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No Vacancy: Maximizing ROI

6 Posts tagged with the advertising_your_rental; tag
2

"A Rising Tide Lifts All Boats" – John F. Kennedy

 

YearConventional Wisdom at Given Point In TimeCorrected Wisdom Beyond Said Point In TimeYear
1960We can’t walk on the moon, more than 10ft of space dust covers it and a man would “sink!”One small step proves minor amounts of dust, nothing a 6-iron couldn’t handle (see photo).1969
1999Older computers are going to crash, causing major global havoc and Lord knows what else!!Turns out a couple people had to reset the timers on their VCR’s, that’s about it.2000
100’s -1543Ptolomy had the whole world believing the sun and planets revolved around the earth.Copernicus, Galileo & others proved that 1500+ years of globally accepted FACT were wrong.1543
August
2013
An increasing number of vacation homes in my area is hurting my vacation home business!Keep reading, the Corrected Wisdom won’t fit inside this box, so we’ll have to get out of it…September
2013

 

 

Now That We’re Outside The Box


I’m going to challenge you to stay outside the box for the rest of this blog.  Like 1,500 years of people before us who thought the universe revolved around them, we’ll need to change our thinking to realize the profitability of your vacation home doesn’t revolve around your area.

 

When we started renting our first vacation home in Anaheim in 2007, our house was the 13th listing on VRBO in our area.  When I started writing this blog post last Thursday, there were 198 listings on VRBO.  By the time I finished it, there were 201.  No doubt some of you out there have seen the same rapid growth, maybe even more so.

 

 

Here Are 3 Reasons Why We Should ALL Be Happy About Increased Competition:


1. Competition Makes Us Better – The idea that someone is trying to take food off our table compels us to get better.  What are you doing to constantly improve?  Reading this blog for one.  Not everyone in your area is, so you’re already gaining on them!

            *Best Practice: After you’ve read through all the No Vacancy Blog Posts, try reading

             my competitor’s, I mean my friend Joel’s blog on VR Success

 

2. Competition Validates Us – If there are homes popping up all around you then you must be in the right place and doing something right, right?  Give such good service that the number of repeat guests outruns the vacation home growth and ride the wave.

 

3. Competition Creates Loyalty – Now that you’ve read all the No Vacancy blogs you know that we’re trying to create Customers for Life (CFL’s) because they are great for ROI.  By allowing #1 above to drive us, we create a gap that future CFL’s will recognize, appreciate and award you their ongoing business for doing so.  And when your CFL’s friends travel to your area and say “there are so many homes to choose from,” your CFL will adamantly say “don’t even bother calling anywhere else, stay where we stay.”  Smells like a Referral’s cookin’.   

 

 

Here Are 3 More Things You Can Do To Leverage The Rising Tide:


1. Get In Cahoots – What local businesses other than vacation homes are also benefitting from the rising tide?  Eateries, entertainment venues, touristy places?  What are you doing to partner with them? 

 

2. Partner With Other Homes – Find a home similar to yours in your area, establish a relationship with the owner/manager and fill each other’s vacancies.  We’ve all turned business away when two inquiries for the same dates go out. Lob one over to your new friend in anticipation that they will do the same.  Don’t forget to pay/collect that referral bonus!

 

2. Keep Your Sights Set On the Horizon – It’s easy to become narrow-minded and short-sighted when we are about to eat vacant nights, but remember we’re running an endurance race, not a sprint.  Keep doing all the Little Things right and the business will be there.

 

Moon photo.jpg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

But was JFK right about ALL boats rising with the tide?  Let’s ask Dwight from "The Office."


Dwight photo.jpg

 

Here we have to concede a point to Dwight.  Sunken boats are indeed unaffected by tides.  Don’t be a sunken boat.

 

 

 

Here Are 3 Ways to Not Be Sunk In A Rising Tide:

 

1. Don’t Cry About It – If you are committed to your business, always look for the upside.  Whining is terrible for ROI. 

 

2. Don’t Immediately Slash Your Rates – Continue to sell the value of your home to inquiries, and do it over the phone, not email.

 

3. Don’t Be Like Everybody Else – If you haven’t figured out your market niche, what is it?  Value? Luxury?  Family?  Location?

