June 9, 2021
A Lesson in Revenue Management
Is Beginners Swim Class a Lesson in Revenue Management? (Yes!)
My 15-month-old son recently started swimming lessons with a class of other toddlers. During the first lesson, I was able to observe while my husband and the other parents supported their children through learning this important life skill.
While watching how the different toddlers reacted to each new skill I couldn’t help but notice the correlations between each skill and revenue management principles. Although learning to swim (or not) can have much more harmful consequences than can be found in revenue management, I thought I could offer an interesting takeaway from this new adventure in my family’s life.
Testing the Waters
The first skill in swim class was having the parents hold their toddler’s arm lengths away, facing away from them while swaying side to side. Some toddlers (we will call them Group A) took to this with no issue by laughing or just silently looking around taking in the new experience wondering what’s to come next. Some toddlers (we will call them Group B) would not let go of their parents, much less allow them to turn them away from them.
Say this first class was teaching revenue management 101 to a vacation rental manager, it would entail understanding KPIs and how to measure them (ADR, Occupancy, Available Occupancy, RevPar or Pan or whatever we are calling it in the industry these days), gathering comp sets to assess your properties value, and understanding the “art” portion such as listing optimization factors that contribute to high conversion.
Be honest here, who’s anxiety went up after reading the last paragraph? If you identify with Group B and even the thought of implementing a revenue management strategy sends worry through your body, then maybe it’s time to look into the available resources. As a manager you do have resources that will not only take this off your plate, giving you more time in the day but also allow your properties to realize maximum revenue. Because someone who truly enjoys pricing is responsible, allowing you to focus on other areas of your business.
Excitement or Relief?
Another task was learning how to climb in and out of the pool. Group A wanted to jump back in as soon as they accomplished getting out. I have to say I am very impressed with Group B as they all managed to climb out of the pool, but once they were out they had no intention of jumping back in. You could see so much excitement on Group A’s faces when they could turn around and jump back in, yet you could feel the relief that came over Group B when they thought their time in the water was over.
At the end of the class, Group A played on the stairs testing their limits, eventually, all being extremely upset when their time was up and had to exit the pool. By the time Group A got out, Group B was already in the changing room booking it to the exit hoping to never enter again (too bad little babies – we will be swimming together for 3 months).
As a property manager, you have the choice to belong to the A or B Group, to embrace and be excited about the opportunity that revenue management brings to your business and your homeowners. Or are you Group B, trying to avoid what can be scary or intimidating?
What it Means…
In all seriousness, learning to swim can make the difference between life or death. Sorry to go morbid on you, but you know it’s true. While Revenue Management is certainly not life or death (I guess this depends on your owner profile – laughing face), it can be the difference between retaining a property or not, or hitting your goals, or losing your mind.
When it comes to swimming lessons I certainly believe that every child can become comfortable and safe in the water, and shouldn’t give up. It’s the same for learning revenue management. With swimming being a survival skill versus revenue management which is not, this is the ultimate “choose your battles” scenario. If revenue management 101 (or any revenue management) makes you feel like you’re sinking from the beginning or every time you have to change a rate with no way to get your head above water… It may be time to pass on this responsibility to those who like to swim in the data.
Talia Lockard is Rented’s Director of Business Development and is a champion of not only swimming for all but equal access to revenue management strategies and execution for professional vacation rental managers. You can get a free 30 day trial of Art, our Automated Reveneue Management tool here!