Rising Costs

Addressing the Increasing Cost of Guest Acquisition

With today’s evolving vacation rental market, consumers have an increasingly diverse marketplace and various options in leisure travel. The growing variety of vacation home options includes: Timeshare/Vacation Ownership, Fractional Ownership/Private Residence Clubs, Destination Clubs, Condo Hotels, and Traditional Second Home Ownership. Strong brands like HomeAway, Airbnb and Booking.com are educating consumers across the globe regarding the merits and availability of vacation rentals as favored lodging options.  The market share of travelers looking to book vacation rentals, versus traditional hotel options, is growing.LeisureLink OTAs

But with this emerging opportunity comes some challenges, and at the top of that list is the rising cost of guest acquisition. Gone are the good old days when travelers would regularly seek out their property manager directly, and it was relatively easy to get good organic visibility or compete for PPC ad positions on a fixed budget. Today, maximizing the power of distribution is the key to visibility, bookings, loyalty and revenue.

At LeisureLink, we hear two primary challenges about working with distribution channels. First is the difficulty of managing multiple channels. Second, is the cost of working with these channels. Both items represent true challenges that must be overcome to compete in today’s environment.

Let’s start with channel management.  There is no question that trying to maintain updated rates and availability for hundreds of individual homes across multiple extranets is an extremely difficult, if not impossible task.  The first step is to start utilizing “channel manager” tools that automatically sync ARI (availability, rates and inventory) between the supplier’s system and the multiple distribution channels.

Now, let’s tackle cost.  Yes, distribution channels cost money, sometimes a lot of money.  But, the successful PMCs that are thriving in this changing environment know that the cost of unsold rooms is far greater than the cost of distribution. Here are three strategies that will allow you to make the benefits of distribution (more bookings) outweigh the incremental cost of distribution.

  1. Focus on RevPAR, not incremental commission %. RevPAR (revenue per available room night) is the industry standard hospitality benchmark, and ultimately what you need to deliver to your owners.
  2. Use expanded channel reach and dynamic pricing to grow RevPAR. Property managers can grow RevPAR by increasing ADR (average daily rate), growing occupancy or both.  The current distribution environment offers more sources of demand than ever before.
  3. Use Third-Party Distribution for new customer acquisition and retain those customers. Reach out to satisfied guests directly to help them book their vacations every year. Property managers who consistently provide this service, along with a great vacation experience typically generate three to five additional guest visits from every new customer generated.

Increasing guest acquisition cost may be a concern for vacation property managers. However, focusing on extending distribution efforts and enhancing the guests’ experience, both while on-property and post-stay, are the best ways to differenciate your offerings from those of competing properties and third parties alike. The property managers who will be the winners will change their business practices to maximize RevPAR, by effectively using new booking channels and will reduce operating costs, through the application of new technology offerings. Most property managers will not be able to implement these changes on their own. Fortunately, there is a growing number of expert technology and service providers designed to address these exact issues. Companies, such as LeisureLink, are available to help property managers adapt and thrive in these exciting times.

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