costs), ample space for the kids to spread out, creature comforts galore, and the familiarity of a place we consider home. It is the appeal of an afternoon nap on a screened porch…lulled to sleep by a sea breeze, the ebb and flow of the waves, and a book slipping gently from our hands. It’s the charm of an open deck with a picnic table set for breakfast or ready for sunset wine and cheese. Later that evening, the same table converts to the perfect spot for a cutthroat game of Tripoley. It is comfy rockers facing a mountain lake or a cozy evening in the hot tub with a glass of wine. A crisp, fall afternoon spent cheering a favorite football team or the welcome shelter of a porch during an afternoon thunderstorm. Vacation rentals bring with them the annual round of specialty meals: shrimp night, burgers on the grill, Dad’s catfish sizzling in a skillet, Aunt Sherry’s fried green tomatoes, and Mom’s homemade ice cream. It is family time well spent. Our children grew up spending summer vacations in beach houses on the sugar-white sands of Fort Morgan, Alabama, a sliver of land that dares separate the gentle waters of Mobile Bay from the crashing waves of the Gulf of Mexico. Anchored on the west by the namesake fort that has been around since the War of 1812, and on the east by bustling Gulf Shores/Orange Beach, Fort Morgan is a little piece of paradise, a stretch of private beach homes, most of them vacation rentals, interrupted by a few – very few – condos. It is family beach fun at its best and a place where memories are forged.
Through the years we’ve enjoyed cottages in England’s Cotswolds, a villa on the northern coast of Spain, both a manor house and a castle in Ireland, and a carriage house in Germany’s Black Forest - all vacation rentals and all embodying the same home-awayfrom-home spirit and appeal. For a ten-year period, we literally put the shoe on the other foot and became vacation rental owners ourselves. We purchased a beach home on the sparkling sands of Fort Morgan, and, from our rental agency, quickly learned our guests were, for the most part, repeat renters. We provided a notebook and pen and asked each family to leave comments about their stay. Every summer they logged in to share the highlights of their vacations: which family members came that year; what their children and grandchildren were doing; how many fish they caught; who got sunburned; and whether or not the jellyfish were a nuisance. Our rental manager dealt with disgruntled vacationers, forced from our home by tropical storms, with little hope of getting their money back. (Only a named hurricane in the Gulf results in full reimbursement.) From time to time we made split-second decisions to replace everything from a toaster to a hot water heater, all in the interest of keeping our guests satisfied. We rescreened the porch and replaced outdoor ceiling fans as quickly as they rusted in the salt air. And in the aftermath of stormy visitors named Danny and Ivan, we re-roofed and renovated. Our regular renters became our friends. When each summer season ended we returned to the beach house to find surprise gifts left by happy vacationers: a piece of driftwood hand-carved with our family name, dog-eared best sellers to add to our collection, and a necklace made of seashells. A few renters acted as if the house were their own, even replacing light bulbs and doing minor repairs. During the holidays our rental manager passed along cards from our guests with glossy photos of smiling family members posed on the steps of our beach home. We began to realize vacation rentals are never a one-way street. Whatever form they take - beach house, mountain cabin, lakeside retreat, or European cottage - two sets of people love the home. The owners who invest in, maintain, and equip the house. And the renters who enjoy, make lifelong memories, and, for one or two brief weeks each year, feel that it’s theirs.
Following our annual beach trips, summer melted into fall and October ushered in our longing for a cabin in the mountains. We’d pack up the family and head to the Buffalo River in northern Arkansas. There we stayed in snug vacation rental cabins. By day we hiked the woods, canoed the Buffalo, and fished nearby lakes. At night we grilled our fresh-caught fish under the stars before snuggling under blankets by a cozy fire to play fierce rounds of Tripoley. Years later we repeated those mountain trips in cabins in the Smokies and along the Blue Ridge of Georgia and North Carolina. When our oldest son married, our family and friends stayed in inviting homes (vacation rentals, of course) at Grandfather Mountain near Linville, North Carolina. In addition to providing our wedding accommodations for a gorgeous September weekend in the mountains, those houses were the scenes of several memorable parties. 96 VRM Intel Magazine | October 2015
It’s a win-win, a love affair from both sides, and there’s no better way to spend a family vacation. *The author leaves this month to divide a week between a condo in Cashiers, North Carolina, and a sumptuous mountain cabin near Asheville. Both vacation rentals, of course! By Ren Hinote
Wish we could say moreâ&#x20AC;Ś
Visit the NAVIS booth at RezFest 2015 or the 2015 VRMA National conference to get a sneak peek
Meet.NavisNow.com
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100 VRM Intel Magazine | October 2015