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Crystal Balling

the Industry's

Technology Glut2015 Technology Options for

Vacation Rental Managers

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Introduction

Crystal Balling the Industry’s Emerging Technologies

2015 TECHNOLOGY CONSIDERATIONS FOR VACATION RENTAL MANAGERS

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Presenters: Crystal Balling the Industry’s Emerging Technologies

Who We Are

George VolskySeaside Realty & Industry/Revenue Management Consultant.

Doug KennedyPresident, Kennedy Training Network

Tom LeddyPresident, Leddy Associates, Inc..

Amy HinoteEditor, VRM Intel &

Founding Member, The VRM Consultants.

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Emerging vacation rental technology categories

Technology Categories

Guest Apps & Activities Pricing ToolsMarketing

Property Management Systems

Call/Lead Tracking & Management

Operations & Smart Home

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ROI is important when evaluating technology purchases..

Return on Investment ($20k return / $10k cost = ROI of 2) • A vendor may advertise up to a 40x ROI• But real ROI may be 2x or zero, not 40

The vendor may mean “Spend 10K to get $400K in new sales”• But just a small percent of rent trickles down to VRMs• Too many VRM products generate no ROI

2015 P&L

Co Sales 1,000,000$

CoRev(Com & Fees): 400,000$

Expenses: 352,000$

Pre-tax profit: 48,000$

2016 P&L

Co Sales 1,400,000$

CoRev(Com & Fees): 560,000$

Expenses: 492,800$

Pre-tax profit: 67,200$

$19,200 / $10,000 = 1.92

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Technology Prices Can be Prohibitive

A vendor may charge 1% of Sales

This may not be a inexpensive as it sounds: 1% of sales (here $10,000) can equates to 21% of a VRM’s pre-tax profit

2015 P&L 2016 Price

Co Sales 1,000,000$ 10,000$

CoRev(Com & Fees): 400,000$

Expenses: 352,000$

Pre-tax profit: 48,000$ 10,000$

2016 Price as % of 2015 Profit: 21%

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Property Management Systems, Operational & Smart Home

Crystal Balling the Industry’s Emerging Technologies

2015 TECHNOLOGY CONSIDERATIONS FOR VACATION RENTAL MANAGERS

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The Early Years in the Vacation Rental Business

Property Management Systems: The Early Years

USPS

PHONE SYSTEM

BANK

FAX MACHINE

PMS/Accounting

SystemTape Chart

Reservations Board

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Chronology of Expanding Technology

Tracking $

Internal

Communications

IntegrationTracking the Money

Tracking Internal

Capabilities

Expanding Communications

Integration with Other

Systems

● Owner/Guest Details● Unit Availability and Rates● Housekeeping Scheduling

● Emails● Website

● Internet● Banking● Distribution

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In Short – Expanding Outward

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Today

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What functionality should be in the PMS?

• Coming from the PMS software business, I have generally thought everything.

• This is totally unrealistic.

• In it is not in the system, it probably needs a high level of integration.

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Do You Keep Current?

• Are you aware of new features when they come out?

• Is someone on your staff taking the lead on implementing new functionality?

• Without a ‘Champion’ not much happens.

• Do you have an internal training process and/or standard operating procedures?

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Call/Lead Tracking Systems

Crystal Balling the Industry’s Emerging Technologies

2015 TECHNOLOGY CONSIDERATIONS FOR VACATION RENTAL MANAGERS

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What Are Call and Lead Tracking Systems?

In short, these systems allow for:

• Incoming calls are recorded.

• Repeat callers are identified

and records populate.

• Calls can be turned into leads

that are traced onto a “lead

stream” list for follow-up.

• All guest correspondence is

then attached to the lead.

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What Are Call and Lead Tracking Systems?

Some offer additional features:

• Integration with online chat.

• Integration with PM system so that guest details

populate automatically. Some integrate with

multiple systems; others integrate with their

company’s proprietary system.