 

 

The Bottom Line: 

 

All boats rise with the tide, unless they are already sunk.  As the number of vacation homes in your area increases, so does the number of vacation home guests.  Every time one of your guests (or theirs) has a great experience in a vacation home an incremental potential CFL for you has been created.  Do what you can to leverage the rising tide.  The formula we are working from is: 

 

More Vacation Homes = More Vacation Home Guests = More Potential CFL’s For You = Higher ROI

 

Here’s to high tides and higher profits.

 

Cheers!

Michael

1

“The shortest period of time lies between the minute you put some money away for a rainy day and the unexpected arrival of rain.”  Jane Bryant Quinn

 

I see saving up for a rainy day, or establishing a Reserve Fund, kind of like how my kids see their vegetables.  We both know what needs to be done and we both know why it should be done…

 

“But if broccoli smells this bad, won’t it taste even worse?”  - Me My Kid

 

The idea of putting additional money (we can’t spare) aside for some unknown thing that may or may not happen just smells bad.  Then after that first month where you reduced your owner draw by 20% to start the Reserve Fund, the originally smelly idea ends up tasting just as bad as it smelt.  Or is it smelled? 

 

I am here to tell you that I am now a believer who LOVES broccoli. 

 

Termites? Not so much…  Pesky little termites gave us our first opportunity to dip into our Reserve Fund, which we reluctantly and nearly did not set up a year ago as we started renting the third house. 

 

I never thought paying thousands of dollars to eradicate tiny little house-biting bugs could feel so good. 

 

The first time a band of termites set out to eat one of our houses it caught us completely by surprise and $3,600 later we were left thoroughly bummed out.  We had the money in our account but we were headed into our off-peak season when cash is tighter, and it made for an uncomfortably long winter and some dismal owners draws.

 

Here’s How The Rainy Day Fund Works (adjust according to your house’s specific circumstances.)
*I’ll assume that you are in some way tracking your revenue and expenses.  If you are not, yet, then be sure to read the next blog.

 

Step 1: Determine a target amount to have in reserve (as cash, and accessible).  Let’s say $10,000.

Step 2: Figure out how much you can pull from your monthly owner draw, enough that you will feel it but it won’t disrupt your ability to cover monthly expenses.  Let’s say 20% of monthly net income.

Step 3: Set this money aside and use your first month’s reserve to open a new savings account.  *Not a must-do, but we’ve found it to be convenient for book keeping.

Step 4: Don’t cheat the fund.  You’ve got to be consistent and build your monthly P&L to account for this money being set aside.  Now watch it grow! 

 

Here’s Why I Wanted to Tell All of You About It

 

Consistent Cash Flow is the first reason our reserve fund worked great.  We took a $3,000 expense hit in stride and still received 100% of the owner draw that month.  We had enough money in the reserve account to cover the extraordinary and unforeseen expense.

 

Consistent Level of Service is perhaps a more valuable reason to establish a Reserve Fund.  We did not have to scramble for the money, wait for more bookings or put it on the dreaded profit-munching credit card in order to take care of the problem.  The repairs were completed over our first three day opening because we had the cash on-hand to do so.   We did not have to inconvenience guests with our problem, and even if we had to put them in other accommodations we had the money on-hand to do so without worrying.

 

Peace of Mind is what the first two benefits above add up to.  But there’s more.  Our Reserve Fund is more than 60% to our goal even after the termites, Lord willing it will hit the goal in 2013.  Once that happens we can look forward to a 20% Increase In Owner Draw, a welcome pay raise.

 

The Bottom Line: Saving up for a rainy day is a good idea that is worth the short-term pain to get there.  Having a Reserve Fund will stabilize your monthly cash flow and provide a nice sustainable boost in owner draw once your fund is met.  The peace of mind in knowing you have that cushion will pay dividends every day, and the immediate access to cash in the event that something major happens will help you make the repair sooner, accommodate the inconvenienced guests and ultimately provide that WOW moment in the face a potentially bad situation.  Those are the moments that create a customer for life, and we could all use more of those. 

 

Here’s to the month after our Rainy Day Funds spill over.

 

Cheers!

 

Michael

1

Given that we now have four, yes FOUR (see sidebar) kids under 7 years old we have realized that we don’t want to, or should we say we are not able to, travel with strollers, highchairs, pack ‘n plays, Bumbos and a separate suitcase for toys and dress-up clothes.

Guess what?  Our (potential) guests don’t want to travel with all of that kid stuff either!

