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PM Perspectives

18 Posts tagged with the vacation_rental_manager 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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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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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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We just launched the 2012 Breakfast Seminars in Destin, Florida and Gulf Shores, Alabama.  Both were great events and very well attended with over 50 attendees at each event.  The feedback from each seminar was universally positive.

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At the seminars, the team gave an update on our plans for all five of our HomeAway Software for Professionals™ platforms: Entech™, PropertyPlus®, FRS®, Escapia® and V12.NET®.  We reiterated our commitment to continue development and support for all of them.  We will continue to support all five software platforms well into the future as long as our clients want us to because supporting the products will continue to be a profitable business for us.  More details on our product development plans are on the way in the coming weeks, but as a public company we are not allowed to make any forward looking statements so it is a difficult balance.

 

 

Our sponsors also presented an update on very important current issues including Credit Card Security by HomeAway and VacationRentPayment, the Five New Marketing Best Practices by Visual Data Systems and Selling Value-Added Travel Services by CSA Travel Protection.

 

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But our primary message at the breakfast seminars is that it’s time to get excited!  Think about this: roughly six million Americans use vacation rentals for their vacation lodging. That’s six million out of a traveling population of over 100 million. With that as a backdrop, it leaves a huge upside for you to advance your business.  HomeAway is constantly efforting to increase the visibility of vacation rentals.  If you haven’t seen our most recent ad campaign called “Let’s Stay Together,” check it out here.

 

 

Along with increasing the visibility of the vacation rental industry through advertising, we’re continuing to develop new capabilities on our software solutions so you can take advantage of that heightened visibility.  And, we’re constantly improving our online marketing tools for professional managers.  Stay abreast of all product advancements through your Relationship Managers and a new quarterly newsletter, the first of which you will receive later this month and we hope to see you at the next Breakfast Seminar!

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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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By: John Suzuki

 

 

Meet Michael Hannah!

 

 

They call him Mr. Florida. Michael got his degrees in Chemistry and Microbiology from the University of Florida and USF, respectively, spent much of his career with various medical diagnostic companies as Director of Marketing and ran a medical consulting company. As he sought his next steps, he took a temporary job in vacation rentals, fell in love with the industry and switched careers by joining Instant Software® nine years ago. Today he is the Relationship Manager responsible for HomeAway Software clients in Florida, Georgia and internationally. Michael offers decades of experience to analyze business problems and recommend ideas to improve his customers’ bottom lines.

 

His favorite pastime is golf, he plays a nine-handicap, and his favorite place to golf is Pebble Beach. If nothing else, the guy sure knows great golf courses in many of the greatest vacation spots across the country, and loves working with vacation rental managers.

 

“Having worked with HomeAway for almost a year now, I have seen firsthand the dedication of every individual, right up to the CEO, to make the vacation rental industry more successful. They realize that our clients, property management companies, are an integral part of making this industry grow and they are committed to providing the tools and services to make our clients successful. I look forward to be representing HomeAway Software for Professionals for a long time and working closely with every one of my clients to ensure their success.”

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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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Hotels must achieve higher occupancy rates to attract investors.  It is natural that hotels sometimes fill vacancies through aggressive discounting.

 

The first part of this blog addressed community interests in vacation rentals.  This second part discusses actions managers can take to defend against hotels and cruise lines.

 

What Community Leaders Should Understand About the Unique and Critical Role Played by Vacation Rental Homes in Local Economies and Why They Should Promote a Level Playing Field

 

As noted in Part 1, vacation rentals are well equipped to survive aggressive promotional discounts by hotels and cruise lines which, by virtue of their more demanding investor expectations, must always rebound to higher prices than are charged by vacation rental homes.

 

But when municipalities place unfair regulations on vacation rentals, long-term damage can result to both the local economy and the vacation rental industry.

 

It is important to recognize (and educate community leaders on this point) that vacation rentals’ unique investment profile generates economic benefits that—on a per-visitor basis—cannot be matched or replaced by hotels.

