Basics of Revenue Management and Hiring a Revenue Manager for your Vacation Rental Business
Revenue management is the practice of analyzing the vacation rental performance and market data to draw insights and set a strong pricing strategy. It predicts customer behavior at micromarket levels, fine-tunes product pricing, and adjusts availability to maximize revenue. However, some factors are more crucial than others when developing a pricing strategy
Why do you need a solid revenue management strategy?
- Increases revenue and profit by helping you identify improvement areas in your strategies by analyzing past performance, market data, and other information.
- A good strategy helps you make informed data-backed decisions based on fact instead of guesswork.
Who are revenue managers and how can they help?
- A revenue manager uses performance data, competitor rates, local market information, and important vacation rental KPIs to optimize property availability and price to maximize your revenue growth.
- Usually, revenue managers choose to combine their market experience and the data provided by revenue management software to design a pricing strategy.
Why is a revenue manager important if a tool can adjust prices automatically?
- As a property manager, your primary goal is to grow revenue and establish a successful business model
- You need to prioritize revenue management and have a dedicated person to take care of this aspect of your business
- A revenue manager can help homeowners release the burden of managing one of the most important and time-consuming aspects of their business
Someone with vacation rental industry experience
- Have an eye for occupancy demands, market trends, and the unique characteristics of individual properties
The importance of data in revenue management
- The volume and accuracy of the data greatly determine the agility of your revenue management strategy
- Leading data helps you make future predictions
- Authoritative data includes all the data you have stored in your property management system
- Lagging data are measurable data points that can be used to analyze the listing’s performance
Start by analyzing your listing’s data
- Data from your property management system is the best source
- Valuable data to have: average check-ins, number of guests staying, average number of check-outs
- Reservation data can show you the differences in reservations over time
Key vacation rental KPIs to analyze
- Average Daily Rent (ADR): This is the average nightly rate for a property (or a cluster of properties), calculated by the total rental revenue / the total nights sold
- Occupancy Rate: The number of occupied nights for the property or a group of properties
- Revenue per Available Room Night (RevPAR): This number is a more accurate way to judge the performance of a rental because it takes the occupancy rate into account
How does the revenue management tool work?
- PriceLabs analyzes market data days in advance to provide you with price recommendations while offering you various customizations to enable the implementation of your strategy.
- This helps optimize bookings while saving time, so you never miss out on opportunities to earn more.
Tips for choosing a revenue management tool
- Know what you want
- Identify the revenue goals you want to achieve
- Check if the software provides flexible updates
- Ensure the software is consistent with its updates and adopts modern revenue management methods
- Their customer support services should be great