Bill's Beneficial Blog

Booking Window - Lodging Newsletter November 30, 2022

By Wm, May
Published: 11/30/22 Topics: Lodging Newsletter, Websites Comments: 0

In prior newsletters a good amount of space has been devoted to explaining our "Seasonal Strategic Distributed & Dynamic" (S2D2) rate setting super software.

When version 3.0 was released in January of 2020, it proved its mettle by predicting and HUGELY adjusting rates (unfortunately downward) when Covid hit in February. But weeks later, it jumped at the chance to pump up rates as guests flocked to vacation rentals.

FYI, we do govern the algorithm tightly each day to fine tune rates, such as last minute discounts or increases, far-ahead rates, and especially by comparison to comparable properties. It’s all about supply and demand to stay ahead of those trends.

There are several other factors that affect rates. Those include length-of-stay, per-person-occupancy, and even pets allowed. Others are Sales Window and Booking Windows. This letter discusses how we deal with those variables to increase income.

In prior newsletters and in printed materials, we have pontificated repeatedly on property details that make or break rates, occupancy and owner income - like great locations, attractive furniture and fixtures, HDR photos, 3D tours, plus customer service, instant onsite service and more.

The S2D2 system can also see and adjust rates based on length-of-stay, per-person-occupancy, and even pets allowed. But "Sales Window" and "Booking Window" may be other big contributors to profit.

P.S. Last month’s letter adopted the term "Full Stack" manager to describe managers who have every management arrow in their quivers, comparing the job of vacation rental management to that of a "Full Stack" software engineer.

A few engineers carped that there is no way that lodging management could ever be as complex as building a robust software platform or intricate website code.

We beg to differ and invite any of our engineer friends to come work with us for a month to see that what we do is every bit as complicated as what they do. Except that we do it 24-7-365 and in rain, sleet, snow, heat which no coder would ever want to do.

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Sales Window - All home owners want to pay management firms on a commission fee basis to link the manager’s goals to theirs. When revenue goes up, owner and manager both win. So it is necessary to set a length of time during which the management firm is obligated to advertise, market and pursue "Sales" (bookings for the home).

Like most businesses, management requires giant up-front time in meeting with owners and (dare I say) educating them on what to expect and how vacation rentals are operated for maximum results. Onboarding must be carefully done.

The giant listing websites, like VRBO, AirBnB, Expedia and others, want owners to believe that operating a vacation rental is a "Get rich quick" scheme. In fact, earning good profits is best when a professional Manager shoulders the entire role by investing many hours and lots of expense - all up front in anticipation of earning a commission.

Over time, profits for the business owner (property owner) grow, guests return, operations become smoother and interruptions fewer. A longer sales window, allows the manager to offer their lowest commission, then to rely on steady earning as they push the property forward.

Booking Window - The time between which a guest places their booking order, and the day they arrive is called the booking window. Hotels and resorts usually set that between 12 and 24 months, seldom longer for fear rates set far in advance may prove undesirable far in the future.

The Wynn Hotel in Las Vegas adjusts rates of their 6,800 rooms every hour, 24 hours a day. What could change that would affect rates in sin city? World news, competitor rates, and even if they booked a 5,000 person convention for a week next year.

Think of the Booking Window as a typical Bell graph that constantly moves forward on 12-month schedule, starting such as on January 1st, 2022. On that day, bookings are received for December, but proportionately only a few. As the year rolls forward the number of bookings for December will ramp up. But then as the number of available dates decrease, the number of bookings will decrease until, on December 31st when no more room nights are available

The bell curve graph changes constantly. During Covid it become terribly short. It has now lengthened but is not back to normal. And it varies by destinations. This means that having a reasonably wide window is how properties secure the maximum number of bookings.

Vacation Rentals - The optimum booking window for home rentals is between 13 and 24 months. Setting a shorter window ignores the bell curve demand. Setting a firm end date decreases bookings by losing guests who insist on planning ahead. Of course, once bookings are accepted it is not considerate and probably illegal to cancel bookings that guests make in good faith.

While a booking window is innately understood by hotels, it is a new idea to vacation rental owners who must plan ahead when they want to stop renting out their homes. It takes time to ramp up and start renting, but it also takes time to ramp down and be done with bookings. Plan ahead.

Managers set commissions based on a Booking Window that rolls forward. If a shorter window is desired, that is to be disclosed to the manager prior to engagement. Changing later could result in higher percentage and retroactive fees. Cutting short an agreed upon existing Booking window would require cancelling legitimate bookings and that must be avoided.

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Author: Wm, May, Vortex VIP
Blog #: 0934 – 11/30/22

Sponsor: Vortex VIP – – VortexVIP.com