Latest / Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights / Are You Reading Your Booking Data Wrong?

Transcript

Are You Reading Your Booking Data Wrong? · Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights

0:00
Most short term rental hosts think they understand their
0:03
performance. They look at their calendar,
0:05
check their occupancy, maybe glance at their average daily
0:09
rate. But here's the problem that
0:11
doesn't tell you what's actually happening.
0:13
So the question is, are you really ahead or do you just
0:17
think you are? In this episode, we're breaking
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down how to read your revenue booking curve, what metrics
0:23
actually matter, and how to make better decisions using real
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market data from our partners at Beyond.
0:29
This is STR Pricing Pulse. Welcome to STR Pricing Pulse,
0:37
where we cut through the noise and focus on what the data is
0:40
actually telling us about pricing and demand.
0:43
I'm James Farley, the founder of launch base buy host Planet.
0:46
This series is powered by Beyond, our exclusive data
0:49
partner, providing the market and pricing insights behind
0:53
every episode. And with me, as always, is
0:55
revenue management guru Doctor Zach Ali.
0:59
How's it going, Zach? It's going great.
1:01
How are you? Very well, even better now that
1:04
I've seen your multi colored microphone.
1:07
Yeah, thanks to you, James. All right, then let's start
1:11
here. How should a host or property
1:13
manager assess their performance?
1:15
What are the key metrics they should be looking at?
1:18
Okay, so most hosts then, So when they're thinking about
1:23
performance, right, they start with, well, I guess they start
1:26
and end with occupancy. I mean, we hear it all the time,
1:29
right? Everybody talks about occupancy.
1:31
I get it. I mean, it's the number that
1:33
stares back at you every morning, every night, every day.
1:37
I guess it feels like a bit of a report card and it's easy to
1:41
understand not only for the property managers but also for
1:44
the operators that they're communicating that number 2.
1:47
But honestly, occupancy on its own is is basically one of the
1:52
most leading numbers in terms of metrics in the short term rental
1:56
space. I guess in terms of why that's
2:00
misleading, you know, you could be at 80% occupancy and be
2:04
leaving significant money on the table.
2:07
You can also be at 65% occupancy and be outperforming the market.
2:11
So when you look at that number alone, it doesn't actually tell
2:14
you anything without context. So I guess what you should
2:19
actually look at are a small set of metrics that together tell
2:25
you not just what's happening, but why it's happening and
2:29
whether it's going to hold. So the one that comes to me
2:31
straight away is, and we've spoken about it many times is
2:35
Rev Pans revenue. But per available night now it's
2:38
a big number because what it does is it actually collapses
2:41
your rate and your occupancy into a single number.
2:45
And then that tells you how efficiently you're actually
2:48
converting your inventory into actual revenue.
2:51
But the metric that most hosts never look at and the one that I
2:56
think is probably the most valuable in this space or at
2:59
least in the revenue management discipline is booking pace,
3:03
right? So I'm sure you've heard about
3:05
it, we've spoken about it many times.
3:07
But booking pace not just is not just a case of how full you are
3:11
right now, but how quickly you're filling relative to where
3:16
you were, say, at this point last year last relative to where
3:21
you were according to your target, target that you've got
3:23
set. And I guess relative to where
3:25
the market in terms of what it's actually doing around you,
3:29
booking pace is really what brings the booking revenue curve
3:32
to life because the curve itself is a picture.
3:36
And the pace basically tells you whether that picture is moving
3:41
in the right direction fast enough.
3:43
And that's basically what I think we should talk about
3:46
today, specifically when it comes to the revenue curve.
3:50
OK. Then, so the revenue booking
3:52
curve, you've kind of explained what it is just about.
3:56
Is there anything else you need to say and what exactly does it
3:59
tell you about your rental? Sure.
4:02
So, yeah, I mean, I just gave you a bit of a icing on the
4:05
cake, you know. So I guess think of it this way.
4:09
Every property has a stay date, right?
4:11
So let's say a Saturday night in June.
