Lodging Update July 31st, 2019
By Wm, May
Published: 07/31/19 Topics: Vacation Rentals, Vortex Managers Comments: 0
It is difficult to tell people things they don't want to hear.
Doctors don't want to give diagnosis of disease. Bankers don't want to say your account is overdrawn. Your kids don't want to say you are getting older.
In lodging management, sometimes we have to tell clients how the industry works. With the pace of change in this quirky industry, sometimes we have to call up and say something has changed.
So this letter is to summarize some of the changes to the lodging industry that you just might not know about.
In fact, the marketplace is growing, owners are making more money, more guests are enjoying homes and management is becoming more scientific, more predictable and more fun.
It's also more work, but that has always been the case.
It's not bad news, usually it's good news, but it's always news.
BUSINESS: Every home that becomes a vacation rental becomes a business. They create income for property owners, but demand time and attention. We offer maximum income with minimum fuss. We invest the time and send profits to owners. Hundreds of methods are applied to make that happen, in ways no other manager does, and in ways do-it-yourself owners can't match. We treat it like a business.
NET INCOME: Owners have two goals (A) Keep the home in good condition (B) Send them maximum net income. That may require some owners to change their thinking. Presumptions don't help, inflexibility doesn't work, and failure to adjust to constant industry changes risks low income. Rely on us to avoid those problems.
PERISHABLE INVENTORY: At midnight every day a home which has not been rented becomes worthless for income. Grocery stores understand that some inventory, such as produce, is perishable and must be discarded if not sold. The manager's job is to book every night at the highest rate, and sometimes at a modest rate rather than to produce no income for the owner.
SCIENCE: We use sophisticated Yield Management techniques that employ Dynamic Rates. Every owner is delighted to see super high rates at the super popular times. But it also means medium rates during shoulder seasons, and low rates in slow seasons. Rates must change based on supply and demand. We don't set rates, the market sets rates.
PRIDE: Some owners are delighted to see big rates and slighted to see low rates often proclaiming "My house is worth more than everyone else's!" Pride of ownership is understandable, but don't let pride empty your pocket book. Allow your manager to employ the science.
NEGOTIATIONS: Since the recession, Americans have became hagglers. Decades ago we all laughed at those silly European or Asian countries where bargaining was everywhere. Today we have become them. Good managers never regret travelers who want deals, but work to turn every possible customer into a happy paying customer.
MAINTENANCE: Every home ages over time. Second homes age about the same. Renting does not accelerate routine repairs and maintenance, but it does enforce the need. Guests have come to demand properly managed homes and hospitality grade cleaning. Good managers provide basic maintenance for affordable rates not to line their pockets, but to avoid guest refunds and credits.
REVIEWS: With the advent of the internet, every business gets reviewed, sliced, and diced online. No matter the quality of a home, owners must be prepared to see negatives online. Plus legitimate complaints (such as a failed water heater) must be fixed fast to avoid reputation assassination. Your manager should be praised for taking swift action to protect owner income, even if there is a cost.
OBSERVATION: Housekeepers and managers keep an eye on every home, but no one can memorize the interior of multiple homes They might not notice a missing throw rug, a pot, pan or hand towel. Guest theft is very rare, damages are uncommon, but as a business it does happen. Your manager can attempt to assess the guest or charge damages to deposit insurance. If that is not possible, it becomes a cost of doing business for the property.
Author: Wm, May, Vortex Managers
Blog #: 0682 – 07/31/19
Sponsor: Vortex Organization – We train quality people to help run unique Inns, Resorts and Vacation Rental Management companies, in an industry that has been a webby net of technology combined with good old fashioned property, guest and owner services. – VortexManagers.com
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