How to Make Revenue Management Not Feel Overwhelming

Rebecca
Rev and Research - COO
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August 14, 2024

Revenue management is a crucial aspect of running a successful short-term rental business. However, it can often feel overwhelming due to the complexity and constant attention it requires. By breaking it down into manageable steps and focusing on clear goals, you can make revenue management more approachable and effective. Creating a system that works for you truly is the key.  Here’s how:

  1. Know Where to Start: Define Your Goals

The first step in simplifying revenue management is to clearly define your goals. What are you aiming to achieve? Common objectives might include:

  • Maximizing Occupancy: Ensuring your properties are rented out as much as possible. Are you making additional money on each reservation, besides for just the rental commission? For example a reservation fee, or added services to the reservation.
  • Hitting a Revenue Target: Achieving a specific revenue goal within a given period, typically for the year.

Understanding your primary goal will help shape your strategy. For example, if your goal is to maintain a 65% occupancy rate each month, this objective will drive your decisions and actions.

  1. Utilize Pacing Reports

Once you have set your goals, pacing reports become invaluable. These reports help you track your progress towards your targets over time. Here’s how to make the most of them:

  • Monitor Regularly: Regularly review your pacing reports to see if you’re on track. These reports will show you how your bookings are pacing compared to your goals, and also how you are doing compared to previous years.
  • Identify Trends: Look for patterns in your booking data. Are there certain times of the month or year when bookings slow down? Use this information to adjust your strategy accordingly.
  1. Set Up Benchmarks

Setting up benchmarks is essential to know if you are truly on track to meet your goals. Benchmarks provide a point of reference to measure your performance. Here’s how to do it effectively:

  • Historical Data: Use historical data to establish benchmarks. What was your occupancy rate or revenue at the same time last year? This can give you a realistic target to aim for. Did the home do well last year? Did you have to make any larger changes due to its performance? Are you setting the home up to win this year?
  • Market Comparison: Compare your performance to similar properties in your market. This can help you understand where you stand and identify areas for improvement. Are you charging too much for nightly rent and sitting open? Are you booked up, because maybe you left money on the table and charged lower rates? 
  1. Time is Key

Time is one of the most underrated key indicators in the short-term rental industry. It can be your biggest strength or greatest weakness if not considered properly. Here’s why time is crucial:

  • Course Correction: If you’re not on track to meet your goals, you need to know when to course correct. Timely adjustments can prevent minor issues from becoming major problems.
  • Booking Windows: Understand your booking windows. How far in advance do guests typically book? Use this information to adjust your pricing and marketing strategies to capture more bookings during peak times. Knowing when your home starts to loose value is KEY!
  1. Be Proactive with Data

Proactive data management is essential for effective revenue management. Here’s how to stay ahead:

  • Continuous Monitoring: Regularly review your performance data. This helps you stay aware of any changes and make necessary adjustments promptly. Make yourself a schedule on what data points to look at each day. This way it keeps you informed, but also makes these tasks not so overwhelming, depending on your portfolio size.
  • Market Trends: Keep an eye on market trends. Are there new competitors in your area? Has the demand for short-term rentals increased or decreased? Use this information to adjust your strategy. Also, keeping yourself aware of any large events coming to your area, it may be a Sporting event, large concert or festival, that could greatly impact your revenue startaergies.

Conclusion

Revenue management doesn’t have to be overwhelming. By clearly defining your goals, utilizing pacing reports, setting up benchmarks, understanding the importance of time, and being proactive with data, you can make revenue management more manageable and effective. Remember, the key is to break it down into smaller, actionable steps and continuously monitor your progress. With the right approach, you can achieve your revenue management goals and ensure the success of your short-term rental business.

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Rebecca
Rev and Research - COO

About author

As a rising leader in the vacation rental industry, Rebecca Ballart has over two decades of dedication to client success. Rebecca’s career has been defined by a commitment to excellence, consistently setting a high standard across every project and partnership. She serves as Founder and Chief of Staff at Happy Guest, an innovative platform enhancing guest experiences by streamlining check-ins, automating operations, and increasing host revenue through strategic upsells. She also serves as Chief Operating Officer at Rev and Research, a global revenue management and operations consulting firm using innovative insights and data-driven strategies to manage client portfolios generating over $100 million annually. Rebecca has assisted with exceeding revenue goals for thousands of properties and has built efficient, scalable operational systems that empower teams to deliver exceptional service. Her consulting approach combines industry expertise with hands-on application to create tailored, impactful strategies that drive sustained growth for her clients’ businesses.

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