4:14
From the moment that date becomes bookable, reservations
4:17
start coming in. So I guess they come in slowly
4:21
up first, but then they build and then they taper off as you
4:24
get closer. We've seen it on all the graphs
4:26
that we've had a look at previously, but if you plot that
4:29
on a graph, let's just say X days out in terms of one of the
4:34
axes and the cumulative bookings on the other, you get that
4:39
curve. That's what you call your
4:41
booking curve, and what it really shows you is the
4:44
behaviour of your guests before they actually arrive.
4:48
Now, how demand this building or not building for a given period
4:52
that you're looking at now, the shape of that curve really does
4:55
matter. A curve that rises steeply and
4:59
early, I guess it tells you that your guests are more confident
5:03
in terms of booking your property.
5:05
So they're committing far out because they want that date,
5:09
they want that property. And I guess when you look at a
5:12
curve that stays flat and then spikes at the last minute, it
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tells you something very differently.
5:18
So guests are waiting, which usually means that they are
5:22
price sensitive. So when you look at 2 properties
5:25
side by side, you know, 2 properties can end up exactly
5:28
the same occupancy, but they have completely different curves
5:32
getting there. So one, I mean you've got 2
5:35
properties obviously it'd be interesting to see what your
5:37
curves look like. But one fills, you know,
5:40
generally steadily. So it's their 90 days out.
5:43
The other scramble to fill out, you know, maybe a discount two
5:47
or three weeks out before the arrival.
5:49
I guess the headline numbers look identical, but it's a
5:52
revenue story that is completely different.
5:54
So when you look at the booking curb, it's not just a progress
5:58
bar towards full occupancy, it's actually telling you the quality
6:01
of how you filled and whether demand came to you willingly at
6:05
your price or whether you had to chase it.
6:08
Now you, you talk, you asked me about revenue curve and I told
6:11
you about booking curve because I think that context really
6:13
matters here. And when you look at revenue
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curve, which is the other half of this, that's really where you
6:21
start to see exactly what's going on.
6:22
The revenue curve tells you what the shape that you've actually
6:25
taken in terms of your booking curve was actually worth.
6:29
You know, you can have a booking curve that looks perfectly
6:32
healthy and a revenue curve that basically starts to quietly
6:35
underperform because the early bookings came in said below
6:40
market rate or your best dates that you're you're trying to
6:43
fill are still exposed or too much revenue is sitting in a
6:46
handful of stays. So when you read them together,
6:50
that's the booking revenue curve and that's basically what
6:52
actually tells you where you stand and really makes all the
6:55
difference. Yeah, it's interesting, isn't
6:57
it? I mean, thinking of it
6:58
practically, once the dates become available, you're really
7:02
looking at your lead times here and when they actually book and,
7:06
and for how much. And I guess once the dates
7:09
become available, if they book very quickly, you might be
7:12
thinking, oh, well that's great. We've filled the dates.
7:14
All our marketing efforts are going brilliantly.
7:17
But on the other hand, you might think, hang on a minute, it's,
7:19
it's for too low, you know, the the rate that we've got for this
7:22
is too low. And then on the flip side, like
7:24
you say, there's a story here to every booking, isn't there?
7:27
You know you can, you can fill the calendar and you you think
7:30
everything's great, but it might not be as good as it seems, or
7:33
it might actually be better than it seems.
7:35
No, like you said, every booking does tell a story and every
7:38
curve, booking curve, revenue curve tells a story.
7:41
You know, it's actually interesting for those.
7:45
And maybe you could do this exercise yourself, but you know,
7:48
given you've got multiple properties, really have a look
7:51
at those curves and have a look at how they're actually being
7:54
generated. It really will amaze you in
7:56
terms of the information that you do find.
7:59
Yes. You know, what I've noticed
8:01
recently is that we often get bookings in clusters.
8:05
It seems to be like occasionally the the OTAs are our friend and
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over the course of a day or two, suddenly 3 or 4 come in at once
8:14
and then it's quiet for a bit and then we have another
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cluster. Not sure why could it could be
8:19
down to all sorts of things. But yeah, we'd definitely be
8:22
interested to do that analysis and maybe we can do that for a
8:24
future show. We can.