 

Large hotels are often not financially viable (and thus not present) in vacation markets that are just beginning to attract tourists or have short seasons.  Hotels in such markets would need to charge prices that are too high to generate the high occupancy rates required by hotels.  Here:

 

  • Vacation rentals bring the capital investment (housing infrastructure) that is necessary to lure tourism dollars to destinations that lack sufficient traffic to support large hotels.
  • Vacation rentals offer lower-priced or higher-value lodging than could be offered by hotels and motels.  This brings more tourists and primes the pump for tourism growth.

 

It is also important to recognize (and educate community leaders on this point) that vacation rentals bring economic benefits to a community that goes far beyond those traditionally generated by hotels and captured within the scope of tourism metrics. Vacation rentals typically:

 

  • Involve longer stays;
  • Involve larger travel groups;
  • Employ more employees per bedroom for maintenance and housekeeping;
  • Support larger numbers of small business;
  • Accommodate peak season overflow that hotels cannot cover;
  • Generate economic benefits beyond those embedded in “tourism” metrics:
    • Prodigious numbers of housing construction;
    • Large volumes of real estate sales commissions (5-8 year home turnovers);
    • Related volumes of mortgage financing and fees;
    • Home furnishings and housewares sales;
    • Indirect employment and sales measured as economic multipliers;
    • Tax revenues related to underlying employment and sales

 

Local leaders seldom realize the full range of benefits their communities receive by nurturing and protecting vacation rentals.  As an industry, we can’t expect community leaders to understand our industry until we do.  It is our responsibility to educate ourselves, then others if we are to defend against regulations that restrain vacation rentals at the prompting of competitors.

 

What Defensive Actions Should Managers Take to Compete with Hotels and Cruise Lines?

 

My advice:  educate yourself on the forces that actually threaten vacation rentals or dictate what we can and cannot achieve.  Engage where you foresee clear benefits.  Otherwise relax.

 

Cruise lines advertise some incredible prices for all-inclusive vacations that can include air fare, a cabin, entertainment and food.  What can you do in defense?  You could pass along articles that show how much cruise lines generate from drinks and gambling, but consumers probably sense that anyway.

 

  • Cruise ships require massive capital investment, and a small decline in bookings can be disastrous.  Unlike rental managers, cruise lines have to pay for empty rooms. 
  • It’s important for cruise lines to be full even if they have to give rooms away because cruise lines get revenue from liquor sales, gambling casinos, and shopping. Plus, ports often pay a fee for each disembarking passenger.
  • Cruise passengers don’t necessarily spend less, but they love the idea that they can spend less, eat endlessly, or put vacation money into shopping, drinking and gambling.
  • Cruise lines won’t supplant vacation rentals.  There’s room for both.  I believe vacation rentals offer more of a recurring lifestyle vacation embedded in family traditions. Cruises fit in the category of infrequent travel adventures, ala Las Vegas or Disney World.
  • For 2011, economic stabilization is allowing cruise operators to demand higher prices, and this should result in less competitive pricing pressure on vacation rentals

 

Periodically, ski resorts and high-end hotels steeply discount room rates to fill vacancies. 

 

  • Resorts and high-end hotels have higher fixed costs than vacation rentals and fight to cover those costs by getting “heads in beds” that generate additional spend from spas, lift tickets, restaurants and shops. When these entities discount lodging by 50%, their revenues drop just a fraction of that and could actually increase.
  • Managers and homeowners do not generate similar supplemental spend, and are hurt more by lodging discounts.  Managers should inform homeowners about steep hotel or resort discounts and give homeowners the option to defensively discount rents to retain renters—many homeowners will  discount rather than get nothing.
  • When resorts ask homeowners and managers to discount lodging to lure renters from competing destinations, do the math and raise the issue if it appears that private homeowners contribute 90% of the discounts but resorts reap 90% of the benefit.
  • Managers need only calculate how low rents can go for them to break even.  Profit is desirable, but it is better to help homeowners get some revenue through discounted rents (even if the manager makes no profit) than to lose the homeowner (and future profits from his home) because the homeowner thinks you didn’t try hard enough

 

Remember, the ability of hotels and resorts to meet fixed expenses depends on high occupancy rates.  This dictates that hotels deliberately keep capacity below levels required for peak demand days, leaving room for vacation rentals. 

