Short-term rental revenue management might still be an ambiguous topic in the industry for some, especially when it comes to defining which operational and business practices actually fall under the revenue management umbrella.
In reality, most property managers and owners are already revenue managing their listings in a variety of different ways. It’s important to understand what revenue management entails and how every aspect of the short term rental business relates to the practice.
The short term rental industry has definitely flourished over the past few years, and the idea and adoption of dynamic pricing has grown alongside it. Dynamic pricing for short-term rentals just made sense coming from the hotel and airline industry, but it still took many years for mainstay property managers to adopt the practice.
While dynamic pricing is an important component to the foundation of any short-term rental business, it’s important for property managers to understand that there is more to revenue management than just dynamic pricing. Just as in other hospitality and travel industries, it’s time for short-term rentals to evolve the idea of revenue management beyond dynamic pricing.
As a short-term rental property revenue manager, it may be difficult to identify which levers you can have to work with outside of just dynamic pricing. Channel distribution is a major factor in any revenue management strategy that can be as important, if not more important than pricing.
If a property is underperforming, might there be an opportunity to expand the booking audience for that listing on another online channel? Are channel distribution costs being factored into the bottom line for a property manager or owner? These are important questions to answer and understand that can really impact the performance of a given short term rental property.
It goes without saying that data is king, and that should apply to internal and external data equally. The most exciting part of this industry is the fact that every listing is unique. This can make it difficult to benchmark performance for any given property, but market data is still very helpful in assessing whether a property is over or under performing.
Occupancy, average daily rate, and revenue data are all baseline metrics that revenue managers should be using to gauge how they are performing against their market. Having the right tools to have this data accessible is key to maintaining a healthy revenue management strategy. Knowing that a property is getting the fair share of demand in a market is the first step in assessing revenue management performance and should be top of mind when operating a short term rental property.
In addition to copious amounts of data and pricing strategies, short term rental property revenue managers can sometimes forget how important their online presence can be. Walking through the process of how a guest may book a property on any given channel can give immense insight into potential flaws into a digital marketing strategy that may be causing a property to underperform.
Bad reviews, improper search flows, poor photo performance and layouts can have a big impact on booking performance that may not be on the forefront of a revenue manager’s mind when diagnosing an underperforming property. These aspects of digital presence should be audited on a frequent basis to identify room for improvement.
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