8:25
We can have a look again. So what are the three
8:28
comparisons every host should be considering?
8:33
Explain what they are and why looking at just one is a bit
8:37
risky. So I guess when you're looking
8:40
at the three comparisons, you know, the really the triangle,
8:44
if you like, that gives you context and without all three,
8:48
you're making decisions, but you're making them with partial
8:51
information. So when we talk about last year,
8:55
last year tells you your own trajectory, right?
8:58
So are you ahead, are you behind where you were at that
9:02
particular point? Say, I don't know, six months,
9:05
12 months ago, right. That's basically the most
9:07
commonly looked at period. So it's the most instinctive
9:12
comparison and it has real value, but it also it's the most
9:18
dangerous 1 to rely on just alone.
9:22
If you like it's the most dangerous to lion alone.
9:24
Last year might give you, you know, it might have been
9:27
exceptional, right or it might have been terrible.
9:30
We don't know what the market would have been like.
9:31
The market might have shifted significantly since then.
9:35
So therefore, just having a look at last year doesn't really give
9:38
you the true picture. I, I always say, you know, your
9:42
target curve, if you like your target tells you whether you're
9:45
on track to hit the revenue, you actually should have a target.
9:51
Not, you know, a lot of hosts out there at the moment don't
9:54
actually have explicit targets, which is a little bit crazy.
9:59
You know, they don't really have an anchor to decide what it is
10:03
that they want to do in terms of strategy or approach.
10:06
They're just simply reacting to the number in front of them with
10:10
no reference point for whether it's actually good enough or
10:13
not. So I guess, you know, having a
10:15
target curve would be the second specific comparison that you
10:21
could make. And then probably from a Third
10:23
Point of view, you know the market.
10:25
So comparing with the market, again, on a, on a revenue curve
10:28
point of view, the market tells you whether you're experiencing,
10:32
whether what you're actually experiencing is specific to you
10:36
or part of a broader pattern. It's the comparison most hosts
10:40
never actually make. But to be honest with you, it's
10:44
the one that changes everything. Because if you're down on last
10:48
year, but the market around you is down a lot more than you are,
10:53
then you're actually outperforming.
10:55
And if you're actually up against last year, but the
10:57
market is also significantly up, let's just say more than you,
11:02
then you're actually losing ground even though your numbers
11:05
do look positive. So I think looking at just one
11:09
of these is like navigating with one eye closed.
11:12
You can do it, but you're actually missing depth.
11:16
And in revenue management, you know, missing depth costs you
11:19
money, costs you revenue. All right, quick pause now.
11:22
This episode is powered by Beyond, our exclusive data
11:25
partner. If you're still setting your
11:26
prices manually or relying on guesswork, you're very likely to
11:30
be leaving money on the table. Beyond users real time market
11:34
data to help you price with confidence, adjusting your rates
11:37
based on demand, seasonality and what's actually happening in
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on screen to find out more if you're watching on YouTube or
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hit the link in the show notes. All right, back to it, Zach.
11:59
What happens when a host is ahead of last year but still
12:04
behind target? How should they interpret that?
12:07
So it's one of the most common traps I see.
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The host looks at the year on year comparison.
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They see a positive number and they feel reassured that being
12:17
head of last year and behind target are not contradictory.
12:21
They're telling you two different things at the same
12:23
time. Now, ahead of last year means
12:25
that you're improving on your own history, your own historical
12:29
performance, but then behind target means that you're not
12:32
actually where you need to be from a revenue point of view.
12:35
Both of them can be true at the same time.
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So the question to ask is why is there a gap between your last
12:43
year's performance and your target?
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So either your target is set wrong, which is going to be
12:49
worth examining, or something has changed in the market or in
12:54
your property. Specifically, something has
12:56
changed, which means that your last year's trajectory isn't
13:00
really going to get you where you need to go now.
13:03
What I'd caution against is using the positive year on year
13:07
number as a reason to just feel comfortable.
13:10
Comfort is the enemy of good revenue management.