It turns out that giving thought and attention to the needs of the kids is great for business too because it allows us to tap into the three R’s that we all Love so much: Referrals, Repeats and Reviews.

 

Kids blog.png

Just a few reasons we have found that kids can increase ROI:

  • Kids often heavily influence their parents’ decision on which house to rent or return to.
  • Kids are fairly easy to please if you put a little effort into DELIGHTING them.
  • When we win over the kids we automatically win over their parents at guest review time and when they are sharing their vacation stories.

 

The majority of our guests are families with kids and usually one or more of the kids are under 10 years old.  There is no quicker path to a parent’s heart than through their kids. For that reason we make an effort during each inquiry to find out whatever we can about the kids in the group.

 

With the knowledge of the ages of the kids who may be staying with us we help parents and grandparents (potential guests) understand why our homes are ideally suited for grownups and kids alike.

 

Some of the kid-friendly features we have included in our homes:

 

  • Multiple strollers, two pack ‘n plays, a high-chair and a Bumbo.
  • Fully stocked game cabinet and toy closet. Best Practice – add a monthly organizational clean-out of games and toys to your PM Checklist!
  • Individually packaged kid snacks in the welcome basket.
  • Kid-friendly movies and video games for various age levels.
  • Automatic walk-on safety covers over the swimming pools.
  • Electrical outlet covers and cabinet latches where appropriate.

 

Detailing some of the features like the ones above sends a message to parents (potential guests) that “your kiddos will have fun in our home.”

 

Occasionally we’ll raid the clearance racks in the toy and clothing aisles to stock up on inexpensive treats for our little guests.  Five or ten bucks can go a long way toward the three R’s and net a pretty good ROI.  At check-in kids have found pajamas with their favorite Disney character on them, Disneyland signature books, activity/coloring books and inexpensive packaged toys just to name a few.

 

Do you have any kid-friendly features in your home?  Do you leverage them effectively during the inquiry process? How can you improve in this area?

 

The Bottom Line:  Kids are profitable!  Wait, that didn’t come out quite right.  I meant to say, kids are GREAT!  Plus, kids are great for business too.  Building Kid-Friendly features into the vacation home experience you offer will endear your business to your guests.  That means they are more likely to give you REFERRAL business, Repeat business and great guest Reviews.  We all know those three R’s add up to Maximum ROI!

 

So raise a glass of chocolate milk to the little guests and give them memories that will leave them longing for their “other” home.

 

What have any of you guys done to make your homes more kid-friendly? Please share your best practices and comments below.

 

 

Cheers!

 

Michael

 

P.S. Please forgive the shameless plug for our other newest baby, Pipsqueak®.  Remember a while back I mentioned we were working on a project? Well, Angela invented the first Bluetooth phone just for kids!  Like proud parents we’re just so excited that we want to tell the whole world about it. Thank you for your readership and please learn more and support our Kickstarter!

1

in·vest  v.  To commit money or capital in order to gain a financial return. 

 

“It’s all about the R.O.I: Return On Investment.”

-probably said by every capitalist, ever, according to me.

 

If you are not actively looking for new ways to invest money back into your vacation home business you should be!  Here are just a few reasons why:

  • You can ALWAYS improve.  You can ALWAYS do better.
  • To differentiate your home from competitors.
  • To maximize the profitability of your business.

 

Angela and I embarked upon a new venture in recent months (totally unrelated to vacation homes) and have met with various capitalists (potential investors) along the way.  We’ve noticed that they all have the same approach when evaluating whether or not to make an investment.  They ask:

 

What is my return on the investment?

What are the risks associated with this investment?

 

These are the questions that we, as vacation home owner/operators, should be asking ourselves when considering making an investment back into our vacation home businesses.  Investments in this case mean any money we “spend” on our business with the intention of making us more money in return.  Like:

ROI pic2.bmp

 

To Invest, Or Not To Invest…THAT Is the Question.  Try this:

 

Step 1: Determine whether the expenditure will help you make more money (drive incremental revenue) or keep more of the money you are already making (reduce operating costs).

 

Step 2: Determine what other costs are associated with implementing the investment. Consider:

    • Delivery, installation, additional components needed to complete the investment.
    • Your own time to research, purchase and implement the investment.
    • Ongoing maintenance required to continue making or saving money via this investment.

 

Step 3: Determine the amount of money to be made or saved versus doing nothing, thus saving the investment funds for another opportunity.