• Provides “ACD” type call traffic reporting.

• Some allow call monitoring and scoring.

• Some offer systems and/or sales training.

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VRMA Suppliers Offering Call/Lead Tracking Systems

Survey Respondents Included:

• NAVIS Narrowcast

• Streamline Xtreme Plus Phone Force

• TRACK Pulse

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What questions should I ask?

Selecting a Call and Lead Tracking System

Do my other property management, phone and/or CRM systems

already provide some of these functions? If so, do I really need

the remaining missing functions?

Are “hybrid” semi-automated processes that can be set-up at

lower costs? If so, how much labor will it take?

If not, are manual processes an option?

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Marketing Technology

Crystal Balling the Industry’s Emerging Technologies

2015 TECHNOLOGY CONSIDERATIONS FOR VACATION RENTAL MANAGERS

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A Day in the Life of a Vacation Rental Marketer

Social MediaNew Marketing Ideas

Repeat Guest MarketingContent Marketing

Loyalty ProgramsOnline Marketing (SEO/SEM/Retargeting)

Website TechnologyEmail Marketing

Systems IntegrationMarketing Automation

Offline MarketingDistribution

Past Guest and Lead Database Management

Reviews/Online Reputation

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What’s New in Marketing Technology

Marketing Mix

Autoresponders

Channel Managers/Distribution

Guest Apps & Activities

Customer Relationship Management (CRM)

Marketing Automation

Loyalty Programs

Website Technology

2016: All about the database…

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Currently, Transactional Foundation Instead of Customer Foundation

Lead Management

CRM/Database

Reservations & Payments

Accounting System

Marketing Automation

Website

Online Marketing

Distribution Channels

Evaluation (Analytics, BI)

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We have a long way to go as an industry to get this nailed down.

CRM Database Management

New Leads

Old Leads

Guests

Owners and Prospect Owners

Guest’s Guests

CRM

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Web to Lead/Data Collection

Responsive Design

Property Display

Booking Engines

Tracking and Capturing User Behavior

Responsive, Device-Compatible Design

New Features to Display Properties

Flexible, Integrated Booking Engines

Website Technology

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Process for implementing marketing automation

Marketing Automation Set Up for VRMs

Closely Evaluate and Adapt

Determine Rules for Automated

Communications

Begin Automation

Clean and Add Existing Database

Set Up Autoresponders

Set Up Data Collection for New Leads and

Guests into CRM

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Marketing Technology

● Improve Guest Experience● Collect Data from All Guests● Communications● Upselling● Partnership Opps

Examples● Glad to Have You● Streamline● VREasy’s Guidal● LSI’s RezText

Guest Apps/Activities

● Connect with Multiple Channels● Track ROI● Control Distribution● Pricing● Smart Grouping

Examples● BookingPal● LeisureLink● Listing Bridge● Rentals United● Xotelia

Channel Managers & Distribution

● Repeat Guests● Competitive Advantage● Partner with Points Providers

Examples● VacayStay● Visual Data Systems

Loyalty Programs

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Pricing Tools and Revenue Mgt

Crystal Balling the Industry’s Emerging Technologies

2015 TECHNOLOGY CONSIDERATIONS FOR VACATION RENTAL MANAGERS

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New Pricing Tools:

A slew of new pricing aids that:

• Monitor

Occupancy rates

Advertised prices for “comps”

Market prices

Your company’s reservation data

Suppliers variously hold their products out as:

• Mere guides that help you make pricing decisions

• Automatic pricing solutions that change PMS rents

• “Yield-Management” modules that can raise rents

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Tool Types:

• Predictive systems that automatically set prices

- Using external data to make predictions

• Rules-based systems that let you set the rules to

- Increase or decrease rents at specific occupancy or dates

• Comp-set tools that summarize rents in your area

• Tools that tell you when your rates are out of sync.

Data Harvested

• Hotel rents, VRBO or Airbnb listings, events, weather, etc.

