Sharing the web’s most useful content.
As part of the process of creating the Kigo Blog we read content from everywhere. Blogs, news articles, industry updates are all scoured so we can create the most relevant content for our customers. This means we read a lot. For a vacation rental manager running a busy business it can be there just isn’t enough time to read everything out there and you may just stick to the same one or two subscriptions. To make sure you get the most useful content available we are casting a spotlight on a blog we think you should be reading
Occasionally, we come across content that we like to share and discuss with our readers because it contains the sort of information that we know they will find indispensable. One of these such blogs is the Vacation Rental Managers Association (VRMA) blog. They consistently provide well-researched and detailed pieces that are specifically aimed at, and contain value for vacation rental managers, not matter how much experience you have.
Recently, we saw a blog that we wanted to share with our readers and offer a response to. This was their post on Revenue and Yield Management: Overcoming Challenges Unique To The Vacation Rental Industry. We felt that this post was the perfect topic to share and offer a response on as Kigo is implementing a Revenue Management system very shortly, and we have also published our own content on this subject. With experience in the world’s largest hotel, the writer has a unique perspective for applying the principles of revenue management.
One of the primary points of their article is that the process of revenue management for vacation rentals cannot simply be translated from hotels. If we take a quote,
‘In a hotel, the main tool for benchmarking performance (until recently) has been RevPAR, which is revenue per available room night.’
‘Full-service hotels and especially resorts have a huge “revenue per guest” opportunity beyond the room revenues, such as food & beverage, golf, skiing, and spa charges. This is why the hotel industry is increasing focusing Revenue Per Guest or RevPAC (Revenue Per Available Customer) even more so than RevPAR.’
We can see how they are re-working the main principles of revenue management to fit the vacation rental industry. Every property has a different value compared to hotel rooms which have numerous rooms at the same price. And, at the moment, vacation rentals have far fewer options to add ‘value-added services’ that can increase revenue. This is an important consideration, the addition of goods or services is something that we are convinced will become a big part of the vacation rental business model in the near future.
The article then goes to explain the ways that vacation rental managers can use the techniques of revenue management to increase the revenue for every night of their calendars. They discuss the need for ‘price elasticity’, but mentions the fact that vacation rentals are more seasonal, people rarely book in the ‘off-season’ whereas hotels manage to generate bookings all year round. Revenue management can help to restructure this, but you will require a property management system that can accommodate a revenue management strategy.
There is currently a lack of information and statistics available for revenue management so there will be a period of ‘trial and error’ as vacation rentals begin to establish a standard for optimising their revenue. Blogs from industry experts like this will be an important part of making this a success.
For anyone considering the practical implications of a revenue management system for their business, this blog is a great place to start. As well as subscribing to the blog, one of the ways you can find out more about staying ahead of changes in the industry like this is by joining the Vacation Rental Managers Association (VRMA). This way you can keep informed of the major trends and shifts, and increase your profits by being the first to learn about and implement effective new strategies and techniques for managing vacation rentals such as revenue management.
If you join or renew your membership in VRMA before March 15 you’ll be entered into a draw for a free 2015 VRMA Regional Seminar registration. You can join here: www.VRMA.com/membership or renew membership at www.VRMA.com/renew.