 

Step 4:  Evaluate the riskiness of the investment.  How sure are you that you will realize your expected return? 

 

Step 5:  Decide for yourself whether or not the risk is worth the return.  If it is, implement.  If it isn’t, don’t. 

 

 

Some real life examples:

 

A Good Investment We Made:  $450 on a Power Flush Toilet.   After the umpteenth $150 “emergency” call to RotoRooter for a majorly clogged toilet in our guest bathroom we decided to try a Power Flush ToiletActual Return:  We haven’t had to call RotoRooter again for that toilet in the four years we’ve had it, and have since replaced three other clog-prone toilets with power flushers.  PLUS, happy guests who don’t have to endure the awkward conversation with us first and then the plumber about how the toilet got clogged. 

 

A Bad Terrible Investment We Made:  $3,000 on a Full Page Color Newspaper Ad. With a large % of Canadian guests we thought an ad in an Alberta, Canada vacation real estate special edition would generate at least one incremental booking.  Maybe even two bookings? Actual Return:  ZERO! Not even one inquiry that tied back to our special “promo offer” from the ad.  Ouch!  Lesson learned. 

 

Our Most Recent Investments:  $250 on Pool Rafts.  Angela’s idea, I needed convincing.  Anyone with a pool knows that rafts need replacing usually once a season or more.  These $120 pool rafts  supposedly do not tear or puncture; plus they don’t need to be filled with air.  Expected Return:  No more replacing pool rafts ($25-40 each), no more paying our PM’s to fill rafts, check for leaks and purchase replacement rafts.  Perhaps most importantly, our guests won’t be burdened with filling/patching/replacing pool rafts. 

 

$250 on Melamine Outdoor Dinnerware.  A line item in our annual budget is to replace all outdoor dinnerware for eating on the patio because, well, it gets nasty.  The plastic shows knife cuts and wear from dishwashing after only a few uses.  Expected Return:  Melamine is way more durable than plastic so it should last multiples seasons, show less wear and tear and give our guests a more pleasant outdoor dining experience.  Plus, one less thing for our PM’s to manage. 

 

The Bottom Line:  It takes money to make money and the minute a business stops investing money in its future it begins to die.  As vacation home owners we should always be looking for the next great investment for our business.  Once you have one, figure out what it will cost to implement, what it will cost to maintain, and how much extra revenue it can generate.  If the return looks good after considering all of the risks then pull the trigger and maximize your R.O.I.

 

Here’s to many positive returns on our investments! 

 

Cheers!

 

Michael

2

How many of your bookings in 2011 have been from referrals?  Or more to the point, how much of your revenue in 2011 is from referrals? 

 

Are you content with your answer to these questions?  Wouldn’t it be nice to have one or two more referrals each year?  In this blog we’re going to look at five ideas that, when used together effectively, will help to drive incremental bookings through referrals. 

 

  1. Be Worthy of a Remark – The best form of advertising for any business is a customer testimonial via word of mouth.  Give your guests a reason to tell anyone who will listen about their time in your home. Whether it’s your attention to detail, your amazing collection of board games or your 120” home theater screen, give them something to be excited to tell others about.
  2. Get “Real” Business Cards – Invest a little money and have some professional business cards on heavy stock printed up (rather than the cheap looking “print at home” variety). Business cards are often the first impression someone gets when hearing of your business.  Include your HomeAway.com and VRBO.com listing numbers along with a one-liner or a few key words that articulate the reason why someone should consider calling you for their next vacation.   
  3. Implement a Guest Referral Program – Give your guests and others who know about your business a reason to refer people to stay with you.  Money is always a great motivator, it’s what we’ve used for several years now.  We pay $15/night to any person who refers a booking to us, that’s over a hundred bucks for a week long booking.  Cash is a good reminder and incentive for someone to mention your business.
  4. Ask for Referrals – Without being pushy, ask your guests and those acquainted with your business to refer anyone who they think may be interested in staying with you.  With our business we do this a couple different ways.  First, in each of our homes we have placed an 8.5 x 11” acrylic stand with a full color flyer in it that talks up our referral program and encourages our guests to take several cards to hand out when they are back home. The acrylic stand has a built-in business card holder and our property managers make sure they are always full. Second, in both the checkout email and in the handwritten “Thank You” cards (remark worthy) our guests receive we remind them that we have a referral program and point out that if they enjoyed their time in our home the best compliment they can give us is to refer us to a Loved one.
  5. Stick with the Plan - Given the nature of our business, long sales cycles and relatively few annual transactions, referrals can be few and far between.  But, that makes each referral even more valuable to business such as ours.  Angela and I diligently performed the actions above for nearly a year before we actually booked our first referral.  Yes, we frequently discussed whether it was worth the extra effort, but that first referral payment we made for $105 on a 7-night booking that was clearly incremental (and off-peak!) made it all worth it.  You are planting seeds that may or may not bear fruit down the road, but at least you are giving them a chance to bear fruit if you keep planting.  

