On your Benchmark, Get Set, Go (Part 2)
This is a guest post by Transparent. Transparent’s Smart Rental data dashboard empowers property management companies to optimize their revenue management strategy. They track over 35 million Airbnb, Booking.com, Vrbo & TripAdvisor listings worldwide to build game-changing vacation rental data insights such as rate, demand, occupancy & supply analysis, which allow users to maximize their revenue and grow within their market.
Marketing: build the listing’s brand
In our last post, we started discussing benchmarking and using it for prospecting. Once you’ve entered the market with a new property and are open for bookings, distribution may also be informed by benchmarking data: prioritize your platform selection by higher performance for the segment in question. With your benchmarking in mind, you can corral those similar listings in your cohort. Pay attention to the styling and aesthetic of this benchmarking group, as well as reading their amenities, descriptions, and reviews to find out how to best appeal to future guests. Are family-oriented groups more representative of the demographic for this submarket, or the individualized experience of the traveling businessperson? How can you cater to either? What should be taken into account in terms of the design and accessibility of your new listing? Ensuring that you provide what your competition is offering and bettering it will position your listing well to capture those early bookings.
Therein lies another opportunity to benchmark your way to swift success: the burning question of how to set your base rates. In order to foster momentum toward the projected revenue goals from the prospecting phase, it may seem reasonable to match the highest rates that are booking for your particular listing type. However, starting out, you won’t have the reviews or ratings that influence a guest’s commitment to book. Therefore, you’ll have to strategically reconsider this approach if you want to gain booking traction and make a lasting impression in your market.
The first step in this revenue management chapter, therefore, is testing the water with a slightly lower base rate instead of matching target straight off the bat, to lure in guests looking for a more attractive rate for a similar experience. Due to your property being newer to the market and not yet having established itself, you’ll want to utilize the available data to exponentially build guest reviews and ratings during your property’s debut. Then, once you’re branded as a top-notch experience, you can begin to rival the rates of top performers in your benchmarking group and learn how to further optimize your listing & prices.
Dynamic pricing: break ahead of the pack
Now you’re established, you can get more granular with your rates, and more ambitious!
Advanced data analysis will allow broader categories to be refined for more detailed, optimized outputs. Effectively track daily advertised rates, occupancies, revenues, listing pages, and reviews for the particularities of a market, segment, or individual property.
As your property evolves, so will your benchmarking stratagem. Dynamic pricing is an incredibly useful approach to responding to seasonality, active competition, and market fluctuations. Here, data visibility removes the limitations of algorithm-based tools only as effective as the insight behind the base rate entry, and positions you to capitalize on-demand pickup, price nuances, and guest reception to an increasingly specific competition. As this practice becomes second nature, and you track performance against benchmarking, you’ll be able to confidently say that you are pushing optimized rates and maximizing revenue.
Benchmarking: the root of the cause
Short-term rental management is a series of layered, intricate processes that coalesce in a successfully managed, optimally priced property. Relying on benchmarking as a foundational methodology ensures that you are accessing data that is applicable and decisive, which sets realistic expectations and achievable goals for owners and investors alike. In addition, benchmarking positions you to create successful listings and with attention, achieve over-and-above your competitors.
Transparent understands this bottom-up approach to a winning revenue management strategy; the competitive advantages within the Rental Estimator and the Smart Rental PRO Dashboard work in tandem to deliver quality benchmarking data from the beginning to the endpoints of your STR business. Wherever you are in your revenue management journey, it’s never too late nor early to adopt these standards of data-based, benchmark learning that scaffold nicely into a best practice that optimizes revenue growth.