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8 Posts tagged with the professional_managers; tag
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Thank you to everyone who took the time to join HomeAway in Las Vegas last month. RezFest 2013 went down in history as one of the largest vacation rental conferences on record. The nearly 900 registered attendees spent three days learning, networking and having fun together. The show was buzzing with energy, new ideas and product announcements poised to make professionally managed vacation rentals stronger than ever.

 

Across the keynotes, the software and listings lab, educational sessions, HomeAway lounge and countless one-on-one interactions over lunch, dinner, drinks, bowling and more – everyone learned from one another in a casual and professional environment. The active participation of each property manager in attendance helps drive continual growth and improvement in the vacation rental industry. View this quick video from property manager Roy Wiltshire who attended and greatly benefited from RezFest.

 

RezFest 2013 was another major step forward in demonstrating HomeAway’s commitment to helping vacation rental managers succeed.  Time and again we heard from customers about how innovative and informative the breakout sessions were as well as the demos conducted by Tom Hale (HomeAway’s Chief Product Officer) and his product team. From showcasing our newest Lead Management module to our new Housekeeping and Maintenance Mobile App and our new Reservation Grid, the words ”operational efficiency” resonated throughout the event.

 

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In addition to major software feature announcements, HomeAway CEO Brian Sharples unveiled two industry game changers:

 

  1. HomeAway’s new pay-per-booking listing model which enables property managers to advertise all or most of their inventory on HomeAway.com with no upfront fees under a pure pay-for-performance model at a 10% commission.
  2. The Professional Referral Network presents vacation home owners interested in listing on HomeAway.com with the option of enlisting the services of a vacation rental manager as an alternative to marketing and managing the home themselves. This major initiative gives vacation rental managers the ability to market their services to the millions of owners who visit HomeAway to list their properties.

 

Our sponsors provided enormous value to property managers by showcasing their products and services. Direct feedback from satisfied property managers who learned and signed up for a number of services from sponsors at the conference were rampant. And, several sponsors mentioned they sold more at RezFest in 48 hours than at all industry events combined! So, a big thanks to all sponsors for attending RezFest and delivering great value to property managers with a variety of new and innovative products and services.

 

Thanks again to everyone who made RezFest such a big success!

 

We are looking forward to an even bigger and better conference in 2014!

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Thanks to every customer and partners who took time away from their busy schedules to join us in Las Vegas in September for three days of networking, fun and tons of learning.  At its heart, RezFest is about educating our software customers on how to get the most out of their investment in our software products.  We offered over 80 sessions on a wide range of topics.  To our normal slate of stellar educational sessions we added advanced classes and a mobile app challenge to convey how important it is to develop products with input from our clients.  As always, the interactive lab was an unparalleled opportunity for customers to get face-to-face training with our experts.  Kudos to our unbelievable Support team for spending so much time preparing and presenting valuable information to our clients.


By measure of the 600+ attendees with whom we spoke at the event, combined with extremely positive post-event survey feedback, customers acknowledge RezFest as the premier technology conference in the vacation rental industry. 

 

At RezFest last year we asked the industry to “judge us by what we do,” not by speculation.  We told the industry we would develop a new tool to help them manage the explosion of leads from potential renters.  And we said we would not only develop that tool but would use it to demonstrate that we can build solutions that work with multiple platforms in our six-system portfolio.  With the demo of the lead management system (LMS), we did exactly that.  We added what is likely the biggest addition to our existing software products in years; all while constructing a new way to build our products. Without question, the LMS was one of the hot topics of RezFest!  Customers not only responded extremely well to what we demoed, but when asked what they want us to focus on going forward, the message from many of them was “do more of that.”  In other words, property managers see LMS not just as a new feature that will soon be available to them but also as a launch pad for a lot of features that will help them build stronger businesses for years to come.  Learn More about LMS here.

 

In the past nine months our product team has been hard at work making your software more effective and secure. With over 30 releases, 508 enhancements on six end systems and 1,000 defects resolved, we continue to make significant progress to deliver category-leading software to all clients. And, rest assured we have no plans to discontinue support on any of our legacy products.

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We’ve also heard property managers ask for improved integration between HomeAway Software and 3rd party distribution. Now, all of our customers can distribute inventory via their software interface on VRBO.com as well as HomeAway.com and all of our customers including EscapiaNET can participate in pay-per-subscription programs that allow them to take advantage of tiered pricing to maximize their visibility and Brand Boost to highlight their brands on our sites. Learn more about distribution here.

