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Is it time to get rid of weekly stays? VRMA Connect

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Is it time to get rid of weekly stays? VRMA Connect

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Beyond Pricing CEO Ian McHenry shares recent local market data in North Carolina, helping vacation rental managers make informed decisions about whether to take less than weekly bookings.

Beyond Pricing CEO Ian McHenry shares recent local market data in North Carolina, helping vacation rental managers make informed decisions about whether to take less than weekly bookings.

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Is it time to get rid of weekly stays? VRMA Connect

  1. 1. Is it time to get rid of weekly stays? Ian McHenry, CEO, Beyond Pricing
  2. 2. North Carolina is a drive-to market
  3. 3. North Carolina is a drive-to market
  4. 4. North Carolina is a drive-to market
  5. 5. …with drive-to demand (Kitty Hawk)
  6. 6. …with drive-to demand (Hatteras Island)
  7. 7. …with drive-to demand (Oak Island)
  8. 8. …with drive-to demand (Wrightsville Beach)
  9. 9. …with drive-to demand (Asheville)
  10. 10. When unconstrained by weekly mins, there is significant demand for shorter stays †Significant weekend demand, typical of drive-to markets †Day of week fluctuation in demand appears smaller in summer mainly because most guests are pushed into week-long stays † Most experiments with reducing minimum length of stay (MLOS) have been restricted to shoulder and off-season, leading to greater fluctuations in weekend occupancy during those periods †Overall macro trends are toward shorter and more last-minute stays † Average American vacation is 4 days long
  11. 11. Percentage of bookings by length of stay Overall October Kitty Hawk 0% 10% 20% 30% 40% 50% 60% 70% 1 2 3 4 5 6 7 8 to14 15 to 30 31+ 0% 5% 10% 15% 20% 25% 30% 1 2 3 4 5 6 7 8 to14 15 to 30 31+
  12. 12. Percentage of bookings by length of stay Overall October Wrightsville Beach 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 1 2 3 4 5 6 7 8 to14 15 to 30 31+ 0% 5% 10% 15% 20% 25% 30% 1 2 3 4 5 6 7 8 to14 15 to 30 31+
  13. 13. Percentage of bookings by length of stay 0% 5% 10% 15% 20% 25% 30% 35% 40% 1 2 3 4 5 6 7 8 to14 15 to 30 31+ 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 1 2 3 4 5 6 7 8 to14 15 to 30 31+ Overall October Asheville
  14. 14. If There’s More Demand for Weekends Than Weekdays and People Want Shorter Stays, Why Do We Have Weekly Min LOS? †Revenue reasons: † Desire to get full occupancy from weekly bookings (enough demand for weekly = no need to reduce min LOS) † Worry that allowing shorter stays will reduce occupancy † Worry that allowing shorter stays will break up calendar †Operational reasons: † Easier to have single day for turnover / check-in † PMS/channel manager/website issues
  15. 15. How to accept shorter stays without losing revenue †Day of week pricing †Length of stay pricing †Last minute and gap filling reduction of min stays
  16. 16. Day of Week Pricing †Increase price on weekends and other higher than average days PM Example: Nags Head Recommended: 20%+ higher on weekends in Nags Head
  17. 17. Length of Stay Pricing †Having a different price depending on how long someone stays is the best way to protect revenue during peak periods †Many ways to implement but starting point is usually around what % of the weekly revenue do you want? † Option 1: No matter how long they stay, they still pay the same as if they stayed a week † PRO: guaranteed to get a full week’s rent even if you don’t fill other days † CON: makes 4 night and below stays incredibly expensive on a per night basis † Option 2: Stay 1-4 nights, pay 80% of weekly rate; stay 5-7 nights, pay 100% of weekly rate (credit to Bluetent for support of this type of arrangement) † PRO: if able to book 2 stays in a week, receive 160% of revenue † CON: still expensive for 2 or 3 night stays † Option 3: Some combination † PRO: flexible and can adapt to changing probabilities of getting shorter stays † CON: more complicated to setup
