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Lodging Update June 30, 2020
By Wm, May
Published: 06/30/20 Topics: Comments: 0
Well, where do I start? It has been a wild ride since the outbreak of the Covid-19 virus.
First, it was the massive economic slow down. But then, slowly, lodging guests realized they could "Get outta Dodge" and stay in a nice clean private vacation home, with contact-less entry, quarantined with their families, but still get out and about in nature.
Vacation rental bookings have rebounded in all our areas, and jumped hugely in some areas. As mentioned in last month's update letter, our super secret S2D2 Yield Management software prompted us when demand plummeted, but also alerted us to pump up rates when demand then jumped.
The result has been higher income for June and July. August is strong, too. And, with schools not re-opening, we think summer demand and, even, rates can continue into September.
Forgive us for gloating yet again, but we giggled as the local competitors were asleep and snickered as carpet bagging out-of-town managers missed the trend, because they are not in touch with every local market. Some panicked early and dropped rates by half.
We did the opposite and our clients are profiting.
The first office in our network opened in 1964 and we have been watching and learning as consumer behavior and habits change. Never have they changed as greatly and as rapidly as with the virus.
Here is the story.
The Advertising Industry has always been greatly misunderstood. It is not all commercials with beautiful celebrities and cavemen selling insurance on TV. On the Internet, advertising is not all about search engine optimization, pay-per-click Google ads or Facebook's spying on its members.
Having started in the ad agency business, I have spent decades watching, studying and anticipating what customers want to buy. Ad pros never try to sell things to people who don't want them or don't need them. And not just because they want to be ethical, but because they know it's not sustainable.
Famous advertising professor, Ed Bannister, startled his class when he said, "Good advertising just makes a poor product fail quicker." (People try it, hate it, and forget it.)
An agency partner one said, "Advertising is easy. You ask people what they want and then you give it to them." Never has this been more true than during the last four months of a pandemic.
With the advent of vacation rental websites just 20 years ago, travelers figured out that staying with their family in a private vacation home is simply a better deal than staying in a cramped hotel room, with no kitchen, no living room, long walks to the parking lot, and outrageous rates - on a per-guest basis.
The 9/11 tragedy frightened the world, of course, but slowly travel returned. The 2008 recession took away discretionary income, some of which would have been for travel. Slowly it rebounded.
Some guests fall for the pitch from Online Travel Agencies (OTAs) such as Expedia, because they buy the pitch that all bookings are cancellable, that the OTAs list all lodgings, and that they can earn "points" that may have some value.
VRBO.com implied that guests were booking with the "Owner" when, in fact, the majority of properties --especially the well maintained, properly cleaned ones -- are from professional managers. But some guests fell for it.
AirBnB sold guests the option of renting a couch or room in someone's house, until they figured out that guests really want private vacation rental homes. AirBnB produces lots of bookings, but guests can be -- shall we say -- weird. Such as expecting the host to meet them for a drink when checking in, even if it's late at night.
At first Covid pushed people into panic, but then travelers ran out of patience and figured out that the safest lodging option is to rent a professionally-managed private vacation home.
We soared because we always ask customers what they wanted. Yes -- our cleaning exceeds high hospitality standards. Yes -- you can check in without "touching" anyone. Yes -- you can bring your family. Yes -- the homes have solid internet so guests can work while vacationing. And oddly, no -- there are no early check-ins to assure the home has been sufficiently empty prior to arrival. (That is the answer the guest actually wants to hear.)
Our ability to adapt to the changing market place has given even more visitors wonderful vacations and our property clients even more money. If your vacation rental home income has not soared, please give us a call. We'll fix it.
Author: Wm, May, Vortex Managers
Blog #: 0772 – 06/30/20
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
HelpBookMe Implements Version 3.0 or S2D2 Pricing System
By William May
Published: 06/03/20 Topics: Software, Sunspots Vacation Rentals, Vacation Rentals, Vortex Managers Comments: 0
Although the Vortex Organization first inserted yield management tools into their HelpBookMe lodging management system years ago, today they announced release of version 3.0 of tools referred to as S2D2 for "Seasonal, Strategic, Dynamic and Distributed".
Salman Arshad, chief engineer notes, "Artificial Intelligence pricing is based on the simple idea of Supply and Demand. But predicting supply and demand is a complicated undertaking because variables change frequently and quickly."
Yield Management, sometimes called "Dynamic Rates", increase or decrease based on the general economy, local and regional economic factors, the features and amenities of each property, local events and circumstances, prior day, week, month and quarter pricing, competitor rates and, even, the weather.
S2D2 rates are based on artificial intelligence that queries over 8 billion dollar points every evening, chooses the factors affecting every individual property, and then applies them to our geographic markets right down to the individual vacation rental home or lodging unit.
"Of course our pricing is based on sophisticated and ever changing algorithms, but we still apply manual review, oversight and, sometimes, intervention," said Kate Quinn, account manager at Vortex. "That is why our product name acknowledges all of those important factors."
"Studied" means constant inspection of what competitors are charging for similar and dis-similar properties. "Strategic" rates are set differently depending on time of the year, the season, and in accordance with local events.
"Dynamic" means that rates are adjusted regularly based on occupancy, advance notice and other factors. "Distributed" requires properties be widely advertised on every productive website and through conventional media to ensure that those who might demand the property know it exists.
You cannot have one of those elements without the others, otherwise the science of yield management would be incomplete. After extensive testing, results show that S2D2 version 3.0 can increase both occupancy and rates, resulting in more profit for property owners.
"It is counter-intuitive to recognize that S2D2 does not care what the day of the week is, what the season is or even if there are holidays." explained Arshad. "Instead, with constant calculation, the software foresees trends and adjusts rates to be at the sweet spot that fosters both occupancy and optimal rate."
Another reason yield management works so well is that, surprisingly, travelers have become accustomed to it and, in fact, learn to use variable rates to change their behavior. In other words, demand for lodging ebbs and flows based on rates.
The HelpBookMe technology and especially version 3.0 help charge the highest possible rate on the most popular dates. Modest rates are charged during shoulder seasons. And low rates are set for slow seasons to attract guests who would not otherwise consider booking.
Yield management shines during good economies, but quickly recognizes and reacts to negative events such as economic downturns, regional weather, and any happenings beyond anyone's control.
William May, a Vortex leader admits, ""Every owner loves the idea of high rates, but pride of ownership can be wounded when they look at lower seasonal rates. But once they see the growth in annual income, owners become quick converts to our S2D2 dynamic rates."
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Vortex Managers is a network of trained vacation rental management companies and provides its clients with the resources of giant lodging corporations without the cost or delay. HelpBookMe is a proprietary lodging management software system perfected with thousands of hours by expert engineers. For more information on Vortex, call or Email: Info@VortexManagers.com, or Website: www.VortexManagers.com
Author: William May – Manager, Vortex Managers
Blog #: 0746 – 06/03/20
- Covid-19 Virus
- Dynamic Pricing
- Online Travel Agents (OTAs)
- Property Management
- Sunspots Vacation Rentals
- Vacation Rental Management
- Vacation Rentals
- Vortex Managers
DETAILS: We work to keep this information up to date, but details do change from time to time based on circumstances, often on short notice, and sometimes beyond our control. To verify any answer or other information you may need, please call or email us anytime. Allow a reasonable amount of time for response. Only legitimate inquiries will be answered.