November 8, 2022
5 Red Flags In Your Booking and Reservation Data—And How to Fix Them
In the vacation rental industry, your business strategy is only as good as the data that drives your decisions. A successfully dynamic pricing strategy requires alignment across your data sources, your KPIs, and between you and your homeowners.
So what is your dynamic pricing data telling you when it fluctuates or, worse, goes completely wonky? And how can you use these “red flags” to make adjustments to your pricing strategy?
In this blog, we’ll take you through five different instances where your booking and reservation data is out of whack, and how you can correct it.
Too Many “Unsellable” Days on the Calendar
There are plenty of good reasons to block off a vacation rental property’s calendar. It could be an owner hold, for seasonal maintenance, or for a deep clean. However, unbooked nights mean a loss of profit. If these unsellable days make up more than X% of your available calendar, then you’re only hurting your bottom line.
Review each of these days with the owner and your team to make sure they’re blocked off for a legitimate reason. This is also a good time to check that your minimum stay and gap-filling policies are working properly. You can also check with guests with bookings if they’d like to extend their stays to fill in the calendar a bit and make up for the lost revenue.
Too Many Reservations From Last-Minute Discounts
Discounts are a complicated issue in the vacation rental industry. Discounts work best towards the end of a booking window or to encourage guests to lengthen their stay (e.g. the fifth or seventh night free). These kinds of deals can help boost occupancy and cover nights that may not get booked on their own.
However, a vacation rental manager doesn’t want to rely solely on discounts to attract bookings. Inappropriately applied discounts can impact your overall revenue. For example, discounting during peak season or during a period of high demand—like during the weekend or a holiday—may cause underpricing and make you lose money on the property.
There are a few ways to continue using discounts without ruining your profit margins. You can program your revenue management software to activate discounts on a rolling basis, or use your historical data to set them up in advance based on your past occupancy rates. Or you and your revenue management team apply them in real-time when your calendar is thin and you could use a few more bookings to round things out.
Lots of Unbooked Days During Shoulder Season
Shoulder season can be an attractive time for guests to consider booking a vacation rental to save money and enjoy a market when it’s less busy. So if you’re seeing more unbooked days than normal during your slower seasons, then it’s time to investigate why.
The first thing to do is check to see how your competition is doing. Create a few comp sets and analyze the difference.
Most likely, it’s a rates issue, meaning your rates are simply too high for these rentals at this time of year and for these potential guests. More often than not, this is because a homeowner is resistant to lowering the rates for fear they won’t meet their revenue goals for the year. It might be a good time to sit down with them and have another conversation about your dynamic pricing strategy and how lower prices now will benefit them in the long run.
If you and your competition are struggling to book at a similar rate, then the problem is likely (largely) out of your control. This might be the perfect time to offer one of those last-minute discounts!
Occupancy Rates Go One Way, ADR Goes Another
Most vacation rental managers will agree that they want occupancy AND ADR to stay high. But it doesn’t always work that way. In the end, you may have to lower your expectations of one or the other to achieve your ultimate revenue goals. But if your occupancy rates are driving one way and your ADR is careening in the other direction, that means something isn’t working quite right.
Thankfully, this is a pretty simple fix. Out-of-sync occupancy and ADR usually means that you haven’t adjusted your prices enough to keep up with market demand. Revenue management tools like Rented’s Automated Rates Tool (or Art) make adjusting prices easy with bulk editing and the ability to project future adjustments based on changes you make today.
Your Minimum Stays Are Out of Step With the Market
Minimum stays work best when they align with market demand. For example, a seven-day minimum booking makes sense in a market like Hawaii, where guests tend to travel and stay for longer periods of time, especially during peak season. However, minimum stays tend to limit the types of guests who can/will book your property. A change in market demand could turn your minimum stay requirements into a restriction and hurt your bottom line.
Follow the market demand carefully and be flexible with your minimum stays. Monitor your forward-looking occupancy for any potential drop-offs.
Proactively addressing changes to your data is part of an effective revenue management strategy. But you don’t have to do it alone. Rented’s team of revenue management experts is here to help you make sense of your data, what it’s trying to tell you, and to steer clear of red flags.
Set up a call with one of our team members to discuss your strategy in more detail now