  18. 18. Length of Stay Pricing – Example 1 DoW Price Monday 600$ Tuesday 600$ Wednesday 610$ Thursday 640$ Friday 730$ Saturday 740$ Sunday 630$ Total 4,550$ LOS Premium 1 700% 2 350% 3 233% 4 175% 5 140% 6 117% 7 100% †No matter whether someone stays 1 night or 7 nights, they pay the same amount: $4,550
  19. 19. Length of Stay Pricing – Example 1 †This leads very high ADRs for shorter stays Monday check-in: LOS ADR 7 650$ 6 768$ 5 938$ 4 1,199$ 3 1,633$ 2 2,398$ 1 4,410$
  20. 20. Length of Stay Pricing – Example 2 DoW Price Monday 600$ Tuesday 600$ Wednesday 610$ Thursday 640$ Friday 730$ Saturday 740$ Sunday 630$ Total 4,550$ †1-4 night stays = $3,640 †5-7 night stays = $4,550 LOS Premium 1 607% 2 303% 3 201% 4 149% 5 143% 6 116% 7 100%
  21. 21. Length of Stay Pricing – Example 2 †Slightly better nightly ADRs but still very high Monday check-in: LOS ADR 7 650$ 6 764$ 5 959$ 4 1,018$ 3 1,408$ 2 2,078$ 1 3,822$
  22. 22. Length of Stay Pricing – Example 3 DoW Price Monday 600$ Tuesday 600$ Wednesday 610$ Thursday 640$ Friday 730$ Saturday 740$ Sunday 630$ Total 4,550$ †Figure out a premium that reflects the probability of getting a booking to fill any gaps created †Varies by market and sub-market LOS Premium 1 266% 2 154% 3 157% 4 145% 5 127% 6 112% 7 100%
  23. 23. Length of Stay Pricing – Example 3 †Reasonable ADRs †If able to book a 3 and a 4 night stay, revenue can be up 60% for the week Monday check-in: LOS ADR Total Amount 7 650$ 4,550$ 6 735$ 4,411$ 5 848$ 4,242$ 4 993$ 3,974$ 3 1,101$ 3,304$ 2 1,057$ 2,113$ 1 1,673$ 1,673$
  24. 24. Last Minute Reduction of Min LOS †If you’re hesitant or unable to do LOS pricing during your peak periods, you can ease into it by reducing your minimum length of stay closer to the stay date †For example, some managers will reduce to 5 nights, 2 months out, and 3 nights 1 month out †Last minute bookers are less likely to be taking an entire week off so you can capture more demand by reducing your minimum stay last minute
  25. 25. Considerations when switching from weekly prices and when doing length of stay pricing †PMS/Channel Manager/website/channel issues † Do each of these folks support it? † Daily prices are supported by all OTAs and weekly prices are being phased out (see Lodging Rates) † Legacy “rate feeds” may still have weekly prices. Make sure your channel manager or website knows you’re moving off of weekly rates and to always fall back on daily rates † Can you do LOS pricing? † Booking.com: yes † Websites (Bluetent, ICND, etc): yes, but ask † HomeAway: ? Will this go away with Guaranteed Pricing? † TripAdvisor: yes † Airbnb: kind of. Mostly just discounting for longer stays
  26. 26. Considerations when switching from weekly prices and when doing length of stay pricing †Your website is probably your most flexible way to implement length of stay pricing so be sure to use a modern one, like Bluetent or others †Still a long way to go to catch up with hotels † Ironic, because LOS pricing can have a bigger impact with vacation rentals, opening up more nights to people looking for shorter stays
  27. 27. Q: Is it time to get rid of weekly stays? †A: It depends J
  28. 28. Q&A + Discussion †For slides or follow-up questions: † ian@beyondpricing.com † Twitter: @beyondpricing
  29. 29. Thank you! †For slides or follow-up questions: † ian@beyondpricing.com † Twitter: @beyondpricing

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