 

The Bottom Line:  Referrals are one of those areas of business that can seem easier said than done.  But each referral is an incremental booking, which can be the difference between a good month and a great month.  Word of mouth is the most powerful form of advertising for any business.  Giving your guests a reason to tell others about their experience in your home, and making it easy for them to do so, is an effective and inexpensive way to maximize your revenue. If you will give them an experience that is worthy of a remark, and if you make it easy for them to refer you to others, your bottom line will reflect your efforts.

 

Here’s to bigger bottom lines…

 

Cheers!

 

Michael

4

As business owners we are all driven to find new and creative ways to make more cabbage.  (Cabbage is a technical term for revenue.)  I’ve got a crazy one for you; let people stay in your home for FREE! According to a recent survey from HomeAway, more than half of owners have donated or considered giving their home away for free to a charity.  

 

Donating nights in our vacation homes at little or no cost to guests has led to:

 

  • Priceless endorsements and some of our most fantastic guestbook comments
  • Goodwill and publicity for our business that would have otherwise been unattainable
  • Exposure to paying customers who may not have otherwise known about us
  • The fulfillment and joy of using our business to Love guests who needed to be Loved

 

“But how will letting people stay for free increase my cabbage,” you may be wondering?  Good question. 

 

Have you ever been WOW’d by a business? WOW’d in such a way that you not only couldn’t keep yourself from telling people about your great experience, but you almost felt obligated to bring that business new customers?  Wouldn’t it be a tremendous WOW to let someone, particularly someone in need, stay in your home at little or no cost to them?

 

Consider what your reaction would be if someone offered you time in a vacation home, one just like yours, to you and your family for nothing in return.  Take it a step further and suppose you were in some type of need, say on an unplanned last-minute trip, maybe visiting a Loved one because of a medical emergency.  Would you become an advocate of your generous host?  How far out of your way would you go to “repay” their Loving act? 

 

This was the case for one of our donations when our guest wrote my wife, Angela, and said,

 

“Oh Angela!  I cannot begin to express my appreciation.  It was so perfect!  And your home made it possible for this to be such a lasting, awesome memory for me…and hopefully my kids.  I wanted you to know that we had an awesome time and how forever grateful I will be.  And I will tell everyone I know about your place.  I’ve already posted on my Facebook about your home [and] a small video clip of my favorite moments of the whole trip.  Thanks again and God Bless you and your beautiful family!”  

 

Angela and I believe that if we keep our primary focus on Lovingly hosting as many guests as possible, even if some of them aren’t paying us, the seeds we’re planting will continue to grow and bear good fruit.   

 

The steps to driving your occupancy and your revenue up by donating your home are pretty straightforward.

  • Decide if you are willing to donate nights in your home and what it should look like for you. 
  • Decide which dates or times of year would be most ideal for you to offer your home for free.
    • You can give away time all year or aim for a time that may likely go unoccupied anyway.
    • The further out you can set aside dates the more successful you’ll be at donating them.
  • Spread the word and be on the lookout for donation opportunities, find a cause to support.  
    • Reach out to church groups, children’s charities or military veteran’s associations.
    • Google search “donate a vacation home” to explore resources that can help you connect with charities if you are unable to fill a direct need on your own.Screen shot 2011-08-31 at 8.22.06 AM.png


 

The Bottom Line:  Donating nights in your vacation home will create goodwill and awareness of your business while endearing you to particular groups of people.  Donations will lead to fantastic guestbook comments, enthusiastic guest referrals, and perhaps most importantly, give you the opportunity to bless others tremendously in the name of Love.  Using your vacation home business in this way will also increase the joy and contentment you derive from being in one of the most rewarding businesses in the world…and it might even lead to additional bookings.

 

So here’s to converting your Love into new cabbage!

 

Cheers!

 

Michael