COASTAL NORTH CAROLINA PROPERTY MANAGER
Two identical units, two different pricing strategies, one clear winner.
While there’s simply no way to conduct a truly controlled scientific study across multiple properties, this case study is about as close as one can get.
Here, a property manager had two identical units with the same owner.
One unit the PM signed up for revenue management services, while the other he didn’t.
This being a property only blocks from the beach and at the height of their summer season, not to mention being new to the property manager’s portfolio, meant that he wanted to see whether revenue management would make a difference.
Having managed similar properties in the area for over five years, this property manager believed his summer rates were fairly consistent and poised for a dependable ROI.
Yet he also understood that there were booking gaps and wanted to utilize revenue management to help tackle that issue.
(1) Ensure optimized pricing
(2) Increase room nights
(3) Grow overall revenue
First, our Revenue Manager jumped in to ensure that the summer 2019 pricing was correctly optimized.
IN THE FIRST TWO WEEKS
But as it was also peak season at the time, another major problem loomed: expiring inventory.
As you might know, the method to handle expiring inventory requires regularly pulling data, identifying gaps, analyzing comp sets, and slowly adjusting pricing over time.
This nuanced and granular process as frequently too time intensive for most property managers. It’s for this reason that many of them utilize static pricing, as they have to handle not just on bookings, but also housekeeping, operations, and more.
Conversely, revenue managers are singularly focused on optimizing a property’s pricing as much as possible.
By focusing on the property’s expiring inventory and dynamically pricing this unit, the Rented.com Revenue Manager not only increased room nights by 56% in the first two weeks, but also grew the overall average daily revenue (ADR) by 35%.
While some might dismiss a two-week sample as a potential fluke, the numbers have continued to prove the value of revenue management and dynamic pricing.
Over the course of the last three and a half months, Rented.com has managed to more than double the unit revenue in comparison with its identical twin unit not under revenue management.
In addition, we’ve maintained a 42% higher number of room nights and, more importantly, consistently held a 33% higher RevPAR. (Old Pages)
2019 TO DATE