Earlier this year, three badass revenue managers formed a panel at the Vacation Rental Women’s Summit hosted by VRM Intel in New Orleans: Desiree Garcia (Corporate Director of Revenue Management for Streamline VRS), Heather Richer (Chief Marketing Officer of RedAwning), and Meaghan Moylan (Revenue Manager at 360Blue). The panel was moderated by Melanie Brown (Data and GIS Analyst for Key Data).
They came to discuss the hot topic of the day, revenue management – specifically: The value of revenue management, how to practice it more effectively, and how technology is making it easier than ever. After a three-hour dinner during which they shared stories, strategies, and know-how, they collectively identified a few key takeaways:
- Revenue management for vacation rental managers means: “Selling the right unit to the right person at the right time.” That ‘simple’ action requires the alignment of multiple aspects of your company, including marketing, property management, and sales. Many may not have a dedicated revenue manager, but all property management companies practice revenue management by setting prices, running promotions, and more. The question is: Are you doing this effectively to maximize revenue?
- The first step is to understand your data. To form a cohesive revenue management strategy, you need to understand a few key data points. Occupancy rate and average daily rate (ADR) are often seen as the most important indicators of a unit or portfolio’s success. However, that’s not the whole story. Revenue per available rental night (RevPAR) combines these two and thus measures both supply and demand. When RevPAR is high, you’re maximizing revenue. Booking window is also extremely important, because it tells your marketing team when to reach people. You’ll want to look at all of these data points for individual units and for your entire portfolio – for specific seasons and for different types of units.
- To maximize revenue, you need to understand the levers available to you.
- Pricing: High occupancy rates are good, but if they’re too high, it’s a reflection that your rates are too low and you’re leaving money on the table. High ADR is generally better because it means you’re making more money for every night sold. However, if ADR is too high, your occupancy rate will start to fall.
- Promotions: Discounted rates may help you fill rooms, but you have to be careful to use them at the right time. If, for instance, you’re worried about unfilled units 90 days out, check your booking window for the same time last year. If guests only reserved 60 days in advance back then, wait a while before lowering rates.
- Marketing: Are your units reaching the right eyes at the right time? To make sure they are, you have to understand your guests’ habits and origin points. Your website design and channel management are also extremely important.
By using these levers as part of a coordinated revenue management strategy based on your data, rather than just shooting from the hip, you’ll be well on your way to maximizing revenue. As you practice revenue management, don’t forget:
- It’s a science, but also an art. You know your area, owners, and units better than any database does. Remember this as you interpret your data.
- It’s also a cycle. Hopefully with an adequate understanding of your data and a cohesive strategy using multiple levels, the majority of your attempts to maximize revenue will be effective. This won’t always be the case, so carefully monitor how your efforts impact your RevPAR, ADR, and occupancy – then use what you learn to refine your strategy.
Key Data Dashboard
Key Data makes sophisticated revenue management infinitely easier. That’s why we built it. Through direct electronic integrations with KDD partners, our technology allows you to visualize your data, giving you powerful insight into your company’s performance, as well as the performance of your competitors’ performance in real time. With KDD, you can visually compare all of the data points I’ve mentioned on easy-to-use, customizable dashboards, allowing you to assess more than 30 up-to-date key performance indicators instantaneously. Scraping competitors’ data is a thing of the past. Creating reports is a snap, saving massive amounts of time and money.