Bill's Beneficial Blog

Vacation Rental Greed - Lodging Newsletter June 30, 2024

By Wm. May
Published: 06/30/24 Topics: Education, Investment, Lodging Management, Profit, Selling, Vacation Rental Management, Yield Management Comments: 0

In the movie "Wall Street", actor Michael Douglas’ character Gordon Gekko proclaims:

"The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit."

In 2015, the "U.S. Open" Golf tournament took place near Tacoma, Washington. Promoters said it would be a massive boom for tourism. But they failed to say - only if you know what you are doing. With our first office having opened in 1964, we have watched how many events affect lodging. Our advice? If you don’t have sophisticated yield management to maximize profit, greed will cause pain.

Normally, clients are not allowed to set rates for the very reason that played out at the U.S.Open. But in this case, a large client insisted his rates be raised ten-fold. To our later chagrin, we gave in.

But by now you may have guessed what happened: It seems that the golf watchers prefer to stay in hotels where they can gossip with like-minded golfers, and maybe rub elbows with pros. The privacy of a private home is not what they come for.

Then the owners of usually non-renting homes, on and near the course, arranged to move out of their houses to offer rentals during the tournament. The market became flooded.

Although our property was very nice, it was far away from the action. Attendees wanted to avoid driving back and forth several times a day for a whole week.

As the championship week approached, our client panicked and screamed "Drop the rates! Let’s get some bookings, any bookings." We did not say, "I told you so." But we could have.

But it was too late. Event travelers plan far ahead and there were no guests to be had. While the property could have earned $10,000 that week, instead the owner made zero, zip, nada.

Setting proper rates is difficult even for skilled experienced managers who have research on rates, dates and competition. Clients do not, so they should drop their ego, ignore the greed, and let the pros make maximum profit for their homes. Sometimes the author Ron Rash, is correct:

"A small profit is better than a big loss."

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Making a profit is good. Being greedy is dangerous. Here is how we pursue profit.

Authority - Let us do our jobs for you. Accept Yield Management as the powerful tool that it is - even if it seems not to work to you at times. Follow our recommendations, approve our ideas, and invest in the little things that make a difference.

Pride - Swallow it during seasons when no one is coming to town and as rates drop. Remember rates will soar during high seasons and yes, even during events. The telemetry we buy considers past, present and future events. It reacts quickly to changes such as weather, travel challenges, and everything competitors are doing - hotels, motels, inns, resorts and vacation rentals, of course.

Doll It Up - It is an old phrase my father was fond of as he "dolled up" his business, his car, his garden, and his 3 boys as he dressed us up for Church every Sunday. As a six old boy I swelled with pride as our teacher reminded students to see "Billy’s garden on the way home. His father grows the most beautiful roses." Dolling up a rental home is more than just good amenities, it is special touches that make a difference.

Buck Up - Ok, here is another phrase from my dad. Because rentals deal with consumers, accept that someday some guest will hate your town, your neighborhood, your resort, your house, your furniture, or even your manager. They are wrong of course, but the best defense is to make your place very nice and keep it that way.

Wise Up - I mean this as no disrespect, but this is the third phrase my Dad trumpeted - be wise. We pay attention, we study, we watch the competition, but we also search for new and innovative ideas. To operate properties tightly, advertise widely, and generate the best results.

Digest - Owners are subjected to the neverending hype about vacation rentals, even as the market supply grows and even if demand does not keep pace. Our team members spend countless hours mastering this seemingly simple industry and all so that our clients don’t have to do so.

Cooks - Yes there can be too many in the soup. And yes my dad told me that too. Repeatedly. It is wonderful to receive tips and ideas about the industry. Keep us posted as we spend overtime working for each and every client.

Do Your Part - Keep your home in tip-top condition, with upgrades, replacements of textiles, kitchen wares, and more. Or you can just call and authorize us to spend money where necessary. Every day, every owner competitor is improving steal your guests. If your place looks a bit worn, your income will drop. Guests won’t return. Or they’ll leave a negative review.

Passion - This last one from my Father is the most important. Tiring of how everyone tells young folks to find something to be "passionate" about, he said. "That is the wrong. He said that success is easy if you are passionate about everything. Do your best. Give a damn. Find the joy. Work your patootie off. Be good at what you do. That is the joy."

We can promise every client. That is what we do here. Thanks to all clients for allowing us to work on your homes. The best is yet to come. It always is.

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Author: Wm. May – Administrator, Vortex VIP
Blog #: 0997 – 06/30/24

Sponsor: Vortex VIP – – VortexVIP.com