Having an efficient and advanced revenue management strategy is an absolute must for all short-term rental property managers. Most property managers outsource this to third parties in the hopes that it will save them time and money.
This approach, however, can have serious negative consequences, like unhappy owners who could decide to take their business elsewhere.
While it can seem difficult to assign responsibilities, find the right tools, and organize an entire strategy for revenue management, it doesn't have to be overwhelming.
By following these tips, you can do what the top 1% of property managers do to make it easier to build those capabilities in house.
1. Know How to Manage the Owner
Owners can have a wide range of expectations regarding the management of their property. The ability to communicate current strategies, market insights, and unit performance expectations and projections is critical to the core of a property management business.
2. Have an Owner Onboarding Plan
To make it easy and as pain-free as possible, make sure you and your team have a game plan for the owner onboarding process. This should include property forecasting and performance expectations, minimum rate and revenue requirements, and a communications calendar on when the owner can expect updates throughout the year.
3. Have a Revenue Management “Owner”
Whether it’s you or someone on your team, there has to be a go-to person for revenue management. This team member should at least be aware of owner management,
operations, marketing, and more in order to help maintain a cohesive revenue management strategy that works for everyone.
4. Local Market Knowledge
Local market knowledge is priceless when it comes to revenue management, and knowing a portfolio backward and forward can add a lot of value to overall revenue management strategies. The property management team already in place already has intimate knowledge regarding unique listings, historical context, its owners, and more. This is an added benefit to managing revenue in-house.
5. Leverage the PMS You Already Have
There are many vacation rental software tools that are used as a part of property management operations that also have fantastic revenue management applications. Inventory and pricing controls within a PMS can help define a revenue management strategy, alongside other distribution features that may be unique to specific systems.
6. Use Dynamic Pricing to Take Revenue to the Next Level
Dynamic pricing software has become popular in the vacation rental industry over the past few years as managers look to gain competitive pricing advantages in their market. This tool is the closest thing that the vacation rental industry currently has to a true Revenue Management System.
7. Automate & Simplify
After you’ve simplified the metrics you look at, simplify your workload by offloading it to the software you have in front of you. Not having “time for revenue management” because of repetitive tasks should not be an excuse for not driving your revenue management strategy.
Consider the following:
- If you sit down to do rates for next year, use rolling calendars instead.
- If you manually reduce min stays as time gets closer, utilize automatic gap filling.
- If you’re manually searching and replacing rates on “Orphan days,” or you’re constantly changing your last minute discounts by hand, automate these activities.
These are just a few examples of what software and pricing tools can do. Automate the repetitive stuff!
8. Don’t Work Harder - Work Smarter
While tools will save you time, a busy—and successful—PM will simply never have enough. And that’s OK. Think how you can work smarter and more efficiently. Here are some tips that we’ve seen work:
- Be proactive. Reviewing September performance in October will tell you what mistakes you made (or hopefully didn’t make), but it won’t stop them from happening.
- Small, smart, and targeted pricing changes make a difference when done regularly. At the beginning of the week, log into your data provider, see what listings are underperforming, and use the tools to take quick action to lower their rates 5%. Let the change take effect.
- At the end of the week, log back in and review forward portfolio occupancy and tweak the dates that are pacing too fast or too slow accordingly.
9. Focus On What Matters
You should spend your time focusing on the basic metrics that are actionable. Consider, for example, “forward looking occupancy.” It’s wonderfully simple. The past is history, and while comparing YTD revenue performance may be important to owners, it doesn’t help you make more revenue. It just quantifies what has already happened.
Quickly scan the 30- and 90-day occupancy of each listing on your program to make sure none are at the extremes, and if so take action. But comparing future rates to historical rates does not matter if you are going unbooked, period.
By leveraging these tips above, you’ll be on your way to joining the top short-term rental managers in the industry!