In an industry that’s evolving constantly, one of the most difficult things for a vacation rental management company is to get ahead of the competition while still turning a profit. Before we take a look at any strategies you could use to maximize revenue and profitability for both your company and property owners, let’s find out where you stand.
For this, it’s important to understand two basic accounting terms: revenue and profit. In a nutshell, revenue represents the total amount of money generated by your company, while profit is the income left after deducting all business expenses. By simply considering the definitions of these two terms, you can easily realize that a company can generate income and still have a net loss.
With this in mind, a dilemma you may find yourself in when trying to increase the profitability of your company is whether you should focus on lowering your operating costs or on boosting revenue. Our advice would be to focus on both of these aspects, particularly if you wish to achieve sustainable business growth. In addition to the business cost reduction strategies that we presented in a previous article, here are a few smart ways that you can boost vacation rental profitability.
Adopt a Seasonal Pricing Strategy Based on Local Events
One way to maximize profit is by determining the “right” pricing strategy based on supply and demand. To project when you should increase the booking rates for the vacation rentals you manage, you need to look for the upcoming events in the cities or areas where your vacation rentals are located and then adjust the prices for each property.
Since this can be a tedious and time-consuming task, especially if you manage multiple properties, a better idea would be to use a lodging management software solution, like JANIIS. Embedded with a dynamic pricing tool, our software is able to determine the perfect pricing for your vacation rentals and come up with optimized daily rates using one of our vendors from our marketplace.
The price adjustments are automatically generated by algorithms that analyze real-time market data as well as your occupancy/vacancy rates, demand, and data from your competitors. This data-driven approach allows our system to adjust booking rates and handle pricing fluctuations in relation to monthly concerts, annual festivals, shows, and other local events that may draw visitors to specific locations. Besides determining the perfect price and auto-updating your rates on a daily basis, dynamic pricing is one of those “set it and forget it” features that you can use to significantly boost your revenue and profit.
While you could use a stand-alone dynamic pricing tool and any other software solution that you might need in exchange for different monthly or annual fees, opting for a complete software solution, like our system, will be more cost-effective. Not only does JANIIS provide a wide range of features, tools, and integrations at a lower price than the one you would otherwise need to pay for different applications; some of them, such as our built-in seasonality pricing tool, are free to use. Spreading your IT budget across a higher number of applications and tools will also contribute to your bottom line.
Encourage Longer Stays
Compared to extended stays, which typically involve discounted rates, shorter stays can generate more revenue. But shorter stays also mean higher operating costs resulting from the fact that you need to clean, maintain, and inspect the properties more often. An increase in operating costs always lowers profit.
Thus, a great strategy would be to offer discounted rates for extended stays associated with seasonal events. This way, your profit margins will go up, while keeping operating costs down. For instance, “Holiday in the Gardens” is an annual event that takes place in Galveston, TX, from November through January, and attracts tourists from all over the world. If you manage any vacation rentals in Galveston or a nearby location, you can encourage guests to book your properties for a week or longer during that period of time by offering them a discounted rate.
Incorporating longer stays into your vacation rental booking strategy will also allow you to target new categories of guests, including remote workers, professionals with temporary workplaces, travelers testing out a city before moving there, and families or individuals who are looking for a transitional home.
Consider New Upselling or Cross-Selling Opportunities
Upselling and cross-selling can help you maximize revenue and profit, without increasing the vacation rental rates. The easiest way to upsell or cross-sell different services is by partnering with different local businesses and offering your guests their services in exchange for a fee or commission. While the type of services you can provide will depend on your target audience and the location of each property, a few extras you may offer are:
- airport transfer services;
- sports equipment, including bicycles, ebikes, scooters, hoverboards, kayaks, canoes, snowshoes, snorkel gear, etc.;
- boat trips;
- city tours;
- wine-tasting events;
- cultural experiences;
- concert tickets;
- child care;
- pet walking, if you manage any pet-friendly vacation rentals;
- laundry and mid-stay cleaning services for longer stays;
- early check-ins and late check-outs.
Even greater than providing a series of services that can boost your revenue and profit, while also offering your guests different options to enhance their stay and enjoy the best possible experience, is that you can use our system to promote upsells with text messages. What’s more, by using our comprehensive PMS solution, you can improve guest satisfaction and retention, while increasing brand loyalty, revenue, and profit. To make the most of our system and find out what it can do for your vacation lodging management company, take a look at JANIIS features or schedule a free demo today!