May 6, 2022
How to Use Data to Attract New Vacation Rental Homeowners (And Keep the Ones You Have)
Regardless of the reasons for owning a second property, every vacation rental homeowner has the same basic desires. They want a well-kept property that guests love, a booked calendar, and a decent return on their investment.
One of the best ways to show homeowners that you can deliver this is through Key Performance Indicators (KPIs). Whether you’re on the hunt for new vacation rental homeowners or having conversations with current owners, bring on your data (historical, current, and projected). This can give homeowners an idea of what they can expect when working with you. It gives current owners a concrete understanding of where their property stands right now, how it can be improved, and what kind of revenue it can make moving forward. And for your prospective homeowners, you can showcase performance in properties that are similar to theirs, so they have a clear understanding of your benefit to them as a manager.
Net Unit Revenue
Homeowners may be curious to know exactly what they’re earning, once you’ve removed all the fees, taxes, and commission. That’s the net unit revenue, the take-home pay for the homeowner.
Why This Matters
This data point by itself can be very useful to share with your homeowners. You can use it to create some comp sets by evaluating the net unit revenue of similar properties on the market and showing homeowners how they’re fairing alongside the similar listings. It’s also a useful variable in calculating other data points (as you’ll see later on).
Average Daily Rate (ADR)
The average daily rate (or ADR) is calculated by dividing the number of nights sold by the total net unit revenue earned. Usually, this data point is calculated with past numbers to give a look at a property’s historical ADR. It can offer a base understanding of past earnings based on season, peak days, major events or holidays, and even times of the year when tourism slows down.
Why This Matters
Establishing an earning history can give you and your homeowners a good starting point for conversations about rates. Historical ADR can help guide pricing choices in the future, particularly if you compare it against similar units and the market at large. For example, if you find that the ADR at Christmas last year was lower than the comp sets, you and your homeowners can talk about increasing rates for December. On the flip side, if the calendar was wide open at a time of year when other properties were booked solid, then you’ll know you’ve charged too much and can take the price down.
Average Occupancy Rates
This metric is pretty self-explanatory: It’s a calculation of how often a property is booked by paying guests. It’s as easy as tallying up the number of booked nights over a set amount of time and dividing that by the number of open nights.
Why This Matters
Like with net unit revenue, you can use average occupancy rates to establish a property’s market sensitivities (by season, by day of the week, etc.) and make adjustments accordingly.
Revenue Per Available Room/Rental Night (RevPAR)
When it comes to revenue management, Revenue Per Available Room/Rental Night (RevPAR) is the key to unlocking a property’s earning potential because it draws a direct comparison between occupancy and revenue. RevPar is the revenue generated divided by the number of nights available within the time period you’re observing.
Why This Matters
RevPar is one of the most important data points to share with vacation rental homeowners because it demonstrates just how dynamic pricing strategies can work. Vacation rental homeowners would love to have their cake and eat it, too: In other words, high rates and a booked calendar for maximum revenue. But it doesn’t usually work out that way. Higher prices mean more revenue but often draw fewer bookings. Lower prices mean more bookings, but perhaps less revenue.
Striking a balance between a satisfying net unit revenue and a high occupancy rate can be tricky, and part of finding that sweet spot is regular adjustments to rates based on relevant market factors.
In the end, any booking, no matter the revenue earned, is better than no booking at all (which means no revenue earned). By allowing for minor price adjustments as booking windows close or as peak season ramps up or slows down, you can show homeowners projections of just how much more they could be making and much fuller their calendar could be.
Revenue management is complex but doesn’t have to be difficult. Using tools like Rented’s Automated Rates Tool (we call them Art for short) can provide pricing recommendations based on market and comp demand, and also provides an intuitive tape chart that makes implementing pricing strategies easy, even for large portfolios. And for those more technical questions, our revenue management team is here to help. Talk to one of our experts today about sharing data with potential homeowners to attract their business (and keep your current homeowners earning more than ever).