Guest blog by Richard Vaughton of Rentivo
If you thought this was just about pricing, think again!
So what exactly is “Revenue Management” and why are we seeing so much of it in the short term rental press, zoom calls and conversations. Wikipedia describes it:
“as the application of disciplined analytics that predict consumer behaviour at the micro-market levels and optimize product availability and price to maximize revenue growth. The primary aim of revenue management is selling the right product to the right customer at the right time for the right price and with the right pack”.
As the definition says: The primary aim of revenue management is selling the right product to the right customer at the right time for the right price.
One of the most important places to spend money is clearly on the property. On this occasion the famous line often incorrectly quoted from “Field of Dreams” may have it right, but it’s only part of a very complex equation that has almost unlimited variables! This makes automated revenue management very difficult.
The granularity of data management for online price positioning and demand is governed by the property and the target consumer, as noted in the definition above. However the product has many variables and the “disciplined analytics” are seldom possible where every one of 10m properties are different and governed by millions of independent owners. These aren’t hotels where each room is the same and central to town.
It’s a jigsaw that guides pricing management
Clearly the property and target demographic is central to the opportunity to price it right but is only one part of the booking jigsaw. The Book Direct Show and my own presentation is a reflection of the granularity of the speakers’ subject matter that all form part of each individual strategy.
It takes a whole range of skills to run a successful rental business and most who enter the fray need to be well versed in multi-tasking and being a jack of all trades, but will also know who to call on for expert and cost effective support.
Don’t miss Richard Vaughton presenting at the Book Direct Show
The whole is greater than the sum of the parts.
When considering revenue management I will cover the tick boxes that improve all the chances of increasing your booking opportunities.
“Puzz,” a rug designed by Frank Gehry (and notated!)
(Arzu Studio Hope)
The “Bookdirect” challenge is the ultimate revenue management opportunity, it provides flexibility and distribution gaming. All the important components need attention: building trust, reducing friction, messaging, presentation, distribution, correspondence, property investment, amenities, bed formats, laundry, hygiene, local information, deals & offers, technology, social, built for mobile, reviews, content, networking, associations & memberships, secure payments, T&C’s etc. All are the building blocks to managing revenue expectations and running a solid business.
It’s no single and simple task, it requires work and knowledge. But get it right and “then you can predict consumer behaviour at the micro-market levels and optimize your product availability and price to maximize revenue growth”.
Put more simply, you can charge more than your neighbours who have no idea, list and wait.
I’ll be providing a check-list and extra income potential from small changes and once all that’s covered you can get into the real details of pricing management.
Richard Vaughton
https://yes.consulting
Over the last 20 years, Richard has been an owner of a private rental portfolio, owned and sold sizeable management companies, is a rental tech company founder (Rentivo) and has been a VP of a large US master lease company.