 

Also keep in mind that hotels must charge enough to generate a return on investment, whereas vacation rentals need not even cover investors’ costs of home ownership. 

 

These facts, combined, make hotels and resorts vulnerable to vacation rentals, which deliver excellent value and lower prices. 

 

In other words, vacation rentals offer a better lodging value for the renter’s buck during normal times.  Hotels and resorts inflict the biggest pain on rental managers during periods when declines in demand make it hard for hotels to cover their larger fixed expenses.  But vacation rentals will always remain healthy competitors in the lodging market.

 

For 2011, U.S. hotels appear to be on pace to grow room revenue (RevPar) 7%, and this should alleviate the steep discounting of prior years. 

 

In all events, the threat from hotels and resorts is not great over the long-term. But I'd love to hear different perspectives if you have them.

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This blog addresses questions that confront every vacation rental manager at some point: 

 

1.    “How can I compete with hotels, cruise lines and other lodging segments?”

 

2.    “How can I convince community leaders to keep the competitive playing field level?”

 

Part 1 answers the first question.  Part 2 discusses how managers should react to other lodging segments and lists reasons why community leaders should promote a level playing field.

 

Why Would a Rental Manager Want to Compete with Other Lodging Segments?

 

The obvious answer: renters of vacation homes also patronize hotels, motels, cruise ships, camp grounds, recreational vehicle rentals, houseboat rentals and B&Bs. 

 

Each lodging segment has unique advantages and core customer groups.  But many travelers patronize two or more lodging types.  Customer pools for each segment can overlap.

 

When travel declines, cruise lines and hotels unleash expensive campaigns that could divert travelers from vacation rentals. The vacation rental industry is historically fragmented and has only recently been postured to defend itself with effective national advertising campaigns.

 

Renters Have Been Inundated With Offers for Alternative Vacation Opportunities


•    Cruise packages that include lodging, transportation, meals and entertainment;

 

•    Heavily discounted rates by resorts and four-star hotels offering shops, spas and food;

 

•    Central reservation systems that discount lodging to lure travelers to resorts;

 

•    The dominance of hotels on online travel agency sites:

 

Hotels have aggressively discounted in response to several years of declining roper room revenues.

 

Should Managers Defend Against Competitive Assaults By Other Lodging Segments?

 

This question should be addressed on four levels:

 

1.    Are vacation rentals’ role in the lodging ecosystem threatened over the long-term?

 

2.    Do managers have any ability to counter low-price promotions by other segments?

 

3.    Should managers respond to promotional initiatives by other lodging segments?

 

4.    Do communities have reasons to keep the competitive playing field level?

 

Vacation Rental Homes Compete Well With Other Lodging Segments in Good Times

 

Hotels are expensive capital assets that require a return on investment from operations and thus high occupancy rates in the 60 percent range.  So developers never intentionally develop enough hotel rooms to accommodate peak season surges (just as airlines wouldn’t intentionally buy enough planes to handle the busiest traffic days if those planes would have to fly half-empty other times).

 

•    By contrast, vacation rental homes can be financially viable with low occupancy rates in the 35 percent range and can serve as the safety nets for local economies that capture dollars spent by visitors whose numbers exceed the bedroom capacity of hotels.

 

•    Investors who own the capital assets in vacation rentals (the homeowners who own your rental inventory) don’t expect to make money from lodging operations.  They expect profit when they sell appreciated real estate and negative cash flow in the interim.

 

•    This unique and advantageous investor profile for vacation rentals means that:

 

     o    Managers and homeowners may price rental homes below cost!

     o    Vacation rentals should thrive with lower occupancy rates!

     o    Vacation rentals should exist and thrive as long as property values at vacation destinations are expected to appreciate over the long term.

 

Vacation Rental Managers Make it a Point to be Structurally Equipped to Ride Out Market Downturns

Generally, when the demand for hotel rooms pulls occupancy below 60 percent for the industry as a whole, many hotels become nervous and discount room rates to any level that contributes to offset hotels’ large fixed expenses.  This is the time when they discount most and/or encourage community restrictions on vacation rentals.