13:13
The target exists for a reason. Now, if you're behind it, you
13:18
need to understand why before you actually decide whether you
13:21
need to act or adjust. And that is really where the
13:25
booking revenue curve becomes critical because the curve tells
13:31
you whether that gap is actually structural.
13:34
So meaning it's baked into how the month has already been
13:36
built, or whether there's still time and demand available to
13:41
actually go ahead and close it. Those two scenarios require
13:45
completely different responses. Interesting.
13:49
I mean, I guess the most obvious place to look here is COVID in
13:54
2020, everybody's calendars would have been disastrous and
13:58
2021 everybody would have been ahead of last year.
14:01
But that doesn't bring into the, you know, the context of of a
14:05
global pandemic. And, and I'm interested in what
14:07
you said there about comfort. So from your side, a revenue
14:11
manager should always feel uncomfortable.
14:14
Is this because they should always be striving for better,
14:17
for more revenue, for better occupancy, for to, to make sure
14:21
that they're really hitting the sweet spot all the time?
14:24
So yes, absolutely revenue management is about maximizing
14:27
revenue. And if you are comfortable that
14:29
you have reached that goal, if you like, then there is no
14:33
maximization to happen, which in in the majority of cases is just
14:37
not correct. Revenue management is about
14:40
dealing with uncertainty and consistently being
14:45
uncomfortable, if you like, with regards to identifying or
14:49
understanding whether you've actually reached that peak that
14:51
you need to reach is something that the revenue management
14:54
discipline teaches you to do and all revenue managers should be
14:57
focused on. Yeah, Yeah.
14:59
I'm kind of interested in the like the real world scenario
15:02
here. If you, I imagine there are
15:04
times when for a certain property or for a certain
15:07
portfolio, you've said we want to reach X target and maybe
15:12
you've smashed through that target then is it kind of a case
15:15
of right, how much more can we get out of this?
15:18
You never think, oh, we're there, we've done, we've done
15:21
our job right. We can.
15:21
We can go to the beach now. No, absolutely.
15:24
It's a constant evolving goal that you have to, to, to be
15:30
working with, right. So you always want to be able to
15:33
strive to be able to maximize revenue.
15:35
And I think going back to the point of what I said to do with
15:38
the targets and you know, when you're setting budgets, that's a
15:42
prime exercise that you as a revenue manager, you actually do
15:45
look out and you do contribute to.
15:48
Now in a lot of cases, supply doesn't actually grow.
15:52
So you might actually be dealing with the same level of supply or
15:56
it might have shrunk for whatever reason.
15:59
But your goal is how can I take this supply and maximize revenue
16:03
from it? So you're constantly having a
16:04
look at which strategy actually worked, which one didn't work,
16:08
What changes can I do for my future strategy in the new year
16:14
and how does that fit within the business dynamics or the market
16:17
dynamics? So it is something that is
16:19
consistently challenged and you should challenge it all the time
16:25
to be able to ensure that you have really, truly maximized
16:28
revenue from the inventory that you're actually dealing with.
16:31
Let's look at the market then. So why is comparing yourself to
16:36
the market such a blind spot for most short term rental
16:41
operators? So I guess because it really
16:45
requires data, most hosts don't actually have easy access to,
16:50
you know, psychologically it's more comfortable to compare
16:54
yourself to yourself. And you know, you think if I
16:58
look at my own numbers and they're improving, I feel good
17:01
about it. If I then look at the market and
17:04
realise I'm improving but more slowly than everyone around me,
17:09
that's uncomfortable. So most hosts don't just
17:13
actually look at their own data, they need to be looking at the
17:18
market data as well. The market comparison is also
17:24
one that tells you whether your performance is driven by
17:26
something you're doing or something that's actually
17:29
happening to everyone in that market.
17:32
I guess that distinction matters enormously for what you actually
17:36
then do next. If you're underperforming in the
17:40
market, you have a property or a strategy problem.
17:44
If you're performing in line with the market but below your
17:48
target, you might have a positioning or a pricing
17:51
problem. If the whole market is soft, you
17:54
have a demand problem. And I guess no amount of rate
17:58
adjustment is then going to fix a demand problem.
