Kigo Blog

The Choice of Three Strategy

Have you ever looked down a wine list, paused in apparent concentration for a few moments before ordering the second least expensive and clapping the menu shut? You don’t want to seem like a cheapskate but also don’t want to waste money on something that you may not enjoy. Well, you’re not alone. It’s natural to aim for the thick of the middle when faced with a choice that we are not experts in. This is known as the Choice of Three strategy.  Most people quickly distill to the easy logic of cheapest= worst and most expensive= best. Choosing from the middle shows that we have considered all the options and have made an informed decision.
 Goldilocks' Choice
This tendency is frequently exploited by the electronics industry. Out of three machines, that all ostensibly perform the same function, the one priced in the middle will outsell the others and it is due to the basic principle of Choice of Three pricing.

Can this logic be applied to vacation rentals?

There are two ways to apply the Choice of Three strategy. Firstly, you can have properties which vary in rate based on their facilities, location and size. Guests looking to book in the area where your properties are will then have a choice between which property they want to stay in based on the apparent luxury of the property set against the price. The Choice of Three strategy dictates that the price in the middle is statistically more likely to be chosen. It is worth considering this principle if you are looking to increase the occupancy of low or high priced property. Shifting the price more towards the mean average may increase the appeal of the property.

 The other option is to have various prices for the same property, depending on the level of service and the extras it comes with. This would range from a no-frills, basic package to a gold-standard, everything included package. This could include services such as breakfast delivery or even a concierge service. The point is that it would contain all of the extras you offer, and come at the highest price.

The third option would then to be to pitch a price in the middle of these two. A price that includes some, but not all of the services you offer. Using the principle of the Choice of Three, this option is likely to become the most popular choice as it seems to be the most sensible choice. You can even give your customers the option to select which services they would like to add to their stay, allowing them to personalise their trip. The theory is that you will sell more extra services than if you just offer the property and the services or products separately.

It is important to have well-defined floors and ceilings in your pricing. There needs to be a big enough gap between the highest price and the middle-ground for your customers to notice. The aim is to find the sweet spot where the cheapest option looks to be poor value because the other option offers so much more without being too expensive. The highest priced option is there to then make your middle choice seem to be inexpensive. You present the middle ground that has the right balance between product and price.

Using the Choice of Three strategy for your vacation rental business can help you convert customers and sell extra products or services alongside bookings.

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Video Content: The Unstoppable Force

Over the next two years, online video is set to account for 69% of consumer Internet traffic. It is, inescapably, the way we are headed. More and more of us have some sort of screen that can stream video on, not just in our homes, but with us everywhere we go. As blogs and written content become ubiquitous, some sites are looking for video to add a new dimension to their site’s content creation. It is the quickest way to spread your message, instantly shareable, and the most captivating way to reach your customers.


There has been a transition in the content we consume. Video has shifted from the ultra-scripted and edited to being more spontaneous and realistic. It is also moving away from being presented as an advert, but as business sponsored content. Videos are a good way to create something that stands alone, without a sales pitch. By presenting and sharing it, you are saying ‘If you liked this, you will like our product’.

 Your audience is active, they need to want to click and play your video. Captive television audiences didn’t have the choice over the adverts they saw but now we do. Video content is growing so quickly because people want to see behind the curtain. Creativity and originality will trump big-budget production values. Your videos don’t have to be sleek, expensive affairs. Popular video content is dominated by content that peoples can relate too, rather than things designed to sell products.

 We’re looking at some of the advantages vacation rental managers can get by creating video content.

Video content ensures that your customers will spend more time on your website, and engage with your brand. Both are important when it comes to getting a good return on investment from content marketing. Popular videos will draw people to your site as well as boosting it up in google’s rankings.

 Vine and Hyperlapse
These are perfect examples of how small businesses can get started with video content creation. Just six seconds long, you can experiment with editing and the available effects in these free apps. Video created on these platforms have generated millions of views. Most phones now the capability to film good quality, short videos. You can capture moments from your area, show of the things to do near your property, and of course, the property itself. New consumer technology, like drones have provided vacation rental managers with the opportunity to create impressive aerial videos of their surroundings. It is now easier than ever for people with no background in creating videos, or high tech equipment to begin producing interesting and high-quality video.

In terms of social media engagement, there is a widely accepted rule that pictures get more engagement than words, and videos get more engagement than pictures. Using videos as part of your content marketing has the twofold advantage of bringing people to your site and demonstrating the appeal of your property and your local area. Creating and sharing videos with your customers is about tapping into the anticipation and excitement of booking a holiday as well as the practicality of being able to show your property, rather than describe. People are eager to share the holiday anticipation so are perfect for social media sharing and encouraging people to interact with your business.

 You can introduce video to your content by creating your own and sharing existing videos with your customers. Original content is likely to garner the most engagement so why not try producing a video that says something about you and your business?

