Basics of Revenue Management and Hiring a Revenue Manager for your Vacation Rental Business

Usman Imtiaz - Operations Manager

Manage My STR・Aug 4, 2022

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

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