 

Lastly, we received feedback from HomeAway PM clients requesting to receive discounts when using both our software and the HomeAway Network of sites.  In addition to the new listing volume discounts, you can now “bundle” new listings with your annual software maintenance and support renewal and save on your annual fees. Your Relationship Manager will contact you about this opportunity prior to your annual maintenance and support renewal month.

 

Our goal for this year was to deliver on our promises to be “judged by what we do” and lay out our 2013 business strategy in order to heighten the level of trust and confidence PMs have in HomeAway’s people and vision.  We wanted to leave the “elephant in the room” behind and establish a trusting relationship with property managers to help grow this industry together!   Based on direct feedback from RezFest attendees (see testimonial videos here), the atmosphere was really positive with more and more customers appreciating that HomeAway truly is committed to helping property managers succeed in the world of online vacation rentals.  We feel our clients left Las Vegas inspired, excited and confident in choosing HomeAway as their strategic business partner not because of what we are but because of what we do.

 

Thanks,


Stephan.

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Through its ownership of listing sites and reservation software companies, HomeAway straddles a line that marked a cultural gap between professional managers and self-managing homeowners.

 

That gap is on the verge of disappearing.   This is good for managers, homeowners, renters and HomeAway—as well as the entire vacation rental industry.

 

The gap began when the Internet spawned listing sites that allowed homeowners to advertise their own vacation rental homes under the rubric “rent-by-owner” (RBO), bypassing managers. 

 

These listing sites provided resources for homeowners interested in self-management and for financially stressed homeowners struggling to cover the expenses of second home ownership. Today, they offer:

 

  • Credit cards payment options
  • Taxes collection and remittance options
  • Online bookings
  • Reservation confirmations
  • Payments tracking
  • Housekeeping or maintenance service options

 

On the other side of the gap, some professional managers wondered whether the RBO movement threatened their livelihood.  Some managers viewed RBOs as a danger to be avoided or fought.

 

Mangers and RBOs on both sides rallied to promote or protect their interests:

 

  • Some early RBO listing sites refused listings by professional managers.
  • Some self-help resources portrayed professional rental managers as cheats and unnecessary.
  • Some managers lobbied to exclude RBOs from local chambers of commerce.
  • Web site discussion groups for both groups made polarizing statements about the other.

 

The reasons for friction are easy to understand.  Technology evolution shifts money from one group to another, creating opportunities for some and problems for others. 

 

In reality, the shift occurred because Internet technology changed the way consumers shop.  This was first reflected in the popularity of online travel agents such as Expedia, Travelocity and Priceline.  Today, consumers have transformed listing sites into the most popular market places for vacation rentals.

 

Today managers needn’t worry about being displaced.  And RBOs needn’t view managers as competitors— their real competitors are other homeowners. Managers exist to serve homeowners (all homeowners are potential customers).  Today’s RBO may be in a managed rental program tomorrow.

 

Managers perform services that save homeowners from tedious and stressful tasks of dealing with customers and servicing homes.  Homeowners typically use managers when they can afford to do so, except where they make rental management their “job.” (My next blog is about the impact of rent-by-owner on professional managers).

 

Managers need not worry that renters do or do not recognize the advantages of professional managers.  Not only does this worry treat RBOs as competitors (potentially alienating future customers), but it channels energy (a scarce resource) to an unproductive end and assumes that managers’ future success depends on a public-awareness-of-rental-managers campaign that would cost tens of millions yearly.

 

Managers, while this may initially sound heretical, your success doesn’t require renters to appreciate managers or even know that a home is managed.  It is gratifying and helpful when that occurs.  But it is not critical.  Thank goodness—it means homeowners and managers are in harmony—not conflict.

 

Why?  Rating systems –which matured after RBO appeared—have emerged as an indirect champion of your brand as a professional manager.  Your systems are designed to deliver high quality, consistent service.  When that works, your homes get good reviews.

 

  • Renters increasingly rely on peer recommendations to find a reliable vacation rental.
  • Rating systems allow renters to identify which homes are well maintained and appointed.
  • Managers will always thrive where their systems generate good renter reviews.
  • Plus mainstream listing services identify managed homes as such for renters who look for this.