 

But vacation rentals are well positioned to survive price competition, even if hotels eat first:

 

•    Homeowners, not managers, shoulder the burden when demand dips (subsidizing mortgage and expenses), whereas managers have few fixed expenses.  Managers’ largest cost is labor, a variable expense that falls almost in lockstep with bookings and arrivals.

 

     o    When rentals dry up, vacation rental managers can lay off staff and hibernate.

     o    Homeowners survive dips in demand by (a) discounting rents to maximize contribution to expenses; (b) covering declining revenue out-of-pocket; or (c) selling the home to a buyer who can afford it at prevailing annual rents.

 

•    Apart from value, vacation rental homes offer:

 

     o    Greater space for families or friends who vacation together;

     o    Kitchens that extend vacations by lowering food costs;

     o    Options for every pocketbook, from small or older homes in great locations to luxury homes with home theaters and indoor pools that are destinations in their own right.

 

•    This unique resilience of vacation rentals to market downturns means that, barring another depression, vacation rentals should exist and thrive over the long-term regardless of the level of discounting by competing lodging segments.

 

Next Blog:  Part 2: 

 

•    What Community Leaders Should Understand about the Unique and Critical Role Played by Vacation Rentals in Local Economies; and why they Should Promote a Level Playing Field

 

What defensive actions managers should take to defend against hotels and cruise lines

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Volsky's View: All About Me!

Posted by gvolsky Dec 7, 2010

Hi!  I’m George Volsky – the person responsible for posting blogs on the Community about vacation rentals in relation to property managers. This first blog is devoted to ME--who I am, what I’ve done, what I’m good at, and what I plan to do with this blog.

 

To start with, I’m a bit dysfunctional and really bad with names, but on the upside, I’m good with concepts and systems and I’ll remember your business issues even when I can’t remember your name.  I can say (modestly) that I have as comprehensive an understanding of this industry as anyone, because of the time spent talking to rental managers about the business.

 

I pour over industry statistics.   I’ve written white papers and delivered hundreds of educational seminars over the years on virtually all industry topics.  I love this industry.

 

What I enjoy most is figuring out how everything about this industry interacts with everything else. I like questions like:

 

  • “What is more important to rental managers--inventory or renters?” 
  • “How can you change your fee structures to insulate you from discounting?”
  • “When is it better to omit add-on fees from your advertised price?”
  • “Which markets are best and worst to compete in?”
  • “How should you compete with hotels and cruise lines?”
  • “How do you deal with competitors who cut commissions and rents?”
  • “How fast can a rental manager grow?”
  • “How do you compete with a competitor that has more money, homes, etc.?”
  • “What does the growth of rent-by--owner mean for the future of rental managers?

 

In my blog, I’ll be talking about issues like these--as well as about issues you raise in the forums.

 

Many vacation rental managers have already attended my seminars at national or state association meetings, software user conferences, regional seminars hosted by vendors and webinars.  For you, I hope to continue sharing my perspectives about our changing industry and your options for adapting.

 

But there are literally thousands of rental managers who are not active in industry events.  For you, I hope to share insights that have evolved from the collective wisdom of your colleagues.  It is my hope that these insights will help you grow, increase your revenue, and navigate the Internet and competitive challenges that are shaking up the vacation rental industry.

 

Anyway, back to the main topic for this blog--ME.

 

My first job out of college was as a transportation industry analyst, where I worked with government analysts and economists, learning about travel economics, and this led to too many years as an attorney, setting up and working with airlines (I still apologize for those years and am grateful that bankers have taken up their share of the burden as public targets). 

 

My first job after leaving the law was as a vacation rental manager on the Outer Banks, where I dove into the company’s reservation data in an effort to learn in a few years what took eight years for vacation rental managers.  Anyway, I started talking about my discoveries, and this led to a 12-year term as a consultant.  I have worked closely with many of the nation’s leading vacation rental companies, large and small, in all areas of the country.

