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No Vacancy: Maximizing ROI

3 Posts tagged with the inquiries 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

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

0

Ahhh……at last….January is finally here.  Isn’t it true that as vacation home owners we count down the days until January?  Just as retailers eagerly wait for the holiday selling season, vacation home owners eagerly await the flood of inquiries that follow the holiday season.

 

The most successful retailers plan for their selling season because they know if they are on their A-game during those 30-45 days it can be the difference between a good year and a great year.  Are you and your vacation home business on your A-game during our prime selling season? 

 

Below are some ideas to help you make the most of OUR Selling Season in 2012.  These may be refreshers, but no need to reinvent the wheel.

 

     1. Respond Promptly – This is nothing new.  Our friends at HomeAway preach this constantly, but only because it works. HomeAway studies consistently show a direct correlation between response time and likelihood for the inquiry to book.  If you can’t always respond immediately, set up an auto-response with some detailed information that an inquirer might find useful and tell them when you will be getting back to them.  The longer you wait, the longer someone else has to take your booking.

 

*Best Practice – If you are away from your calendar and receive a call or email notification, answer it to let them know you have received their inquiry and you aren’t at your calendar.  Then set the expectation that you will be getting back to them by a specific time and follow up.

 

     2. Get On the Phone - This is one that Angela and I often struggle to find time for, but it works and we are always more successful when we   can manage to do it.  We have found that most inquirers appreciate talking to a live person and it’s easier for you to establish common ground with them over the phone than over email.  If you aren’t comfortable responding with a call to an initial inquiry, or if they don’t leave a phone number, then give them yours in your email response and encourage them to call you.  Like it or not, if you are responding to inquiries you are in sales, and it is usually easier to “close the deal” over the phone than over email. 

 

*Best Practice – Offer to help them “plan their trip” by asking what they are most looking forward to doing while they are in your area, then offer suggestions related to their response.

 

     3. Follow Up – After you have answered all their questions over the phone, follow the conversation up with an email that states:

  • The 3 main selling points of your property – remind them why they should book with you.
  • The Rate quote for the dates, number of guests and total costs you discussed.
  • That you book on a first come, first served basis.

 

*Best Practice – Don’t come across as pushy, rather as concerned that their ideal home (yours) might book if they wait too much longer so let’s figure out what it will take to get them to book now.  Are they asking for a DISCOUNT?

 

     4. Keep It Fresh – Be sure to keep your headline, rates, photos and calendar updated on a regular basis. Resist the temptation to keep your calendar blank and not post your rates.  After experimenting with this concept over the last 5 years in this business we can say with confidence that travelers want to see calendars and rates, and most will inquire first on those properties they know are available within their timeframe and their budget. 

 

*Best Practice – Differentiate your listing headline to stand out from the crowd. Call out specific date ranges you need to book or include a special offer for your two slowest months.

 

The Bottom Line:  Practically every booking begins with an inquiry so we ought to treat our inquiries, each one of them, as if our business depends on them.  Because you know what?  Our business does depend on them.  One of the best ways we can maximize ROI is to create more opportunities to turn inquiries into bookings.  By responding promptly and professionally, following up and keeping our listings fresh we increase our opportunities and our occupancy, and maximize our revenue!

 

Happy New Year to all of you, Angela and I pray that 2012 is full of Love, peace and prosperity for us all. Now get back to those inquiries and BOOK! BOOK!! BOOK!!!

 

Cheers!

 

Michael