 

If a RBO home next to yours gets good reviews, it is usually because that homeowner is working very hard to do what you do.  That homeowner deserves to get rentals.  That same homeowner may eventually tire of working so hard, or have no time to do so, and hire you to do some or all of his work.

 

Today, there are still some RBOs and managers who distrust each other. Some RBO groups worry that:

  • The presence of managed homes on RBO sites dilutes their bookings; or that
  • Management companies have marketing and resource advantages.

 

Some rental management companies worry that:

 

  • Listing sites divert homes from rental management programs;
  • RBOs steal renters by under pricing managed homes;
  • RBOs attract renters by failing to collect (charge for) lodging taxes.

 

Many of these worries once had some basis in fact.  But today the impact appears minimal. 

 

Booking Dilution. Today, leading listing sites market managed and self-managed homes side by side.  I see no evidence that this can/should be avoided or that it dilutes or diverts bookings from one group:

 

  • It is consumers who decide the popularity of listing sites-- consumers are patronizing the sites that offer the widest range of product and price. 
  • Renters love to use the Internet to shop—they have so many options that no single company could thwart consumer shopping preferences (aggregator services today search multiple sites).
  • Renters use the Internet to find and compare all available homes—Internet shopping technology is the driver of integrated market places, not listing site policies.

 

Resource Advantages.  It is obvious that professional managers have marketing and service resources advantages—this is a common sense result where managers spread the service costs among multiple homeowners.  That’s why so many homeowners hire managers.  But hardworking RBOs compete well.

 

  • Renters simply want a well serviced home that meets their needs and is competitively priced.
  • No RBOs can be at a disadvantage if they service their home well and price competitively.
  • In my experience, renters tend to find the good homes—even where lesser homes have superior marketing exposure.
  • A manager’s pooled resources (e.g., backup cleaners) confer advantage where this results in better or more consistent service (reflected in the reviews).
  • RBOs lose rentals to professional managers and vice-versa when they are not able to provide high quality service.  Many RBOs will eventually hire managers for some or all services.

 

Tax Collection.  Interestingly, I have seen no evidence that professional managers are losing bookings to RBOs who ignore tax collection requirements, at least not in measurable dimensions.  This is due in part to local tax authorities who are ramping up tax enforcement and to efforts to educate homeowners.   Also, renters appear most concerned about finding the right home at a competitive price—it takes a lot of extra work to identify a homeowner who won’t charge tax (homeowners can’t advertise that fact).

 

  • One of the most successful professional managers on HomeAway sites tells me that his bookings are not remotely affected by RBOs who do not charge tax.  He says he is not interested in renters who take bargain hunting to this extreme and that it is his attention to inventory quality and marketing that brings him bookings and growth.

 

Underpricing.  It is true in theory that some self-managing homeowners try to offer lower rents and feel empowered to do so because they do not pay a professional manager.  But I see no evidence that self-managed homes end up with lower rents or that they divert renters from managers based on price:

 

    • Professional managers initially set rents at levels that renters are willing to pay—given all the competing homes that are being offered in the area.  They then adjust rents as necessary.
    • RBOs commonly set rents based on comparable managed homes.  Even though they don’t pay managers, most RBOs can’t afford to charge too much less rent than renters are willing to pay.
    • A percentage of RBOs do try to under price managers in an effort to attract renters.
    • This stimulates discounting by managers.  Managers track bookings pace from one year to the next and are quick to discount prices when current year bookings are slow, equalizing rents.
    • For every discounting RBO, there is a hungry homeowner demanding that his rental manager discount his rent so he can snag a renter or a manager who discounts to fill vacancies.
    • The net effect is that rental home prices adjust the way that stock prices adjust. They simply rise and fall on a weekly or daily basis in response to shifting balance between supply and demand. 

 

Stay tuned for my next blog will summarize the impact of the rent-by-owner trend on professional managers.

 

Best,
George

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GMH3330-L.jpgWe are just weeks away from hosting RezFest 2012 on September 25-27 at the beautiful Red Rock Casino and Spa in Las Vegas! The excitement is building as we prepare for this incredible event where leading property managers gather to learn, network and have fun together for a couple of days.  To make this event even more fun this year, we are launching a ”Mobile App Challenge,” which consists of gathering ideas from our clients through a 5 minute survey.  Once at RezFest, you will have an opportunity to check out the best ideas from the survey, vote on them and work with our Product Managers and Software Designers to help them build a prototype, which will be presented to you during RezFest’s closing session. Whether you attend RezFest 2012 in person or not, you can contribute your ideas through this survey and automatically qualify for a chance to win some great prizes, such as an iPad, Bose Noise Reduction Headphones or a membership to the "Wine of the Month" club.  Take our 5 minute survey before August 15th for your chance to win!