 

I’ve studied the competitive and pricing strategies of competitors in entire markets, valued companies for purchase or sale, designed decision support software, projected the economic impact of vacation rentals on state and local economies, and served as industry consultant for the 2008 PhoCusWright study that sized and valued the vacation rental industry. 

 

I currently monitor industry statistics and do monthly trend reports.  I have served as Director of Research for the nation’s leading reservation software companies, Instant Software and Escapia, which, as of October 2010 were acquired by HomeAway.

 

I’ve now said “I” enough times that I can only bear to say it thrice more in this blog:

 

  • I’m looking forward to sharing my views and
  • I hope, over time, to get the benefit of yours;
  • I’ll share my next blog in time to wish you a happy holiday.

 

Geo

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As 2009 came to a close, the lead story in Wall Street Journal’s November 16 Money & Investing section was captioned “Earnings are Strong, Sales are Another Story.”  Eighty percent of companies in the Standard & Poor’s 500 stock index beat analysts’ expectations during a period when revenue was on pace to fall 10 percent.

 

 

“Cost-cutting” drove profits for these major companies.  Cost cutting is similarly a priority for many vacation rental managers, which leads to the point of this blog:


 

The most direct paths to cost-cutting in vacation rentals can lead to a reduction in a company’s long-term profits and competitive stature.  The paths that best protect profits are often counter-intuitive.  So pick your path cautiously.

 

 

  • “Knee-****” cost cutting often jeopardizes future profit and growth;
  • It generally costs money to properly find and implement cost cuts;
  • The best cost-cutting opportunities arise from industry changes.

 

 

What to Expect from Cost-Cutting.

 

 

  • As noted in the Wall Street Journal article, cost cutting can only boost profits so long, but companies that learn to run lean in bad times can expect to see profits surge when sales improve.
  • In my view, cost-cutting is “reckless” when it is the goal; it is “safe” when it is the byproduct (intended) of a goal to make your company more efficient.
  • Your goal should be to become more efficient pursuant to a plan all players understand and buy into.

 

 

When Does It Cost Money to Cut Costs Properly? 

 

 

  • Time.  Generating plans and buy-in is expensive because staff must stop doing something they may not want to stop doing--making their jobs harder--and devote time, money and energy to developing a new plan, acquiring any required resources, testing the plan, and implementing it.
    E.g., the woodsman who responds to the well-meaning passerby’s suggestion that he might cut a lot more wood if he sharpened his ax:  “I can’t—I’m too busy.”
  • Systems Development.  Often, the best efficiencies require your company to change the way it does business, requiring an investment in new systems design, technology, training, promotion and customer hand-holding.

 

 

Why Do You Need Staff “Buy-In?”  

 

 

  • If a player doesn’t understand how your plan will work, he can’t execute well. 
  • If he doesn’t buy in, he won’t execute well.  He’ll be happy to let your plan fail so he can return to the system he is used to. 

 

 

Trimming Fat.  Successful companies can get “fat” during good years because they can afford to hire people and buy services.  I know a company that trimmed several top managers without losing a beat.  But the common pitfalls arise when you ask people to do more with less, without a plan they buy into. 

 

 

  • This causes tension among employees, increases turnover (reducing your staff’s skills), reduces service quality, saps energy required to get new customers, and—ultimately—makes it difficult to keep and attract homeowners and renters. 

 

 

Look at Competitors Before Identifying Cost Cuts.   Difficult times pose problems for some but create opportunities for others who find ways to use them to leapfrog ahead of their nearest competitors.  You can’t decide which expenses to cut without knowing whether your competitors are redistributing their resources.  Are they:

 

 

  • Going hard after your homeowners?
  • Soliciting your renters?
  • Trying to get extra bookings from their existing renters?
  • Offering new services to existing renters and homeowners?
  • Replacing expensive staff services with computer services?

 

 

Categories of Promising Cost Cuts. Look carefully at the following: 

 

 

  1. Changing your business model.
  2. Use of technology to free staff for other jobs;
  3. Elimination of services to renters or homeowners  who don’t need them;
  4. Downsizing of promotional activities that may no longer be cost effective;
  5. Trimming of fat to become more lean and fit.



 

 

 


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