Profitability Strategy #5: 5 Must-Have Tactics to Beat the Competition
There is no denying that traveler demand has grown—in fact, it is anticipated to double in the next 20 years alongside population growth (Forbes). However, the increased volume of travelers only accounts for a portion of the vacation rental boom of the past few years. The growth of the vacation rental industry has been equally rooted in a shift of market share away from traditional lodging options. Vacation rentals have laid claim to a full 20% of the total lodging market, and the trend will likely continue as vacation-home sales destined for the short-term rental market reach record levels at 21% of all real estate transactions (Skift, Inman).
For Vacation Rental Management Companies (VRMC’s), profitability depends on capturing market share from traditional lodging as well as private accommodations. Here are five tactics for increasing market share in a currently explosive and crowded industry.
Differentiate from Hotels: Someone Else’s Home Away from Home
Know your travelers. A 2015 Ernst & Young “Global Hospitality Insights” report notes that in an attempt to cater to younger travelers, many new hotel brands are moving away from the “home away from home” philosophy to feature smaller rooms, social lobbies, technology amenities, and more. (EY)
What travelers desire from a vacation rental experience is far different—they want someone else’s home away from home, a place where they can feel a part of the local culture with a bit of extra space. Embracing this in messaging and marketing may attract travelers torn between a rental and a hotel.
Market Shifts Happen Quickly: Be Ready
Understand how travel is changing in your region. Social media and intermediary sites play a significant role in influencing destination shifts from year to year. For instance, TripAdvisor’s Best US Beaches for 2015 featured seven Florida beaches in the top ten. In 2014, Hawaii took seven of the top ten, while Florida occupied just two. Significant shifts in exposure, especially to drive destinations, can yield increases in family travelers who often desire vacation rentals for the multiple bedrooms and kitchen access, as well as couples traveling together. Watch for changes in the desirability or exposure of your market to move quickly with outreach to new and previous guests.
Competitive Rate Intelligence: Shift Smartly
In addition to demand forecasts, keep a finger on the pulse of competing hotels and private accommodations. When rates drop, determine why and, rather than immediately undercutting, consider value-added promotions to drive traffic. When rates rise, ensure yours are in line with increased rates. Rates that are wildly out of sync with the market can be a red flag to prospective guests.
A TripAdvisor travel survey shows that 77% of travelers always check travel reviews on the site before booking a hotel (HotelMarketing). A TrustYou study reports that that if prices are equal between two hotels, travelers are almost 4 times more likely to choose the property with higher review scores, and 76% were willing to pay more for a property with higher scores (Tnooz). To stay competitive not only do solid reviews matter, but travelers need easy access to them. Put reviews out there front and center.
24/7/365 Call Coverage
Many VRMC’s struggle with this element of guest service due to staffing and budget limitations; especially when it comes to competing with hotels. It is essential that guests can reach an agent at all times. If 24-hour in-house call coverage is not viable, options such as RezForce exist to provide well-trained, hospitality experts to cover overflow calls during peak hours as well as overnight. In addition to increasing conversions, having agents available at all hours increases traveler confidence in your product and service. The voice channel continues to be the top revenue driver for vacation rentals; comprehensive call coverage is well worth the investment.
All of these profitability tactics are connected to one goal: to continuously engage with and provide value for guests. In addition to staying in touch with market shifts and competitors, VRMC’s must understand traveler habits, concerns, and interests. An essential component once those needs are understood is to capture and leverage that data so that voice and online channels are maximized for the most profitable direct bookings and an increased volume of repeat guests.