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PM Perspectives

8 Posts tagged with the property_manager; tag
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As the newest member of the HomeAway Software™ marketing team, Carmela joins us with many, many years of vacation rental industry experience, making her ideally suited for her new role as our Marketing Product Manager.

 

IMG_20120614_082955.jpgCarmela started her VR industry career at First Resort™ Software as their second Support Representative.  She progressed through the ranks to become the Support Department Manager and then Vice President and Chief Operating Officer until 2004.  From there, she moved on to ResortQuest to become Director of Operations, and then VP of Information Technology.  Most recently, she served VR companies across the country as a business development consultant.  Through it all, Carmela has driven quality customer service, matched technology to client needs and discovered efficiencies while doing so.

 

Carmela grew up loving football in Arkansas (Go Razorbacks!), moved to Colorado in 1988 (Go Broncos and Buffaloes!) and recently relocated to Austin.  She has a daughter who is a college senior, two dogs, a cat, and everyone gets along great! Her hobbies include a love for tennis (because of the cute outfits), golf, hiking, all winter sports, entertaining, fresh local food, wine and flowers. Says Carmela, “Flowers just make me happy!”

 

“I am passionate about the vacation rental industry mainly because of the people who are in it—you have to be a ‘people person,’ you have to be creative, you have to be smart and you have to be passionate about delivering great customer service.  Also, I know my successes are because of the individuals with whom I have worked.  They are very talented (very lucky here too!) and I believe a team is much stronger than an individual.”

 

As Product Marketing Manager, Carmela will help identify and prioritize feature requirements on HomeAway’s® software platforms and help us communicate the great things we do on behalf of our clients.  She is amazingly bright, caring and fun, and we are thrilled to have her aboard with HomeAway Software. When you get a chance to meet her, perhaps at the RezFest® conference this year, you will find yourself putting her on your short list of super smart people who also happen to be very, very nice.

 

Welcome aboard Carmela!

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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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As the worldwide leader in online vacation rentals, HomeAway® continues to invest in building broad-based awareness to travelers nationwide.  This year our brand team has decided to forego Super Bowl advertising and focus on a campaign promoting families and groups ‘staying together’ in a vacation rental home.

 

The new national advertising campaign, centered around the key message “Let’s Stay Together,” focuses on families and groups creating lasting memories out of where they stay, not just where they go. The HomeAway ad campaign licenses the rights to Al Green’s 1972 classic hit, “Let’s Stay Together,” and debuts in select markets during the January 15, 2012 NBC television broadcast of the 69th Annual Golden Globe Awards.

 

We believe investing in a long-term campaign with ongoing communication, rather than on a brief Super Bowl ad, will have a much bigger impact on the marketplace by bringing traveler awareness to our amazing category!  The goal with this 2012 advertising campaign, which kicks off next week is to confirm HomeAway’s commitment to building the vacation rental category as a whole and increasing traveler demand for vacation rentals.  If you’d like to learn more about the campaign, please read this blog by our co-founder and CEO Brian Sharples.

 

We invite you to join us for a webinar this Thursday, January 12, at 2pm CST.  The presentation will provide a sneak peek of our upcoming ads and discuss the overall campaign strategy to ultimately bring you more travelers.  Just click on this link to sign up and join us.

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The HomeAway Software for Professionals™ blog has made the move to join the Community blog, PM Perspectives.  As you may know, this blog is currently written by industry veteran George Volsky and highlights the vacation rental industry from a property manager’s point of view.  George’s insights will continue to be posted each month, now with the addition of content from the HomeAway Software Management team, bringing news and perspectives from the software side of the property management industry.

 

Community is committed to continue the sharing of insights and perspectives of the industry as a whole.  With the recent addition of a dedicated section to property managers, there is a great opportunity to have many of our friends and colleagues together in one space to contribute and share their ideas and experiences.  Let us be the first to welcome you to the revamped PM Perspectives blog. 

 

For those interested in reading through the archives of the HomeAway Software for Professionals blog, please see the following links:

Blog Archive 1: HomeAway Software for Professionals

Blog Archive 2: HomeAway Software for Professionals

Blog Archive 3: HomeAway Software for Professionals

Blog Archive 4: HomeAway Software for Professionals

Blog Archive 5: HomeAway Software for Professionals

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RezFest 2011 – Wow!

