PKRM 2023 First Quarter Newsletter

In these times of growing inflation and ever-changing demand for travel, proactively sharing key vacation rental data and analysis with my property owner partners is more important than ever. This information is meant to help get ahead of any worries or concerns which may arise and to help reassure that the property is in good hands.‍

I believe that sharing the right metrics and information will go a long way in engaging with and strengthening the relationship with my property owner partners. In addition to sharing revenue figures, sharing just a few more metrics and analyses can be crucial to help understand how the property is performing. I want to ensure your success which includes being able to plan for the event when we experience any drop in demand or when it is helpful to implement rental rate decreases. This allows me to help meet, manage, and exceed expectations. Thankfully, the peak seasons for 2023 are shaping up nicely already for our market.

Share the Most Accurate Revenue Number

Year-over-year (YoY) revenue is one of the most common ways to measure short-term rental performance. However, (YoY) revenue growth does not always prove that we've maximized a property's revenue potential. This is where RevPAN comes in.

Revenue per available night, or RevPAN, shows a more accurate and equal picture of revenue management performance over a given period of time. Similar to RevPAR in the hotel industry, RevPAN measures revenue earned for available nights and can give my property owner partners insight into the overall performance of the property. It can help easily demonstrate the opportunity cost of owner stays or maintenance blocks that can have a substantial impact on performance, and it is a fantastic indicator of profitability since it’s able to clearly communicate whether or not a property is effectively selling all bookable nights when compared to operational costs. 

Going Beyond YoY Revenue and Share Market Data & Insights

The past few years in the vacation rental world have not operated normally, so comparing year-over-year (YoY) can sometimes be misleading and doesn’t tell the full story.

Instead, comparing the performance of our properties against the market helps to provide the most accurate view and pulse check of how our listings are doing, note any discrepancies in the data, and offer you expert analysis. ‍

Sharing Our Strategy for Setting Minimum Prices

Most owners consider their property as an investment, and they expect to earn a return on that investment. Often though, they think of their minimum price as the amount they need to earn to be ROI positive. However, we know that this is not always the case. I hope that by helping to educate my property owner partners by analyzing data like occupancy and ADR, we arrive at a better, more accurate minimum price for each season that will truly drive stronger ROI. An effective strategy of setting minimums is essential to get the most ROI from the property.

Similarly, I check on how often a property hits the defined minimum price over a rolling period of time for the next 90 days, as this will ensure the minimum price isn't too limiting and is always allowing the rate to fluctuate based on demand. 

It's important to note, that this is primarily a concern outside of our busy spring and summer seasons, between Labor Day and March 1st. While most years we have a good September and early October, it's equally important to mention that this off-peak time accounts for half of the entire year.

‍The Details of Our Revenue Management Strategy 

With all of these unique/unpredictable trends, it's important for me to take the time to share examples of past performance that highlight great bookings, how we keep up with trends in our market, and how our combined revenue management and value proposition strategy gives us an edge over the competition. Providing a behind-the-scenes view into your strategy is a great opportunity to show off your expertise, and a chance to open up the conversation beyond just revenue.

A few examples are:

• While we don't generate a large portion of our customer base as a fly-to market, demand to fly into Pensacola domestically for a vacation is dropping. Last November, our airport was ranked in the top 10 most expensive airports to fly out of in the U.S.. Our strategy for tackling this is to get in front of as many guests as possible by optimizing rates, expanding our distribution, and adding new channels/marketplaces, along with our dynamic pricing keeps us ahead of the market.
• In adding new audiences through additional channels and marketplaces (Marriott, Booking.com, etc) in 2022 and already in 2023 we're seeing some stellar bookings lately. We're pacing ahead of 2023 which means that we're in front of travelers on the right platform, at the right price, and at the right time. Part of this strategy means not accepting bookings for high-value times of year too far in advance as we are determining (and holding out for) the best market rate while managing discounting policies for short-notice stays. 
• Understanding when monthly stays are the best decision for your calendar. When seasonal demand drops, we monitor the demand for monthly stays and the rates which are likely to be captured. Comparing the revenue potential that short stays have against monthly stays allows us to discern whether or not these extended stay bookings are a better decision for the season. For the late-fall '22 into early '23, monthly stays have been a great decision for those property owner partners who are not planning to use their vacation homes and instead hoping to maximize revenue.
• Thankfully, our successes can be replicated as we monitor upcoming vacancies, market pacing, and occupancy rates.

JD and PKRM are here to help

JD Hallam
GM - Perdido Key Resort Management
Broker/Owner - Perdido Key Resort Realty