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Self-Service is Empowerment for Today’s Vacation Rental Manager

Historically, one of the first major industries to embrace self-service was the travel industry. Airlines and hotels have spent hundreds of millions over the last 10 years to allow travelers to check-in using a kiosk. Airlines then moved to online self-service check-in and, fast-forward to today, now they are moving to check-in via smartphones. New self-service apps also allow you to check-in to a hotel from your phone, receive a text when your room is ready and unlock the door with the code sent to your phone. You could move from the airport to your room with just a few clicks and no delays.

Consumers demand it. Consumers want to skip the line and hassle and prefer the choice of “do-it-yourself” rather than waiting or paying more to have someone do it for you. Consumers want the choice at least.

Self-service gives customers time and choices. It was not long ago that a flight meant arriving at the airport at least two hours before the flight. Always arriving early in fear of queues and delays leading to missed flights. Since the introduction of self-service check-in and baggage-drop this waiting time has been reduced greatly. Travel has become more streamlined and easier to navigate. Customers now not only enjoy having the option of self-service, they expect it. Property Managers are consumers, too. That is why our engineers spend so much time and effort creating self-service tools for our customers.

As a vacation rental manager, you have the option to provide self-service for your customers and take advantage of the time and money it can save your business. Could you start to offer optional extras on your site that your customers choose themselves at the time of booking? Or have a feature that lets your guests opt for a late checkout, all with a few clicks. There are many ways that having more self-service options will give your guests the opportunity to create the perfect trip. It creates satisfaction whilst saving you time and your business money.

The benefits of self-service for travellers are becoming more abundantly clear. But how can you use this industry trend to gain an advantage as a vacation rental manager?

Consider building your website. Before the advent of self-service and personalisation business owners were bound to developers to build their entire website and back office. Managers now have the option to use templates, add features or options as they wish, without the need to hire in developers. Kigo’s system even allows managers to add our API to your existing system, keeping as much or as little of your own property management system as you choose.

Kigo will be working together with a wider range of services such as rental insurance, revenue management and different payment gateways that you can choose to add to your system. These services will be available for all clients to choose and add without the need for any third parties or time-consuming implementation. You can tailor the software to meet the exact requirements of your business.

Having a dynamic system that allows your customers to control and modify their own booking means that they have the option to purchase value-added-services that you offer, all automatically. They control their stay, meaning they can tailor it exactly as they wish. And there is more self-service coming all the time. Why? Because self-service means empowerment for today’s Vacation Rental Manager and their customers.

The rise of self-service as an option in the travel industry allows consumers can get exactly what they require, in a quicker, easier way. This is the ethos we operate by at Kigo, so we like to make our service the most effective software solution for every vacation rental manager that chooses us. And we do this by letting every manager choose what it right for them and their business.

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Regulation Is Coming – Make Sure You’re Prepared

Cities, especially, are in a fight with vacation rentals over regulation. The popularity has exploded faster than law and regulations have been able to keep up. In many cities, vacation rentals operate in a legal nether-zone, with people not being quite sure where they stand. Some cities require permits. Others require inspections. The regulations vary between countries and states, even switching between different cities and neighborhoods. The laws seem byzantine and idiosyncratic, all underpinned in a deep legalese.

Hotels and portal websites are setting their lawyers at war. Briefcases have been clashing in New York for years. Un-leased rentals for fewer than 30 days in New York are basically illegal, but a quick search will reveal thousands available for rental. Hotels are lobbying that these laws are more strictly enforced.

San Francisco reached a compromise by allowing owners to rent their property for up to 90 days of the year, providing that the owner occupies the property for the remainder of the year. For owners with one property, this seems like an amicable solution. But, for the owner of a growing business in the city, it could spell disaster. With more cities focusing and defining their accommodation regulation to cover short term vacation rentals, some property owners could find themselves with properties that do not meet the new standards. Today we’re looking at the areas that we think are likely to be under new regulations in major cities very soon.

 City Laws
Using the example of Barcelona, properties in the city center must acquire a licence that permits short term tourist rentals. These are issued after an inspection of the property’s suitability. The problem is that these licences are no longer being issued. The city is full. A city has the power to effectively shut down expansion of the vacation rental industry. Always check the laws, and check when they were last amended. Vacation rentals have undergone such rapid expansion in the last five years that any unchanged property laws that outdate this growth are likely to be up for review very shortly.

Length of Stay
Short term rentals are generally defined as anything less than 30 days. Longer stays will generally require paperwork to be signed. This is how the growth of vacation rentals has so far, generally managed to skid under the radar. Proactive city councils are now dictating the amount of short term stays that can be rented during the year, also including the total number of days. Could your business survive if you could only rent your properties for 90 days of the year?

Fire and Safety
This is a key difference between the regulations that hotels and vacation rentals face. Hotels have had to have fire escape provisions for years. They require emergency exits, disabled access and regular safety inspections. The safety of every guest also has to be insured and guaranteed.