 

If there is one educational event you must attend this year, RezFest is it! At this exceptional event, you will hear from Tom Flick, whose keynote sessions have inspired companies like Ritz Carlton, Starbucks and Boeing. You can also expect HomeAway® executives to make some PM-centric announcements you want to miss!  With almost 100 sessions and 9 concurrent tracks, RezFest is your once-a-year opportunity to sit down with your software trainers for free to see demos of our latest features.  As always, you can count on our social events to have fun while learning and networking with other leading property managers. So, make sure you bring enough staff at all levels of your organization, because your biggest regret will be that you didn’t bring more employees with you to take advantage of all the learning opportunities!


See you in Las Vegas on Sept 25-27 & may the best idea win!

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Due to the overwhelming attendee feedback from last year’s RezFest®, HomeAway Software for Professionals™ is proud to announce a repeat of the most vibrant and comprehensive software user conference for property management companies of all sizes on September 25 - 27, GMH3362-L.jpg2012 at Red Rock Casino in Las Vegas, Nevada. Join us for an incredible 2-day event where you will learn firsthand about the latest industry trends, imminent technology changes and most importantly, tangible ways to take your vacation rental business to higher levels of efficiency than you’ve ever imagined.  This year, we challenged ourselves to outperform last year’s success, which is not going to be easy after what we heard last year:

 

 

“RezFest 2011 was the best conference I have attended in 10 years,” said Doug Byron from RE/MAX Lake Travis & Co.

 

 

You won’t want to miss the most valuable industry event and miss an opportunity to spend 2 1/2 days learning and networking with the most innovative property managers in the industry while having fun at the Red Rock Casino, Resort and Spa with all of us.  This venue offers exquisite hotel rooms and suites with an unmatched combination of comfort, extravagance and value. Guests at the Red Rock Casino, Resort and Spa are pampered with every comfort and convenience imaginable, from luxurious bed linens to iPod jack sound system in every room and in-room spa treatments by appointment.

 

 

RezFest is not only a wonderful way to keep your finger on the pulse of the vacation rental industry, but also a terrific opportunity to network and interact with some of the most innovative minds in the field.” (Mark Carraway - Meyer Vacation Rentals)

 

 

In addition to over 80 educational sessions to choose from and evenings of fun-filled events, you will hear from two extraordinary keyGMH3781-L.jpgnote speakers.  Brian Sharples (CEO of HomeAway, Inc), who has lead the biggest revolution in the travel industry in decades, and Tom Flick.  Mr. Flick has provided guidance to world class companies, including Starbucks, Ritz-Carlton, Boeing, Marriott and dozens of others. His insights have inspired sales teams, executives and managers from some of the greatest companies in America—who have asked him to return year after year. HomeAway is excited to have Mr. Flick speak about teamwork, performance and growth to the greatest companies in the vacation rental industry. And as a hands-on owner and user of vacation rental properties, Mr. Flick is bound to surprise you with leadership ideas you can apply to your business immediately.

 

 

You can attend RezFest 2012 for less than $240 if you take advantage of our “early bird” pricing, a $260 saving over our rack-rate pricing!  So Register Today and receive the best possible value of any industry conference!

 


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What do you do when a competitor threatens to steal your inventory or renters by offering lower commission or rental rates? This challenge presents itself when competitors:

 

  • Set their seasonal rent at a level below your rates
  • Put homes on website “specials” page at a discounted rent
  • Solicit your homeowners with offers of lower commission rates
  • Offer your homeowners free amenities or services to join their rental programs

 

I know what many of you want to do.  But what makes business sense?  The right approach is the one that leaves you with the most rental revenue. Unfortunately, the right approach is not always the most intuitive and can require you to speculate about customer behavior.

 

  • If you lower rents or commissions once, will you brand yourself “price flexible?”
  • Once you discount, will it be difficult to hold your regular prices with other or repeat customers?
  • If you refuse to discount, will you lose rentals or homeowners?
  • Will losing renters or homeowners snowball into migration of other homes and renters?