Posted by s.debernede Dec 20, 2011

When HomeAway Software for Professionals™ was born in late 2010, we decided to continue the Instant Software® tradition to hold RezFest® as the premier software user conference in the industry.  In doing so, we had a simple goal in mind: to make RezFest 2011 bigger, better, more fun and more professional than ever!  Thanks to all of you showed up in Vegas for RezFest 2011, we surpassed expectations on all fronts! 

 

Now that we have rested for a couple of weeks, gathered our thoughts and received survey feedback, I can share why RezFest 2011 was so successful.  On a year-on-year analysis, conference attendance increased by 60%, with 80% more individual companies and 78% more sponsors attending than last year - thank you!  We also provided more networking opportunities.  Check out some of the fun photos from the opening night reception featuring the Blues Brothers impersonators to hitting the lanes on bowling night.  Was that fun or what? Many clients thought RezFest was the best industry event they have attended and several of them were hugging us by the end of the conference!  Here are a couple quotes from actual attendees that capture the moment:


This was our first time at RezFest and we are now making sure that event is in our budget from now on.  Worth every penny spent.”


“If you only attend one convention next year, it should be RezFest.  It is the premier event for the vacation rental manager.  You will meet wonderful people and learn so much.  At RezFest you work hard, and play just as hard.  Don't miss it!”

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With 76 track combinations, we tried to offer a diverse and interesting agenda. Presenters did an amazing job and your appreciation was reflected in your survey responses.  The large computer lab manned by the customer support team was also a tremendous success, giving clients the opportunity to be trained and/or ask questions about your particular software.  Again, based on your feedback, the software lab was regarded as a valuable addition because it provides staff members from all levels of your organization a chance to work hands on with our team of experts. The agenda was so packed with engaging material that some of you asked that we make the show a day longer next year!  Wow, that is a first where attendees ask for more time at a trade event!

 

382715_10150368458921909_6237476908_8408484_1892240781_n.jpgDuring HomeAway CEO, Brian Sharples’ keynote, he explained why HomeAway acquired Escapia® and Instant Software and addressed industry fears to demonstrate how committed HomeAway is to the PM segment.  By the end of his presentation, everyone seemed to have understood HomeAway’s strategy and felt much more comfortable with Hideaway’s acquisitions from about a year ago.  Throughout the show, clients were able to mingle and with HomeAway’s executive team. I think customers were surprised by how accessible and down-to-earth Brian Sharples, COO Brent Bellm and the other executives were in person. 

 

Peter Greenberg, the other RezFest speaker, was an energetic and informative speaker as he emphasized that the “personal contact” property managers provide to their guests 24/7 is key.  He also focused on “selling value to the right demographics,” particularly to Boomers.  Greenberg’s bullish perspective on the travel industry in the coming years was encouraging and the 2011 performance of many PMs in the room this year prove that he may be on track with his predictions.

 

I hope HomeAway demonstrated our commitment to your success and have your interests at heart.  We will continue to operate in a professional and straightforward manner, with the 120 employees in HomeAway Software for Professionals dedicated to building the best possible software solutions and keeping dialog going with you and the Support and Relationship Manager staff.  To use a construction analogy, we feel 2011 has been focused on building the foundation of a great house of the future.  Next year will be a year of INNOVATION that will add marble counter tops, state of the art light fixtures and simple details to save you time and money.  Our goal is to take your software solution to extraordinary levels of efficiencies using a modular approach that builds on top of your existing platform.  It is not an easy and it takes time but like we said in late 2010, “judge us by our actions.” 

 

Thank you for attending RezFest!  For those of you who could not attend this year, please join us next year.  You will not regret it!

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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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Though today, I shared my perspectives on the vacation rental management industry under the title “Volsky’s View.”  I’m excited to report this will be my last blog under that title.

 

Going forward, my blogs will be supplemented by contributors (HomeAway Software for Professionals (HASP) employees) who are in a position to interact with vacation rental managers and observe industry trends. These blogs, along with mine, will appear under the title, “Property Manager Perspectives.”

 

It is our goal to enrich the content of blogs on HomeAway Community by addressing evolving industry trends, newly emerging issues that concern property managers and events that help rental managers make better decisions. 

 

This change is part of a new role I will be assuming at HomeAway.  I have been given an opportunity to help HomeAway provide new and meaningful resources for property managers on HomeAway Community. The planning phase of this new project will keep me busy for a good while. 

 

We hope to unveil some new online resources and services for PMs in the future.  Until then, I’ll keep contributing blogs to PM Perspectives, as will other authors. 

 

Best,

George

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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.