• Competitors’ websites

• VRMs own reservation history

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Product Features of Note

• Comp selection tools• Market trend information• Distribution channel pricing• Fixed Price Options

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Smart Host

Cool approach to comp selection:

• Smart host identifies comps

• You adjust by adding or deleting comps.

• Add comps by pasting an Homeaway or Airbnb ID

• Current limitation:

Focuses on Airbnb, VRBO.com

& HA

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Beyond Pricing• Works for individuals and small managers (10,000 listings already).

– Dozens of property managers including MyVRHost and OneFineStay

• Auto-price using external data to make demand predictions. Automatically tells you what price vs. rules-based systems implementing your judgment.

• Vs. comp-set tools that indicate what competitors are charging.

• Be wary of copying prices of unsophisticated competitors (why?)

• Based on external data

• Easy-to-use, requires no training (10,000 listings)

ROI Benefits:

• Saves time from manually having to run demand and comp analysis to determine prices

• Keeps calendars up to date, improving listing rank

• Free one-month trail: 1% revenues

– ($5 mil 1%= $50k) ($5 mil * 40% = $2 mil x 10% op profit)

– Cost can equate to 25% of owner’s profit.

– Paying on total revenue or bookings generated?

• “up to 40x ROI for owners [how calculate?]

Limitation: Airbnb listings, imprecise book amounts, Airbnb data

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ListingBridge

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Everbooked Reports

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RealVoice RateManager

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Rented. Case Study

VRM Anna's Anna Anna's

Transaction history Rev Bid Com VRM Expenses Net Time (hrs)

2013 $ 35,000 35% $ 12,500 $ 22,750

2014 $ 27,500 $ 4,500 $ 23,000 150

"rented" facilitates contract:

Manager Bid Premises: $ 35,000 65% $ 12,000 0 $ 23,000 0

Managers Actual: $ 41,000 $ 18,000 $ 23,000

The first manager could not price below $1500 without losing money.Through rented., a second Manager (more efficient with pricing savvy) booked:

•10 peak weeks at the usual rent (as had Anna and her first manager)•10 off-peak weeks at the usual rent (more than Anna, same as first VRM)•5 additional peak weeks at a 40% discount (well above marginal cost)

The property went to the best professional. Two wins.

Summary

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Pricing Technology Challenges

• Delivering “clean” data

– Listing sites “clutter”

– Identifying “comps” (without your input)

– Flagging fee influence (add-on fees)

– Missing comps

• Factoring in advance book time (“When” renters book)

– This differs by home: Don’t drop prices too early.

• Accommodating alternative pricing “goals”

– Some tools price “to book” - leave money on the table.

– No tools can predict price-increase opportunities in most markets.

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Pricing Needs Vary by Market

We all need critical data to price well:

• How much “WILL” renters pay for a home?

• How much do they “NEED” to pay?

• What do renters consider when picking a home?

• When do specific homes book and rent?

NONE of the current products supply all this.

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Closing Thoughts on Pricing Tools

• Pricing has to begin with your reservation data. (“Core”). Market data is “Context”.

• Pricing tools may be helpful in some markets.

• They won’t be prime time for a year or two.

• Don’t rely on pricing tools to learn pricing.

• Don’t buy tools unless you don’t know more about your needs than your vendor.

– Pricing tools can be dangerous.

– It takes a year or 2 to confirm whether tools work.

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Conclusion

New technology, Internet and mobile, is “disruptive,” shifting profits and market share.

The services that dominate our budgets will be different in three years, as will VRMA’s showroom.

New products will displace legacy marketing services that have helped the industry get where it is today.

Your job is to keep is to balance cost and benefit in terms of ROI, so that you can adapt and prosper in the aftermath of disruptive change.

We hope this session is a start in that direction.

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Pricing Tools and Revenue Mgt

Crystal Balling the Industry’s Emerging Technologies

2015 TECHNOLOGY CONSIDERATIONS FOR VACATION RENTAL MANAGERS