 

No one sets prices with complete certainty but you can perform the best if you have good technique and strategy.  A good approach is to view pricing like a sports event that has both an offensive and defensive strategy. 

 

For offense, begin by setting seasonal prices correctly and by knowing whether or not it is in your interest to use discounting to grow or protect your business, and how to discount most effectively.

 

For defense, create a foundation that will withstand competitive discounting by building knowledge of your product and markets and developing a business philosophy that is grounded in economics.

 

As to business philosophy, be wary of general principles that have brought you this far but which you promote and defend with emotional energy (we all have them):

 

  • “We deliver good value and we never discount.”
  • “If I discounted, I would undermine my ability to maintain my pricing structure.”
  • “If I don’t match every discount, I’ll lose rentals and homeowners.”

 

The best business philosophy recognizes:

 

  • Vacation rentals will always make financial sense no matter how low rents go as long as vacation homes continue to offer more value for the dollar than alternative lodging segments
  • The Internet allows renters to depress rent levels whenever supply exceeds demands
  • There is little you can do to protect a homeowner’s investment against discounting that arises from seasonal vacancies, predatory competitors or market downturns
  • Price flexibility (dynamic pricing) a necessary evil
  • There are opportunities to protect your pricing

 

Knowledge of your home(s) and market is your best defense against competitors discounting.

 

First, know your product and homeowners.  For each home, make the effort to identify the homes with which it competes, including other homes you manage, in terms of size, features, quality, proximity and consumer appeal.

 

  • One of your homes may be a commodity, like numerous others, that competes for renters during a low occupancy season; you have to discount to maintain your historic share of rentals
  • Another home may be unique and does not need to be discounted during low occupancy seasons because it has no peers, because its peers are not being discounted or because all competing homes are in your own rental program
  • Work to understand whether you lose money on seasonally discounted homes after add-on fees are taken into account.  If not, don’t hesitate to match competitive discounts during off-peak times where this will make your homeowner happy and keep his peak season rents in your program.
  • Offseason rents are often so low that they lose money for rental managers.  Where offseason rentals benefit homeowners only, match competitive discounts only where necessary to prevent your homeowner from leaving.
  • Also remember that homeowners, especially those with good homes, generally prefer rental programs that offer homes of equal or higher quality.  In this case, think about whether losing or retaining a homeowner over your discount policy will nudge other homeowners to join or leave your rental program.

 

Secondly, make sure you monitor and understand your market.

 

  • What’s Up with Your Competitors? 
    • If you have aggressive or up-and-coming competitors, you might have no choice but to match or beat their discounts to prevent them from “buying” market share by hijacking your customers (“We have more quality homes” or “We get more rentals per home.”)
    • If you know most of your competitors won’t discount aggressively during lower occupancy seasons, you can ignore an occasional competitive discount and hold your prices at levels renters are willing to pay for the week in question.
    • If you have multiple competitors who are discounting during a time when supply exceeds demand, your options are to match every discount or risk foregoing any rental for the period in question.
  • Mature or Growing Market: You must fight hard to retain your homeowners if your market has matured, exemplified by little or no growth of rental homes in your area.
  • Tracking the balance of supply and demand for each week of the year

 

When there is more supply than demand; renters have bargaining power thanks to the Internet—price competitively or forego the rental after asking yourself:  If I get fewer rentals than competing homes, will more homeowners leave me than if I match discounts?  Where will I likely lose the most money?

 

Price right initially by monitoring the duration and amount of seasonal discounting by competing homes. Then monitor your competitors’ discounting and booking pace.  Decide how discounting is likely to cause your inventory to decline, hold steady, or grow.   Think carefully about whether your company’s long and short-term interests conflict:

 

  • Do you need to match competitors’ discounts and lose money for a few rentals in order to protect several years of revenue? 
  • Is a competitor stealing your inventory and hurting your brand image by discounting steeply to get bragging rights that attract your homeowners (“I booked more rentals than my competitors.”)?
  • Do you dominate any market by managing most of the homes in a particular category so you can maximize revenue by refusing to discount at all?

 

What we thought of as “discounting” yesterday is today better thought of as “dynamic pricing” that requires quick adjustment in response to supply and demand.  The pressure to discount cannot be successfully addressed by inflexible policies.  It is easy to calculate how discounting will erode your historical rental income in the short-term.  It is more difficult, but more necessary in today’s Internet world, to acknowledge that the decision to discount or not has both short and long term consequences that often conflict.

