August 7, 2019
VRM Intel’s Data & Revenue Management Conference
I was one of the lucky people who registered in time to attend the inaugural VRM Intel Data & Revenue Management Conference in Atlanta. Knowing many wanted to make it but couldn’t (since it sold out), I want to share my top takeaways with those interested, so here you go.
The time is right
As mentioned above, the conference was sold out. In its first year. With limited notice. There is clearly demand for this topic. Demand for knowledge, for solutions, and for something different than the status quo. Amy Hinote truly struck a nerve in organizing the conference, and as the MC for the event, Simon Lehmann said to me after the first day: “Amy now owns this space.” Too true.
Maturation of our industry
It was only a few years ago that there was an open question on how many conferences the short-term rental industry could really take. After all, we all have day jobs! Attendance at some of the regional events was waning.
My how times have changed.
Not only does the VRMA International Conference seem to have record attendance every single year, but now a specific topic within the industry can sustain its own sold out conference. That says a lot about how far we have come.
Now the mere fact of the conference speaks to maturation, but even more than that is the level of sophistication at the conference. The presentations, the heavy data, jargon, and methodologies discussed and understood by the audience, all demonstrated that this industry typically known for “RBOs” and Mom & Pop businesses is clearly professionalizing at a rapid pace. And as Simon pointed out, that pace is only accelerating. “‘I’ve not seen as many changes over the past 10 years as I’ve seen in the past 6 months,” Simon told attendees at the beginning of the conference. I would be willing to be we can expect even more in the next 6 months.
Data is King
Everyone knew this, but what it immediately leads you to ask is: What data?
An early session from KeyData’s Jason Sprenkle and Rented.com’s Cliff Johnson addressed this well by setting out the “Big Three KPIs” we should all be looking at:
2. Average Daily Rate (ADR)
3. Revenue Per Available Room (RevPAR)
The nuances of these KPIs are also important to recognize. Is it pure occupancy that matters, or “normalized” occupancy, meaning only the occupancy rate for those nights that are truly rentable (e.g., excluding unbookable owner holds). Is it really RevPAR that is important for our industry, or rather than room should we be thinking about Revenue per Available Night (RevPAN) for that property and similar properties? And when you bring these together, is it pure RevPAN/RevPAR or “normalized” RevPAN/RevPAR we should be tracking?
There perhaps is no one answer today, but the takeaway is that you should at least know what these numbers mean, be able to calculate them, and be tracking them regularly. They are the crux of any vacation rental manager’s business. Ignore them at your peril.
Another Data conversation over the two days was the pros and cons of scraped data versus real and clean data. As one data scraping company admitted on stage, “scraped data is not perfect.” But that does not mean scraped data is worthless. You just need to be careful what you rely on it for. Scraped data is great, as Cliff pointed out, for “static” data. For example if you want to know if a property exists, its address, how many bedrooms it has, or things like that, these are all scrapable, and the chances of that scraped data being accurate are pretty good.
However, when you get to dynamic data like price, if and when a property is booked or reserved, and things like that, scraped data is more likely to lead you astray than to be helpful. Today, unfortunately, there are not many sources for industry wide real and clean data in short-term rentals. As Smith Travel and other presenters who came to this space from industries like hotels, apartments, and airlines pointed out, the way to get to this data set is to start sharing our data with one another. This may seem a scary step, but I think the success of those other industries make a good case for why we should do it, and start doing it sooner rather than later.
What do you do with the data?
The question then becomes what do you do with all of this data? There were plenty of buzzwords thrown around about “Big Data, AI, and machine learning.” For most people this immediately conjures up images of robots taking over everyone’s job. However, the consensus throughout the conference was exactly the opposite. This proliferation of data, technology, and tools actually increases the need for human oversight, management, and intervention. As Yohannes Semere of BookingPal so succinctly put it: “Revenue Management is far more an art than a science.” Here, here.
This truism is not unique to our industry. For example, when banks rolled out ATMs everyone worried bank tellers would become a thing of the past. The exact opposite happened. Not only did teller jobs increase after ATMs became prevalent, they grew at a faster rate than the labor force as a whole. The same is even truer in our industry. As more data becomes available, as there are more tools to manage, the need for manual oversight and intervention increases.
It seemed many came in thinking there would be a silver bullet solution out there. The truth was far murkier. As one data company presenter pointed out: “There is no set it and forget it pricing tool out there right now in vacation rentals…The machines aren’t there yet…For now it’s up to humans to do what the machines can’t.”
This puts many vacation rental managers in a bind. As Steve Milo of Vtrips said during the conference: “The amount of information coming at us as property managers is only getting more complicated.” At the same time, the demands on our time and attention are not decreasing proportionately in other areas. We still have to deal with owners, with guests, and with maintenance and operational issues. Give this problem, where do the extra time and resources needed to deliver on revenue management come from? Fortunately there were a number of great vendors at the conference all too ready to help (Rented.com among them of course).
Revenue Management is about more than Price
This point came up many times in a few different forms. Scott Breon of Vacasa was the first to raise this point, explaining the enormous impact Terms & Conditions, and in particular cancellation policies, can have on revenue performance for certain markets and property types. Other clear examples from channel distribution to listing attributes were also frequently mentioned. However, much of the conversation focused on how to react to a static demand curve until the example of what CJ Stam of did in Blue Ridge came up.
CJ and others in his market looked at their calendars, and noticed there was one weekend in particular that had the lowest occupancy year after year. The normal reaction would be to see other managers as competitors for that “fixed demand” and fight bloodily to be in the 20% of properties that got booked for the time period. CJ and others in Blue Ridge took a different approach. They became collaborators rather than competitors, and found a way to generate new demand by creating the Blue Ridge Blues & BBQ Festival. Rather than fight over 20% occupancy scraps, they have seen occupancy on this weekend climb to 80%. Oh, and the festival itself generates a profit!
The point being that you don’t have to only be reactive. You can actually proactively influence your market as well. As George Bernard Shaw said: “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
Go out and be unreasonable people!
I could go on and on. I am sure I will still be synthesizing all I learned over the conference for weeks to come. But there were hundreds (literally) of other people there, and so I would prefer for this to be the start of a conversation, not the end of one. Please share your thoughts, takeaways, and questions. We have come a long way, and together we can go much further still.
I will close by giving a big thank you to Amy Hinote and the entire VRM Intel team for pulling together an absolutely phenomenal conference. To quote the ever-quotable Steve Milo: “This was a data conference, and it became so much more.” Kudos.