18:01
You know, the host who actually consistently outperform are the
18:05
ones who know which problem they're actually solving.
18:08
And that really becomes fundamental.
18:11
You simply cannot know you know what that problem is that you
18:15
need to solve without actually looking at market comparison.
18:20
So I mean you, you mentioned there then you know, you could
18:23
have a property problem, you could have a market problem.
18:26
How does a host actually tell the difference?
18:31
So I guess the market comparison is the diagnostic tool.
18:34
It's actually quite straightforward once you have
18:37
the data in front of you. So if your booking pace is soft
18:40
and the market around you is also soft, so let's just say
18:44
similar properties, similar locations, similar price point,
18:48
you know that's a market problem.
18:50
Demand is down broadly. In that situation, aggressively
18:55
cutting your rate is often the wrong move because you're
18:58
naturally going to stimulate demand that isn't there.
19:01
You're actually just going to go ahead and take a lower rate for
19:04
guests who were actually going to book your property anyways.
19:08
If your booking pace is soft but comparable properties around you
19:13
are filling normally, then that's a property problem.
19:17
Something about your listing or your rate positioning for
19:20
example, or even your photos, your reviews, your minimum says
19:25
stay strategy or the settings that you've got.
19:28
You know all those factors are creating friction that's pushing
19:32
guests towards your competitors. That then requires a completely
19:36
different intervention. I guess the mistake hosts
19:39
actually make is applying the same solution to both.
19:43
They see soft occupancy and they cut rates, which I guess
19:47
sometimes you know that's the right thing to do, but if it's a
19:51
property problem, then you know cutting rates might fill the
19:54
calendar without actually then fixing the underlining issue.
19:58
I guess you're just training your guests to expect a lower
20:02
price point permanently. So before you actually touch
20:05
your rate, look at the market. It literally takes 5 minutes and
20:10
honestly it changes everything about what you're going to do
20:13
next. Yeah, it's interesting.
20:16
You know, I saw something quite cool the other day and it's kind
20:18
of related to what we're talking about.
20:20
So obviously, like for years and years, hardly anybody goes to
20:24
watch county cricket matches anymore.
20:26
You know, people will go to Test matches and they'll watch the
20:28
England team, but county cricket, nobody really goes.
20:31
It's like one man and a dog watching.
20:34
And the Oval down in London did this really clever campaign
20:38
harnessing, you know, people who are working from home in digital
20:41
nomads. And it said come and work from
20:43
Oval. So they called it WFO.
20:47
And suddenly the, you know, they've, they've created a load
20:49
of spaces where digital nomads, they can, you know, plunk
20:52
themselves down for the day. Cricket's going on in the
20:54
background. They've got a desk, they've got
20:56
power, they've got super fast Wi-Fi, they can get on with
20:59
their day. And this has got loads of people
21:00
coming in and inquiring about memberships.
21:02
And I guess if we look at that from a short term rental point
21:05
of view, sometimes do you have to like if you're a property and
21:08
you're underperforming for whatever reason, whether it's
21:11
your property or the market that you're in, you sometimes you
21:14
have to think a little bit outside the box to try and maybe
21:16
go after a type of guest that you haven't tried to attract
21:20
before. Yeah.
21:21
I mean, I don't think we've spoken about segmentation on
21:24
these this series, right? But maybe it's something that we
21:27
should speak about because segmentation is pretty big in
21:30
hotels, right. It's basically where market
21:32
segmentation, you know, almost started from in terms of
21:36
identifying the guest type, not only what type of guest they are
21:40
in terms of profile, but also their booking behaviours and all
21:44
those different factors. I'll stop there, but otherwise
21:47
we won't have an episode to talk segmentation about.
21:51
But absolutely, you know, understanding your guests
21:55
behaviour, segmentation is critical to ensure that you're
21:58
aligned with who it is that you're actually targeting
22:00
specifically. So then what are the early
22:03
warning signs in a revenue booking curve that tell you
22:07
something is going wrong before it's completely obvious?