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Who Should Go to RezFest?  It’s not just for HomeAway Software for Professionals (HASP) Customers.

 

I was a consultant to many property managers (PMs) during my first 12 years in the vacation rental industry.  I learned two things that are generally, but of course, not always-true:

 

  • Companies that attend industry events are the most hungry to learn and compete well;
  • The biggest benefit of industry events is the sharing of information among attendees.

 

Let me qualify this quickly, so as not to offend some very good companies that don’t do a lot of professional socializing:  there are many excellent companies that don’t attend industry events.

 

With that acknowledgment, let me further say that every management company would benefit by attending industry functions.  Why?  “THE INTERNET is changing this industry’s business models and forcing rapid industry evolution.”

 

More than at any time in the industry’s history, it is critical today that PMs keep track of changes.  No matter how strong or aggressively they monitor their own markets, they cannot afford to ignore the changes in other markets because:

 

  • Key trends start in a few markets and spread to others;
  • In my opinion, our industry’s occupancy rate (under 40%) and short peak season (often just 6 weeks) means that PMs often need more than one year lead time to adjust to trends.

 

Industry events are where PMs discover minor changes they are feeling can be the beginning of major trends that can alter the competitive pecking order.

 

The question is which industry event to attend.  Every company has limited travel budgets, and there are many industry events to choose from such as:

 

  • National associations
  • State associations
  • Local tourism bureaus
  • Reservation software user conferences
  • Regional conferences sponsored by industry vendors
  • Regional symposiums
  • Online webinars

 

So Which Events Should PM’s Attend? 

 

It comes down to:

  • Budget: what is the cost and how many events can you afford?
  • Size of the conference:  larger conferences offer more courses and more PMs to talk to;
  • Relevance of the event’s special focus (software training, housekeeping, ski tourism, etc.).

 

If you are looking to attend a larger conference, there are two worth noting…RezFest and the annual VRMA conference. Because HomeAway puts on Rezfest, we have some additional insight into the event. You can also learn more information about Rezfest here.

 

Who Will Benefit from RezFest?

 

HASP Customers.  Rezfest is organized around reservation software training and updates: it has different tracks for each of its reservation software products. So Rezfest is certainly good for HASP software customers.  Rezfest brings technicians and trainers, as well as the administrative staff who price software and decide which features to add to one location.  Rezfest is a good opportunity to get low-cost training, learn about new features, and interact with software staff who need to understand your problems and needs. 

 

Those Who Want to Explore Industry Products and Suppliers.  RezFest is one of the industry’s largest events, and accordingly, attracts the industry’s major vendors.  This is an opportunity for PMs to meet with key suppliers to compare features and prices, and talk to other managers who use these products.

 

Those Who Want Trend and Leadership Education.  By virtue of the size of HASP’s enormous customer base,  RezFest attracts one of the industry’s largest aggregations of managers and leaders.  As one of the industry’s largest supplier of reservation systems, Rezfest product and service reps deal daily with the effects of industry change across the country, and are well equipped to help PMs understand and adapt to national and regional changes.  This translates into sessions and seminar content that:

 

  • Highlight trends and issues;
  • Explain the evolving role of Internet marketing and technology;
  • Discuss the industry’s most vexing problems and solutions;
  • Offer thought leadership insights by key industry leaders.

 

Employee Rewards.  Where there is a business advantage to attending RezFest, there is also the opportunity to reward employees by sending them to Rezfest.  The event is historically held in fun locations and provides opportunities to interact with fellow PMs in a relaxed social setting.

 

Many PMs Who Are Not Already HASP Customers Can Benefit by Attending RezFest

 

  • Many will find RezFest less expensive than alternative gatherings while still offering substantial socialization, education and product information benefits:


    • Rezfest offers one of the largest gatherings of leading industry vendors;
    • The level of expertise in HomeAway’s family of products and partners is unparalleled;
    • It’s a preferred choice for those who can drive or otherwise incur less expensive travel.

 

  • RezFest is a great opportunity for PMs looking to buy or change reservation software.
    • While many managers can identify features they like in a software, most have difficulty charting the features that aren’t in a new software, until it’s too late.
    • The HASP family offers multiple reservation software products.  RezFest is the ideal location for learning which of them are best suited for a PM and, in fact, the best place to confirm that the HASP family of products will not suit your needs (if that is true).

