Revenue management is the application of rigorous analytics to forecast consumer behavior at the micro-market level and optimize product availability while using pricing elasticity to maximize revenue growth and thus profit.
FREMONT, CA: For some in the sector, short-term rental revenue management may remain a vague concept, particularly when determining which operational and commercial processes fall under the revenue management umbrella.
In truth, most property managers and owners already manage their listings' earnings in a variety of methods. It's critical to understand what revenue management comprises and how it ties to every part of the short-term rental business.
The Beginning of Dynamic Pricing
The short-term rental sector has undoubtedly evolved in recent years with the concept and use of dynamic pricing. Although dynamic pricing for short-term rentals made intuitive sense when applied to the hotel and airline industries, it took many years for established property managers to adopt the technique.
While dynamic pricing is a critical component of any short-term rental business, property managers must recognize that revenue management encompasses more than dynamic pricing. As with other hotel and tourism businesses, it is time for short-term rentals to go beyond dynamic pricing in revenue management.
As a revenue manager for short-term rental properties, it may be tough to determine which levers they may use in addition to dynamic pricing. Channel distribution is a critical component of any revenue management strategy, often as critical as, if not more so than, price.
If a property is underperforming, is there a chance to increase the booking audience for that listing through another internet channel? Are channel distribution fees considered a property manager's or owner's bottom line? These are critical concerns to address and comprehend since they might significantly impact the success of a specific short-term rental property.
Market Data Provides Actionable Insights
The most exciting aspect of this profession is how unique each listing is. Without a doubt, data is king, and this should apply equally to internal and external data. This complicates benchmarking performance for any individual property, but market data is still instrumental in determining whether a property is functioning well or poorly.
Occupancy, average daily rate, and revenue data are all baseline measures that revenue managers should use to determine their market position. Having the appropriate technologies to make this data available is critical for a substantial revenue management plan to remain viable. Ascertaining that a property receives its fair share of market demand is the first stage in evaluating revenue management effectiveness. It should be a primary consideration when operating a short-term rental property.
Upkeep of a digital strategy
Along with a wealth of data and pricing methods, revenue managers for short-term rental properties frequently overlook the critical nature of their web presence. Walking a guest through the process of booking a property on any given channel can provide invaluable insight into potential weaknesses in a digital marketing plan that may be contributing to a property's underperformance.
Poor reviews, inefficient search flows, and ineffective photo performance and layouts can significantly impact booking performance. They may be overlooked by revenue managers when diagnosing an underperforming property. These facets of digital presence should be regularly reviewed to find opportunities for improvement.