Intro to Dynamic Pricing and Yield Management for Vacation Rentals - VRMA National 2016
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From our 2016 VRMA National panel talk featuring Jeff Paglialonga from Teeming VR and Eric Breon from Vacasa. This is the best starting point for learning about how to dynamically price your vacation rental or short-term rental and improve your yield through revenue management. See more at: www.beyondpricing.com
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Intro to Dynamic Pricing and Yield Management for Vacation Rentals - VRMA National 2016
- 1. Intro to Dynamic Pricing & Yield Management FOR VACATION & SHORT-TERM RENTALS
- 2. Evaluation We’d love to hear your feedback on this session! Please “rate this session” by selecting this session in the VRMA National Conference Mobile App after the presentation.
- 3. ANTITRUST STATEMENT It is the policy of the Vacation Rental Managers Association (VRMA), and it is the responsibility of every VRMA member, to comply in all respects with antitrust laws. VRMA—and, in particular, VRMA meetings and other functions—shall not be used as a means of pursuing anti-competitive practices, including: a) Setting prices or other customer charges; b) Ensuring parallel contract terms and conditions; c) Agreeing not to compete, including allocation of territories or markets; and d) Refusing to do business with any supplier, vendor, or customer.
- 4. • Ian McHenry, Co-Founder & CEO, Beyond Pricing • Eric Breon, CEO, Vacasa • Jeff Paglialonga, Owner, Teeming Vacation Rentals @beyondpricing beyondpricing.com Panel
- 5. Some Quick Clarification • What is yield management? • Selling to the right person at the right time for the right price • Can include: • Dynamic pricing • Cancellation fee policies • Length of stay adjustments • Channel management • Promotions • Marketing • “Yield” was traditionally an airline term and hotels started calling it “revenue management”
- 9. As Demand Changes, So Do Prices Price Rooms Booked High Season Demandnd Low Season Demand $200 $150
- 13. What Happens When You Don’t Vary Your Prices • Owner #1 - $140/night – Chronic Under Pricer • She will be filled 95% of the time and excited about her high occupancy • Owner #2 - $180/night – Average Jane • She is excited because she is filled from March-October and thinks winters are just “slow” • Owner #3 - $220/night – Occasional Olivia • Her calendar is usually open, except for big events which are booked months in advance
- 14. Most Managers Already Vary Their Prices • Most managers will have at least: • High season • Low season • Weekend • Last-minute discounts
- 18. Example Owner
- 24. 1. Seasonality 2. Day of Week 3. Events 3 Biggest Factors Driving Demand
- 35. Many Factors Contribute to How Much You Can Charge • Amenities • Number of Reviews • Average Star Rating • Quality of Pictures • Number of Pictures • Stainless Steel Appliances • Location • Response Time • Listing Site Search Ranking • Number of Bedrooms • Number of Bathrooms • Number of Beds • Extra Guest Fee • Cleaning Fee • Instant Book • Listing Title
- 40. What About My Competition? 1. Comps help you figure out your average price • However, keep an eye on how quickly your units book up relative to your booking curve. This is the best indicator of your “Goldilocks” average price 2. If you have smart neighbors (ahem, Vacasa), tracking the changes in their prices for events, seasonality, day of week, etc. can help • However, you never want to copy off of a ‘D’ student if you’re going to copy 3. In periods of low-demand / last-minute availability, making sure you are competitively priced can be important
- 41. $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 11/1/16 11/8/16 11/15/16 11/22/16 11/29/16 12/6/16 12/13/16 12/20/16 12/27/16 The Pitfalls of Comps Occupancy Average Price Occupancy Avg. Price
- 44. What About Distressed Inventory? • Distressed inventory is any last-minute or hard to book nights that you need to fill • Don’t want to train guests to wait until the last minute because they know you are going to discount • Want to know how early to start discounting - some markets have a lot of bookings in the week before. • People use different strategies including opening inventory on channels with more last- minute bookers • Hotels use sites like Hotwire which mask their name so loyal customers can’t book the special rates
- 47. 2. Real-time Demand Changes • Hotels use their inventory of, say, 200 rooms to see how quickly they are filling up vs. last year • This works for hotels because they are trying to optimize prices across the whole PORTFOLIO of rooms • So if they don’t realize until half of the rooms are booked that there is more demand than expected, they make it up on the second half • If you do this with vacation rentals, half of your owners will get booked at too low of a rate • However, it’s better than all of your owners getting booked at too low of a rate
- 48. Pitfalls of Using You Own Inventory to See Demand Changes • Hotel style occupancy matrices require you to decide when and by how much to change price • In our Tahoe example, the PM might have sold out 80% of their inventory before they raised prices • Better than not raising prices, but better to use market demand trends to see increased demand before your places get booked
- 50. Example
- 59. Pricing for Vacation Rentals We manage many properties with Minimum Stay Requirements. • No Minimum Stay Requirement • Weekly Minimum • Semi-Monthly (2 Week Minimum) • Monthly Minimum • 3 Month Minimum
- 61. Pricing for Vacation Rentals Parameters • Daily Units • All Year • Any day Check In / Check Out • Minimum Stay 3 nights • Can stay for 1 or 2 nights but price is the same as 3 • Software generates the minimum DOLLAR amount for each stay • Weekend rates are more
- 63. Pricing for Vacation Rentals Parameters • Weekly Units • Peak Season (Jan-Easter) • Saturday Check In / Check Out • Minimum Stay 7 days • Non-Peak Season (rest of year) • Any Day Check In / Check Out • Minimum Stay 3 days
- 67. Pricing for Vacation Rentals Rate Tables • We send Channel Partners different rates. • We can use the same or different rate tables for different channel partners. • We try to NET the same amount from any distribution source as if it was booked on our site.
- 68. Pricing for Vacation Rentals Parameters • Semi-Monthly Units (2 week minimum) • Peak Season (Jan-Easter) • Saturday Check In / Check Out • Minimum Stay 14 days • Non-Peak Season (rest of year) • Any Day Check In / Check Out • Must fall within 2 week windows • Minimum Stay = $ Amount
- 71. Pricing for Vacation Rentals 2 Week Min Rate Table • In off season we will rent for 1 week but at a minimum price. The surcharge reflects that price manipulation. • Any search for 1-6 days will give the same price as 7 days. This is the 2 Week Min OTA Rate Table
- 73. Pricing for Vacation Rentals Parameters • Monthly Units • Peak Season (Jan-April) • Saturday Check In / Check Out • Minimum Stay 28, 30 or calendar month • Non-Peak Season (rest of year) • Any Day Check In / Check Out • Minimum Stay = $ Amount
- 75. Pricing for Vacation Rentals Channel Partners that support Length of Stay Pricing • RedAwning? • myBookingPal? • RentalsUnited? • avantio? • Lodgify? • and…
- 77. Pricing for Vacation Rentals How does all this help your business? • Selling point to get new units • Owners do not have the data or programs to do LOS pricing • More revenue for your owners- which means more revenue for you. • More bookings = more fee and revenue as well.
- 79. Evaluation We’d love to hear your feedback on this session! Don’t forget to “rate this session” NOW by selecting this session in the VRMA National Conference Mobile App