With Airbnb hosting being so lucrative, it is inevitable that competition in the Vacation Rental industry will continue to rise in 2017. This will greatly affect prices and profitability and is why it is important to maximize the earning potential of each of your properties. John Bower, Chief Product Officer from YourWelcome, is joining us today to share his tips for unlocking new revenue streams from every booking.
The home-sharing and vacation rental industry, highlighted by the rampant success of companies like Airbnb and HomeAway, is facing government regulation on both a national and regional scale. In some areas, the number of nights that you can rent your property is being diminished by 75%, so our approach to making profit must reflect that; maximizing revenue from a smaller number of bookings, instead of relying on a high frequency of guests.
Whether you’re a newbie or a seasoned pro, the key to solving this problem is upselling. It’s possible to deploy simple technological solutions to quickly make a difference in your nightly bottom line – wherever you list your property online.
Here is How to Increase Revenue From Fewer Guests:
#1 Reduce The Time You Spend Answering Routine Questions
It’s simple – less time spent answering the phone will equate to more money. Freeing yourself from the shackles of problem-firefighting will allow you to spend more time on hospitality and hosting – one of the reasons that you started letting your property in the first place.
If your guests perceive that the easiest way to get information is to call you, then that’s what they’ll do.
In the age of the Google search, even the least tech-savvy expect to be able to find answers in just a few taps. Every click between your guest and the information they are looking for is a roadblock, and it is these barriers that you need to remove.
This is the reason that no one reads your house manual on your Airbnb profile, and why you get those late-night messages asking how to operate your dishwasher – information is either being shown at the wrong time, or hard-to-find when they are looking for it. If they’ve just stepped off a redeye flight to spend a few precious days in your part of the world, the last thing they want to be doing is clearing space on their phone to download an app just to get the wifi details, or bookmarking a website.
Wherever there is repetition, there is an opportunity to automate – it’s possible to use new technology to solve this problem for you. Displaying your house manual in an innovative way completely removes the responsibility from your guests to retrieve information, and will result in an immediate reduction in the number of phone calls you receive about the things in your home.
YourWelcome is one such solution; all of the information about your home is included on a wifi-connected tablet for them to use as soon as they walk through your door. Your wifi details are also shown on the home screen, so they can get instant internet access without having to rummage through your router to pull up the password.
#2 Up-Sell Late Checkouts & Other Services
Offering a late checkout is the easiest way to increase the potential revenue from every booking. Guests that don’t want to pay are far more likely to adhere to original check-out time, and guests that do will pay up to 40-50% of your nightly rate for the convenience.
As with the tip above, this will only succeed if you make the booking process clear and easy for guests. Sending the right offer at the right time is key, and again you can use tech solutions to achieve this effect.
To save any unnecessary hassle, it is crucial to stick to a rigid schedule – and to be firm when guests inquire about arriving early or staying for a few more hours.
Here’s an example schedule that I have used in the past:
Set your check-out time to 10:30AM
Offer extensions until 3PM
Arrange a hospitality clean for 3:30PM
Shift your check-in time to 5:30PM.
You can tweak the timing until you find something that works for you. If you think the turnaround is too tight, experiment by bringing forward your check-out time to allow more of a buffer.
#3 Set Up A Mini Bar
Whether you decide to offer luxury add-ons like a bottle of champagne, or simply want to offer essentials like toothpaste and deodorant; why not stock an ‘honor bar’ – a collection of small or premium items available for them to purchase.
An honour bar is simple to set up – you can buy many consumables in bulk, for a reduced price – and guests are happy to pay a little extra for the convenience they provide. Think of it like a mini-bar, we all know that the contents can be purchased for less elsewhere, but they still drive a handsome profit for the hotels that install them. The ‘convenience tax’ you add to every item is where you can start driving a profit.
The key is to choose desirable items with high potential profit margins; craft beers and wine, luxury chocolates, local produce.
Don’t just focus on things that guests need, offer things they want – you could put together a list of affordable gifts, for them to take back to their families.
The next step is to set up your payment method. The simplest option is to set up a price list and honesty jar – though this isn’t really suitable for those that manage their property remotely unless it is bolted down. You could use an app such as HonourTab to collect payment – once set up, your guests download the app and set up a tab for the things they use.
Whether you are seeing a lower number of bookings through rising competition, or perhaps are in an area facing new regulation, you can increase profits by upselling additional products and services to your guests.
Get creative – you should start by surveying your guests to find out which things they are buying or services that they are booking. If you start to hear similar responses, then think about how you can pre-empt their needs – whether you’re offering gift packs to purchase, or running your own taxi service to the airport.
If you’re interested in learning more about property management and discovering the many ways Guesty's platform can help your business, we invite you to a free one-on-one session with one of our experts.