3 Lessons in Mastering the Low Season in Short-Term Rental Management
Getting to a place in your short-term rental property management goals where you are not stressed out about the low season cashflow
You are now in the first shoulder following your busy season and you may be starting to get a little worried about your short-term rental management cash flow, or if you manage several vacation rentals, you're worried about losing money, losing clients due to poor revenue performance, or low review count.
When I first started my short-term rental management business, I dreaded the Airbnb management during the low season. I quickly learned that managing the change in seasons is a key in making a profit in short-term rental property management. While my reviews were positive, the competition was steep, and like others in Airbnb management, I couldn't afford to lose money on any of my properties and vacation rentals. I had to get creative, or I was going to sink. Over the years, I have learned and fine-tuned the implementation of different strategies to get over this slow and painful dip. Whether you have 1 or 100 properties, learning to master the low season slump can change your whole outlook and growth strategy for your short-term rental management business. Now that my company owns and manages vacation rentals and short-term rental properties in several states and countries (Washington, Arizona, Hawaii, Oregon and Argentina), each one with a different low and high season, implementing a successful pricing strategy during the low season is still vital to how I run my business. So how do you master the low season and actually have good cash flow?
My big 3 lessons are: consistently review and update revenue management metrics, cast the widest net possible on other traveling agencies (OTAs), and implement reservation lag time to occupancy pricing tactics.
These lessons go beyond the everyday maintenance you should always be doing, the "must-dos, no matter what" bucket items. By that, I mean that the low season is a good time to make any repairs you need on your property, refresh the listings with new photos reflecting the seasonal change, up your amenity offering and so on; always protect the basics. For example, if your vacation rental is in a location where the weather changes, and during the winter months it snows in the area, update the photos to show the snowy and cozy looking environment. Part of your goal is always to attract and get good reviews, so you should bring out the thickest and heaviest duvets, set the temperature to 72 degrees, and so on. Don't take these minor things for granted! You should always be making changes to keep your search engine optimization (SEO) driven guest clicks into booking conversions. An OTA, or a channel, such as Airbnb, Expedia, Booking.com, VRBO, Hotels Tonight, Furnished Finders for example, can drive your goal to be seen by many potential guests, into clicks, and ultimately into bookings.
So what if you have done the maintenance, the updated seasonal photos and amenities, but you're still not making a profit? Develop and implement a strategic plan. As I learned, having good reviews alone is not going to enough to ensure success in short-term rental property management.
Revenue Management Metrics
Start by understanding your RevPAR—or Revenue Per Available Room. This is a metric used by the hospitality industry to measure how much a property can fill its availability. Calculate this by taking total revenue (for the period of your choice) and dividing by number of nights occupied (for the same period as total revenue). Alternatively, you can use the ADR (average daily rate) multiplied by the occupancy rate. Once you understand this number, you can adjust the rental price. Note that some talk about the ADR as if it was the holy grail in short-term rental profit generation, when in fact ADR is a blurry and misleading component on its own.
Timing of Revenue Management
The best time to change pricing is at dawn. Doing it at this hour specifically will allow you to capture the newest batch of travelers looking to make a booking at a slightly reduced ADR, compared to your competitor, and increase your occupancy (and taking away bookings from the competition!), further cementing your RevPAR. This way you can outperform occupancy with the tiniest pricing difference.
Cast the widest net
Distributing your property through only Airbnb, for example, is a guaranteed recipe for failure during the low season. As the amount of vacation rentals available remain the same but demand decreases, and price becomes the single factor in determining a booking, a single OTA strategy will be your death. OTAs are seeing the revenues sharply decrease, pushing them into putting the guest first, and the host second. With revenue already low, any refunds or OTA mandated discounts will be your kiss of death. Instead publish your listing in as many OTAs as possible. Your ideal target should be four OTAs, but if you can get it on more channels, the better. You should aim for one OTA in the short-term rental space, one OTA in the vacation rental space, one OTA in the hotel space, and one OTA in the executive lease space. The more places your listing can be seen, the more clicks you will get, and the more bookings you will convert. While Airbnb and VRBO are the most popular platforms, you need to take this low season as your opportunity to redefine your audience and partners.
• Audience:
This is a great opportunity to list your property for longer than a couple of days, and opt for a 30-60-90 day rental instead. This is the executive space. It will target a different audience that is looking for something a little longer than a vacation rental. You should re-work the language of your listing to propagate on OTA websites that are specifically targeting executives, traveling nurses, corporate relocations, etc. Get someone in your place for 90 days, and your low season will be wrapped up!
Implement different pricing tactics
Redefine who it is that gets into your property by analyzing your reservation lag time versus your future occupancy rate. This goes back full circle to revenue management metrics. By focusing on your short-term RevPAR and being intimately aware of your reservation lag time, you can modify your ADR at the right time, at dawn preferably, into the future to drive a higher price point. This will fill in the gaps in your calendar with a clientele willing to pay those random nights or weeks.