22:13
So I think the most important one is pace deceleration, right?
22:18
So not that bookings have actually stopped, but the rate
22:22
at which they're coming in has actually slowed relative to
22:25
where it was at this point in previous years or previous
22:29
months, depending on which period of actually having a look
22:32
at. You know, that's almost always
22:34
the first signal and most hosts actually miss it because they're
22:38
looking at the cumulative number rather than the rate of change.
22:41
It really does make a big difference in just simply
22:43
switching and having a look at the rate of change.
22:47
Second, I would say is the rate of compression without occupancy
22:52
improvement specifically. So if you've been dropping your
22:55
rate and your occupancy isn't responding, then guests aren't
22:59
converting despite the lower price.
23:02
That's telling you price isn't the issue, which means something
23:06
else is. So again, it's about having a
23:09
look at at it from that point of view.
23:11
And then third, I'll probably say is your booking window
23:14
shortening if your guests are booking closer and closer to
23:17
arrival over time. Now it could be the norm, but
23:21
then it might not be. So This is why it's really
23:23
important to go ahead and understand that.
23:25
Then I guess you know, your forward visibility is also
23:28
potentially eroding. You know, you're becoming more
23:31
dependent on last minute demand, which I guess is the most
23:35
volatile and price sensitive segment that we could ever have.
23:40
That, I would say is a structural vulnerability that
23:43
doesn't really show up in your occupancy number until it's
23:46
actually too late. Just one more point actually is
23:49
what I would call silent fragility.
23:52
You know, your headline numbers look fine, occupancy is
23:56
reasonable, revenues reasonable, but when you look underneath,
24:00
you actually find that a disproportionate share of your
24:03
revenue is actually concentrated in a small number of bookings.
24:08
Your secure occupancy is much lower than you, you know your
24:12
reported occupancy and then once you actually account for
24:17
cancellation risk it's a very different picture.
24:20
Also I guess demand pressure is low with no late surge that is
24:24
actually building. Everything may look OK until it
24:28
doesn't, and then by the time it's obvious, you've actually
24:30
lost the window to respond. Interesting stuff.
24:35
OK, then. So final question, if a host
24:37
could take just one action after looking at their revenue booking
24:41
curve this week, what should it be?
24:44
So I guess compare where you are today to where you were exactly
24:49
this point last year for the same future dates and then look
24:52
at what the market around you is actually doing right now for
24:56
those same dates. I think that single comparison,
25:00
your pace versus last year versus market will tell you more
25:03
in 5 minutes than a month of looking at your headline
25:06
occupancy numbers. It will tell you whether you
25:09
have a problem, whether it's your problem or the market
25:13
problem, and then whether you have time to actually respond or
25:16
whether you are actually already behind.
25:20
You know, if those two comparisons show you that you're
25:24
behind on both, then don't just simply reach for the rate lever
25:28
first. Go back to the curve.
25:30
Look at the shape, look at when the bookings actually came in
25:34
and what rate, because the answer to what you should do
25:38
next is always in the detail of how you actually got there in
25:41
the 1st place. You know, most hosts are
25:43
actually flying on instruments that they don't fully understand
25:47
the booking revenue curve. Red properly and compared
25:51
correctly, is the one instrument that actually tells you where
25:55
you are and where you're actually heading.
25:57
Everything else just simply follows after that.
26:00
Very good advice and if in doubt, change your photos.
26:03
There you go, Simple bit of advice Zach.
26:06
It's been a pleasure as ever. Thanks for joining us on STR
26:11
Pricing Pulse. Great.
26:12
Thank you, James. All right, we'd love to hear
26:14
from you. Do you currently track your
26:15
revenue booking curve or are you still relying on occupancy and
26:20
ADR? Drop a comment and let us know.
26:22
We'll tackle the most common challenges in a future episode.
26:26
If this was useful, hit like and subscribe.
26:28
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26:44
notes for further details. This is STR pricing pulse from
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launch base buy host planet and powered buy beyond until next
26:52
time I'll be hosting.