Using Data to Manage Your Owners
We've heard from lots of our customers: managing owners during this time of travel uncertainty is difficult and uncharted territory. To help you manage the tough conversations you will have with your property owners, we have boiled down the key topics to cover to set realistic expectations for property pricing and results.
Open and frequent communication with your property owners is essential to the survival of your business as a property manager. With thousands of customers, we at Beyond Pricing understand the magnitude of the challenges and critical importance of keeping pace with today’s evolving market dynamics. While these discussions can be difficult, the overwhelming feedback we hear from our property managers is that it is better to be candid and proactive with owner communications.
Retaining an existing owner costs far less than acquiring a new one, therefore your efforts in keeping them informed and up to date are worthy time and effort investments. Also, you can distinguish yourself from your competition with open and transparent communication. Owners seeking reassurance and guidance will appreciate a well organized and realistic approach to setting revenue and occupancy expectations for the remainder of 2020, into 2021.
Show Your Owners the Data
As you are learning to adapt daily to a changing environment, using data-driven, intuitive tools to inform pricing decisions are paramount to driving bookings and, ultimately, retaining owners. We encourage you to share with and show your owners how dynamic pricing responds to market changes and adjusts prices automatically. This automation and real time understanding of market shifts provide you with the quick action and visibility you need in this uncertain environment.
By sharing examples of your market data, highlighting occupancy information and explaining how you are adjusting pricing strategies to weather the current situation, you will build confidence in trust with your owners. Additionally, if a strategy needs to be adjusted, the hard work of explaining the reasoning to the owner will already have been done.
Resetting Owners Expectations
This travel environment is unprecedented, and with new territory, comes new ways you need to think about driving to positive outcomes and optimizing revenues. What has worked in the past will not work now, and may not work in the future. Therefore, it's critically important you are setting owners expectations appropriately around three key areas:
- Drive for Occupancy: As demand is stagnant and still low, consider this fundamental shift in your revenue management strategy: focusing on maximizing occupancy by taking lower priced reservations versus year over year ADR increases. To do so effectively requires that your owners understand that you cannot rely on historical ADRs until the market stabilizes. Doing so will likely leave properties under-booked even as demand returns. This is because there is a great deal more vacant supply than normal available and excess supply with lower demand typically leads to lower accepted ADRs. For this reason, a realistic occupancy-based revenue strategy will help to ease owners' worries by capturing revenue to cover their fixed costs, such as mortgages and upkeep.
- Adjust Minimum Prices: Driving for occupancy may also mean that you will also need to adjust certain properties' minimum prices, especially in units showing a slower recovery. With fewer people traveling and an increase in available inventory, it's critical for a property's minimum price to be competitive. This does not mean dropping prices across the board, however, it does mean a careful reconsideration of what a minimally acceptable price may be for owners in this market.
- Adjust Length of Stay Requirements: To capture the demand that is returning, keep your properties at the top of search results by adjusting length of stay requirements. We also encourage you to enable Gap Filling or Last Minute Minimum stays in Beyond Pricing to take advantage of the short lead time bookings. By filling dates which would have been unbooked, you can earn incremental revenue which will go a long way toward recovery. Of course, adjusting these requirements may also mean adjusting changeover requirements as well. If your cleaning costs and schedules will allow, adjusting this can give a significant boost to your inquiries and help your owners to know you are doing all you can to fill their calendars.
Use Data to Tell the Story
The Coronavirus Support Page and the Market Data tab inside your Beyond Pricing account are at your fingertips. By showing you have access to and command of understanding market trends, whether positive or negative, your owners will gain trust and faith that you are considering all the facts as you make property-level recommendations and decisions. Use these reports as a core part of your owner communications, as the data illustrates how data informs your analysis and decision-making.
Coronavirus Support Page: Our Coronavirus Support Page gives you the data to back up why the owner should expect continued underperformance of reservations and revenue comparable to what they have seen in past years. It’s important for you to familiarize yourself with this information so you can effectively communicate it to the property owner. On this page you will find charts that track reservations, cancellations, length of stay, average daily rate, and booking lead time by market.
For example, looking at the Oregon Coast market below, we see that reservations came to a standstill in March, and have slowly started to return recently. Sharing this type of market level information with owners can help guide the conversation about what guest check-ins will look like over the next few months and address questions about when demand will return.
Market Data Tab Example: Share with owners a screenshot of the Market Data tab of their listing. Owners might ask questions on why they are getting lower rates than last year - you can show them these graphs to explain that you have switched to an occupancy based pricing strategy due to lower demand.
- Let's look at an example from the Market Data tab of a listing in Panama City Beach. For Memorial Day 2019 the Panama City Beach vacation rental market was 73% booked, this year only 39% of units are booked.
- Even if travel restrictions were released today it is unlikely that the demand will rise up to historically achieved levels, so we can safely conclude that this year's occupancy will be a fraction of the historical. Showing this to an owner will help make it clear that we will need to respond by pricing at lower rates.
Owners in Drive-to vs Fly-to Markets
Drive-to Markets & Demand
As you are likely aware, travel experts and enthusiasts predict the resurgence of drive-to markets before the harder to reach markets return to normalcy. As a results, many of the managers we work with have shifted their marketing efforts to capture demand from their region, with the belief that while travelers are anxious to vacation, they are less comfortable taking flights. Communicating this plan to your owners is another great way to instill confidence in you as the market expert, and if effective, will help to aid in recouping lost revenue
In addition, we have seen certain drive-to markets show higher demand year-over year during this pandemic because of the desire for travelers to shelter in place at a vacation property. As a large percentage of people are working from home and aren’t able to send their kids to school, renting a family friendly vacation home with private amenities, such as a swimming pool, is appealing. This, combined with promotions designed to entice a longer stay than just a single weekend can significantly help to make sure you, the expert, are still able to help cover the owners’ costs for their properties and help them feel more confident in your ability to do so.
Fly-to Markets & Demand
For fly-to destinations, the effect to your bottom line as well as the owners’ is significant. There is much less traveler demand to be had in these markets, but that doesn’t mean that marketing to locals or your loyal repeat customers won’t have an impact. It underscores the message to owners that you are doing everything you can to get them bookings. Even greater emphasis in these markets should be placed on speaking to owners about adjusting minimum prices where necessary, minimum stay requirements and length of stay discounts.
These areas of emphasis, combined with cheaper flights, will help entice guests to take a trip as soon as confidence returns. As your business is directly tied to airlines resuming normal flight schedules, we recommend you familiarize yourself with current airlines policies. Keeping a pulse check on when flight confidence resumes will help inform your anticipated demand.
We are here to help
Now, more than ever, it is important to communicate and demonstrate to your owners the value you bring to them and their properties. Using Beyond Pricing to help show market data, demand trends, and the other tactics you are implementing will strengthen the quality of your owner communications, and build trust in this trying time. Everyone needs a helping hand during times like this and your role as a property manager is critical in assuaging owner fears and uncertainties. Though Beyond Pricing has put the data at your fingertips, these conversations are never easy, so please let us know what else we can do to help. Remember, we are in this together!