 

For those of you interested in attending, I’ll be there.  I look forward to seeing you all.

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Title notwithstanding, this is not a blog where I will:

•    List and rank markets according to competitive opportunities; or

•    Assume that managers have much choice about where they operate.

 

I will list some characteristics that make a market good or difficult to compete in.  Understanding these can help you set realistic priorities, identify strategies that have a chance of success and avoid competitive efforts that are a waste of resources.

 

First, let’s acknowledge the Internet has put pressure on second home owners and managers alike, pushing rents down and expenses up in all markets.  A manager’s ability to adapt to these changes will vary by market.

 

Markets offer more or less opportunity depending upon:

•    Season length (longer seasons mean more revenue per home);

•    Real estate prices (rising prices counterbalance rising expenses or discounting);

•    Average stay length (how many times do you have to rent and clean each home?);

•    Number of vacation rental homes (profit opportunities increase with volume);

•    Number of competitors (discussed below); and

•    Market maturity (also discussed below).

 

The best market to compete in is one in which you have a monopoly—you are the only rental manager in your area, and you have the vast majority of available homes.  Consumers can’t bargain shop by threatening to use a competitor.  (Few monopolies exist).

 

The second best market is one where there are 3-4 equally sized large competitors and a number of smaller companies. The large companies often compete on everything but price (“pricing parallelism”) and are able to discipline smaller companies who undercut them(discouraging predatory discounts by responding with even steeper discounts).  Everyone makes money.

 

The worst market to compete in is one where you have tons of equally sized competitors and vacancies (this generates desperate discounting).  Few managers can make much money here until the market consolidates, weeding out the weak and creating leaders.

 

A very difficult market environment is one where the growth of rental inventory has stopped.  This occurs, for example, where all desirable land has been developed, local regulation has strangled growth, or falling home prices have forced homeowners to subsidize mortgage and carrying costs. As a result:

•    Managers can no longer achieve double digit growth in inventory;

•    It is no longer possible to offset “expense creep” by taking on more inventory;

•    Each new home must be acquired through hand-to-hand combat with competitors.

 

By categorizing the characteristics of your market, you can better identify what won’t work and zero in on the tactics that can grow (or at least protect) your company’s profits.

 

Here are suggestions for a mature market or a fragmented market with many competitors:

•    When the growth of new rental homes slows or stops in your market, focus on becoming more efficient than your competitors.  A lean company can do more with less and spend more money to retain and attract homeowners, leapfrogging over competitors who are saddled with less productive operations.

•    If it is getting harder to find new revenue streams or you are digging into profits to cover growing expenses, consider growth by acquisition (or merger).  This will insulate you from requests for discounts and allow you to offset shrinking margins with volume.  Consider the impact on you if your competitor beats you to this.

•    Don’t be afraid to “buy” new inventory one home at a time by offering promotional or introductory rates.  You can give away up to three years' profit to get a new home, just as you would if you bought a competitor’s inventory. (Just take care not to undermine your general commission structure).

•    If your market is maturing (no growth), focus on becoming dominant in a specific area, building or type of home (50 percent market share is a good goal).  This is another way to protect yourself from renters who demand discounts and from competitors who will undercut your pricing (more on this in a future blog).

 

In a healthier competitive market, you can focus on marketing.  Keep in mind that inventory quality and size trumps almost everything. The better your inventory, the less you must spend to find renters. Companies with very large marketing budgets sometimes achieve a relatively small occupancy rate advantage (or barely manage to stay even with other large-budget competitors).  Cutting marketing expenditures may not translate to many lost rentals:

•    If you don’t already do so, monitor your competitor’s occupancy via the Internet.  Weekly monitoring of availability calendars can allow you to track this with only a few hours of effort each week.  You need to know how you match up.

•    Re-examine each market expenditure with an eye toward identifying expenditures that aren’t clearly necessary and with the goal of leveraging any advantages that you do achieve from them.

          o   If you spend more on marketing, let homeowners know if you are getting more rentals than competitors—homeowners respond to this.

          o    If your competitor has a bigger marketing war chest, use Internet monitoring to let homeowners know there is little difference in occupancy for comparable homes (say you put your money into service where it goes much further in benefiting the homeowner).

 

I’ll cover some of these strategies in more detail in future blogs.