In the age of Internet reviews and the instant spread of reputation, it’s arguable that cleanliness is regulated by customers themselves. But, certain basic standards could be applied. This is especially true of the increasing number of properties that are starting to offer additional services such as food delivery.

If a vacation rental is being operated outside the law, it is unlikely that the proper tax is being paid. This is not only a problem for the owners that run the risk of serious fines, but the government that is missing out on millions in tax revenue. Setting clear and simple regulations and giving owners detailed information on the tax that is due from their properties will increase city funding and allow owners to operate their businesses with clear knowledge of all of their required outgoings.  

The demand for vacation rentals is already here. They have managed to become popular and established before the law had chance to notice. Attempting to retrospectively apply prohibition is unlikely to be effective. Councils will have to regulate, working together with owners, hoteliers and residents to form a satisfying balance. There is a perception that the vacation rental industry doesn’t want regulation. Hotels argue that they enjoy an unfair advantage in the marketplace and actively dodge expenditure on safety standards, tax and things that hotels are forced to pay just to operate.

But, with regulation comes more security and safety for business owners. They can be assured of operating entirely legally, know the tax they have to pay and avoid fines or penalties. Right now many businesses are in the difficult position of attempting to expand a business that might be effectively illegal in some areas within a year or two.

What we can sure about is that these regulations are coming. The problem is that they are likely to differ wildly. Keeping up to date with the regulations in your city and making sure you’re as ready as possible will set you in the best possible stead for the time when the laws surrounding your business do change.

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Amsterdam Makes No Mistake With Tourist Tax

A recent trend among city councils has been to impose a levy on tourists staying in hotels and rented accommodation in popular tourist destinations. This can take the form of a set charge or an additional percentage of the per-night rate the guests are paying. This tourist tax is designed to offset the impact of mass tourism on cities and provide resources for local people. A criticism of vacation rentals is that this tax is often left uncollected as it is so hard to measure and enforce. Hotels are bound by law to collect this from guests and will have to pay it for every guest that stays. Vacation rentals are bound by the same law but it has always been harder to enforce every host to comply. Previously the responsibility was levied on the individual owners, but now in Amsterdam, the authorities are collecting this tax from the source.

Pressure from hotels has lead to Amsterdam becoming the first European city that demands that a vacation rental portal collects the tax on behalf of the city. Multnomah County and Portland and San Francisco in the USA also work alongside Airbnb to ensure that all tax is collected efficiently and correctly from vacation rental properties.

Hotels have always had the responsibility to pay the tourist tax to the city for every guest, but vacation rental guests have often been slipping through the cracks. Whether it was due to part-time owners being unaware of the tourist tax, or the people booking not knowing that vacation rental bookings were also subject to the tourist tax. Either way, the city was losing out on money that amounted to millions, every year. Being unaware of the tourist tax is now no longer an excuse. Vacation rental managers are expected to know that they are liable for this tax, and have the responsibility to collect it. The tourist tax will be now added to the cost per night of booking an Airbnb property in Amsterdam and collected by the site before being paid to the government.

Other cities have a tourist tax; Rome, Paris and Barcelona all levy a charge for guests to stay in the city. If this initial project is a success in Amsterdam, other portals and cities could choose to embrace collecting the tax at the source. Expecting all owners to proactively collect and pay this relatively new tax has lead to accusations that some owners simply choose to ignore it to keep their prices as low as possible. It has been argued that vacation rentals do not operate on a level playing field with other types of accommodation and have an unfair advantage by not being scrutinised as heavily when it comes to things like tax . This is one of the first steps to standardising the regulations and expectations for all types of accommodation. If Airbnb is expected to collect tourist tax then it can surely only be a matter of time before other major portals are expected to as well, eventually progressing to any vacation rental website.

The tourist tax in Amsterdam is 5.5% of the cost per night booked. Other cities choose to charge a flat fee, typically between about €1-3 per person. With a % fee, this tax could end up being an unpleasantly high amount to have to pay at the end of a holiday. Having all taxes built into the final price listed on your website will avoid the shock of a further charge at the end of their stay. If tourist tax is to be collected from vacation rental managers at the point of transaction then websites and business will have to adapt to factor it into their sites.

Punishments and fines are always applicable for owners that fail to pay the tourist tax for each night that their property is booked for. This ruling makes it easier for hosts and businesses to operate legally and helps to register vacation rentals as part of the legitimate and integral economy of the city. However, the number of portals, and smaller rental businesses mean that a ruling such as this could prove difficult to implement for smaller businesses. Airbnb is currently the only site that has this tax in place at the point of sale in Amsterdam, but other sites may have to follow suit eventually. Sites will need to have a dynamic pricing system in place to add the varied tourist tax that cities impose. If you had to collect and pay tourist tax this year, would your business be ready?

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