Hospitality And Hotel Properties For Vacation Rentals In Property Development – There is a trend of increasing awareness: when travelers see the benefits of staying in a holiday home, it often becomes their home of choice for the future. People from all over the world are looking for ways to grow their dollars. For a short stay of just 1-4 nights, booking a hotel room is fine, given the size of the party, but what if you want to stay longer and have more guests than a single hotel room? Many travelers find a better option is to go out and stay in a vacation rental or private home. Private homes are ideal for guests to enjoy the feeling of being with their family, but also enjoy their privacy.
The hotel may limit the space where you can relax and it is difficult to close the door to keep the rest of the party quiet. Reading a book before bed seems impossible when your child is watching the latest episode of their favorite show blaring on the TV. Some hotels have the option for a shared suite for privacy, but if the hotel doesn’t offer a suite, you’ll be locked in a room with no door! If some quiet time is important to you, look into vacation rentals. Imagine owning a 5-bedroom private home, perfect for the whole family, for the same price as a hotel room! Enjoy that time alone in your own room, but you can watch movies together in the living room and eat in your own kitchen!
Hospitality And Hotel Properties For Vacation Rentals In Property Development
The first expense when you’re on vacation is your 3+ meals a day. Eating out at restaurants every night can be expensive. Having your own kitchen can help you with those costs and give you an extra dollar in your pocket.
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If you want the ultimate vacation experience, find a vacation rental in a serviced resort community! These include a swimming pool, tennis courts and a communal playground. This gives you the privacy you need in your home with access to a beautiful community.
Explore your options and look for something different than the standard hotel room. Every holiday home can be unique!
Advantage Of Vacation Rentals Versus Staying At A Hotel
Today, hotels aren’t just competing with hotels. And vacation rentals have entered a larger and more competitive space. During this period of change, STR hosts and property managers must use all available tools to keep their finger on the pulse of the industry and respond to all changes. The best way to do this is by using cash flow management.
Revenue Management (RM) is the art of maximizing profits. The ultimate goal of revenue management is to sell the product at the best possible price. Price too low, you lose money, too high – no sales. The problem with companies such as the catering or transport sector is that you cannot simply sell the product tomorrow. If a hotel room or train seat stays overnight, it loses its value.
Some revenue management tactics are obvious to many hosts: the closer to the effective date, the lower the price should be. You can sell it cheaply or even give it away to customers. Just make sure it’s worth it. But lead time is one of the factors that influence product demand and, as a result, price. Low or high time, local activities, day of the week, length of stay – these are some of the things to consider when adjusting the price.
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This is what an income management strategy does. They anticipate product demand based on seasonality, economic conditions or your historical data (demand forecasting) and automatically increase or decrease prices based on forecast demand and your company’s target revenue (dynamic pricing). These complex analytical tasks are often performed with machine learning.
The use of RM practices and software is critical for hotels as they compete with each other and with online travel agencies for market share. The same goes for vacation rental companies. However, they should not blindly adopt the pricing strategies of neighboring hotels. That’s because hotels and short-term rentals, regardless of the hospitality umbrella they fall under, have some distinct differences that impact RM practices.
Of course, today’s hotels are just like hotels, as hotels try to keep up with the vacation trend. However, many of them still work in traditional ways and create two different products. Let’s see what the difference is between them.
Hotels Vs Vacation Rentals
Booking and accommodation. A hotel can operate hundreds of rooms, each booked separately, while renting out the entire vacation home. This means that the two companies calculate their positions differently. The occupancy of a hotel room is determined by the number of rooms booked for one night. The occupancy of the holiday homes is calculated based on the number of nights booked within a period.
Characteristics. Vacation rentals are unique by definition, while hotel rooms are more or less standard depending on the number of beds, size, view and more. Therefore, in short-term rentals, it is more difficult to analyze competitors and apply benchmarks, because there are many nuances in every real estate. At the same time, it is more difficult to place a customer in the segment because there is a lot to consider, from the design of the house to the accessories. This makes forecasting demand more difficult.
Checking the supply. Nearly 2 million vacation rentals in the United States are managed by property management companies. Unlike hotels or companies like Sonder, which own their rental prices, third parties are less lenient because contractual obligations with the owner can prevent them from enforcing the price.
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RM expertise. Cash management is not new to hotels, many of which already use specialist software and experienced cash managers. They know how to work with data and actively respond to changes in the market. In the vacation rental industry, not only is the process not understood by everyone, but many property owners and managers lack the skills or experience to implement it, even if they have the tools at hand. This brings us to the next difference.
Available resources. Once again, large foreign chains can spend time and personnel on sales management. But a homeowner listing their rental property on Airbnb often can’t take the time to learn terms like RevPar and ADR, invest in and integrate third-party tools.
With these market characteristics in mind, how should vacation rental income be managed? Let’s talk about RM software.
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The market for RM tools specific to STR is still new, so there are many features and practices available from those already working in hotels. As we said above, this can cause complications because you cannot determine the price and need the same analysis for both types of companies. Unfortunately, many existing solutions marketed specifically for vacation rentals are not the same as general-purpose RM tools. We’ll go into it in more detail in this section.
From OTA. The first and perhaps the easiest is to use the revenue management feature of the vacation rental website’s owner profile. Airbnb, HomeAway, Expedia, and other places where you list your accommodations may have dynamic pricing and other RM features available to owners and managers. The use of these tools is free for hosts. They can be very intuitive and allow for automatic and manual pricing. At the same time, you can’t expect advanced features as they are not aimed at professionals. Naturally, these tools are only available to domain hosting users, leaving you out of all options.
From tools to manage vacation rental income. In addition, PriceLabs and Wheelhouse are among the specialty products that offer state-of-the-art revenue management, often enriched with machine learning capabilities. Using additional tools on top of your asset management system is of course more expensive, but you do get access to advanced algorithms and more customization. We will talk more about the capabilities of such software in the next section.
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Personal income management for vacation rentals. It makes a lot of sense to go the traditional route and develop your own solution. Income management will become more important in the coming years as the holiday rental market grows, so it’s worth investing in a product that takes all the differences into account. In this case that is possible
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