Airbnb’s guide for software-connected hosts

May 4, 2020 | Apartments, Connections, COVID-19

Airbnb’s guide for software-connected hosts

We know this is a challenging time in the travel business, and there’s a lot of uncertainty around COVID-19 and how it will affect you and your hosting business. Understandably, many guests are concerned about booking future travel right now.
There are still many guests making reservations, but under different circumstances. Much higher demand for longer stays and flexible cancellation policies, and many hosts are opening their properties to COVID-19 responders.
Our partner Airbnb wants to help you get through this difficult time. They’re working to support you by giving you resources to do what you do best – providing excellent hospitality for guests around the world. Airbnb also launched a new site, Airbnb.com/COVID, an online resource for hosts with valuable info including frequently asked questions, updates, and more.
Read on to discover how you can adapt your business, including tips for updating your settings to encourage guests to book now, cleaning guidelines, and how to open your space to COVID-19 responders.

DOWNLOAD GUIDE HERE

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How to forecast apartment occupancy and prices

Aug 2, 2019 | Apartments

How to forecast apartment occupancy and prices

Much like managing a hotel, managing apartments consists mainly in anticipating and managing the future. Naturally, this is no easy task as financial results are influenced by numerous factors. Despite the obvious difficulties connected with development of a forecasting model, it is not a good idea to give up on creating a system which will help to determine when occupancy will be higher and when lower and what prices should be assumed for a given period considering all relevant parameters. Even an imprecise forecast will be a better basis for making business decisions than pure guesswork. How can you successfully forecast the demand for apartments? What tools will enable automation of the entire process?

Many owners of apartments for short-term rental make no demand forecasts whatsoever, putting all of their effort into creating an effective distribution strategy, i.e. simply deciding what channels they should use to offer their apartments for rental and making the apartments available in those channels. An effective strategy can be understood in different ways – for some owners it is the most important to get as many bookings as possible and for others to get bookings at the lowest possible cost. The latter scenario, meaning the one where the greatest focus is placed on analyzing booking sources with regard to the cost of acquisition thereof, seems much more justified, as far as sales strategies are concerned. After all, it is not hard to sell all of the apartments one has – publishing an offer in leading channels, such as Booking.com or Airbnb at an attractive price can lead to this in a very short time. On the other hand, making use of a property’s full economic potential, i.e. acquiring bookings at a low cost while generating the highest possible gains, is no mean feat. It is impossible to achieve this goal without effective forecasting? Why is that? Forecasting of demand allows you to dynamically optimize the pricing policy and sell apartments at reasonable prices. By charging the same prices all year round or changing them only sporadically you are using only part of the potential of the apartments you manage.

Where to start when forecasting the demand?

The first step should be to refer to historical data, i.e. analyze the bookings from corresponding periods in the previous years. This will allow you to quickly identify trends: periods of increased or decreased interest in the offer or months in which rooms were sold at a higher or lower price. Analysis of bookings made in the previous years is a much more reliable method than basing forecasts on intuition alone. However, it is not enough. Regular price fluctuations caused, for instance, by seasonality as well as the trends observed at your competitors with regard to changes in the pricing policy may serve as a guideline and a starting point; however, you should also consider a number of other parameters which will constitute variables in the model when forecasting the demand. This means that you need to take account of events which may have a considerable impact on customer behaviors – these can include major cultural, entertainment or sport events, among others. Furthermore, much depends on the nature and location of your apartments, your target group, direct competitors, etc. It is also good to consider if the prices for the same rooms should differ depending on the distribution channel. Should the price on Booking.com be higher than on Airbnb? Or maybe the other way round. This is another situation where data, for instance data on how your apartments sold in these channels in prior periods, comes in handy.

Are there any shortcuts?

Preparation of a precise model which takes account of all important variables takes a lot of time. Developing a pricing strategy for apartments poses one more challenge: normally, each facility is located in a different place, has a number of unique features and therefore attracts different customers. Therefore, it becomes necessary to create multiple independent models for each of the rented properties. Sounds like hard work. Luckily, this is where technology comes to the rescue. Forecasting demand is part of the online distribution process, which is why purchase of a professional system of the channel manager class, will help to streamline a large part of the process with minimum involvement on your part. However, it is important for the selected tool to work smoothly with the systems you use.

The Channel Manager from YieldPlanet is integrated with more than 400 Property Management Systems, Booking Engines, OTAs and others. Check the list of our integrations to see if it includes the systems you use.

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How to increase revenue from apartment rental

Jul 25, 2019 | Apartments

How to increase revenue from apartment rental

Both hotels and apartments base their distribution strategies on multiple mutually complementary sales channels, as this is the only way to achieve success on this extremely competitive market. However, management of a large number of channels may yield some difficulties. How automate online distribution and boost revenues from apartment sales?

Contemporary distribution strategies, both those of hotels and those of apartments, are based on direct and indirect channels. As a rule, the most beneficial bookings from the economic point of view are the direct ones made using a hotel’s own booking engine, as they make it possible to avoid considerable commissions for middlemen. Naturally, basing a hotel’s distribution strategy solely on direct bookings is possible, but it creates the risk of low occupancy and additionally requires investment of considerable funds in extensive marketing efforts in order to reach potential customers. As might be expected, this course of action may ultimately prove more expensive than the costs of middlemen’s commissions. For this reason, hotels should not shy away from cooperating with OTAs. Quite the contrary: appropriately selected OTA channels will render it possible to reach an enormous group of customers – not only regional, but also international – and significantly increase revenue. Without OTAs, achievement of this goal is virtually impossible.

As shown by the data from bookings recorded by the YieldPlanet Channel Manager in 2018, in the case of apartments a greater number of sales channels translates into increased sales. Therefore, when creating a distribution strategy for apartments, it is a good idea to rely not only on the hotel’s own booking engine, but also on appropriately selected OTAs – both the leading one which make it possible to reach millions of potential customers and niche ones which render it possible to reach a more profiled target group at a relatively low cost. Once created, the distribution strategy should naturally be updated on a regular basis in accordance with the conducted conversion and profitability analyses. This is the only way to achieve long-term success. Both management of multiple channels and ongoing monitoring of the effectiveness of the decisions made are much simpler with the right tools. These tools include first and foremost property management systems (PMS) and channel managers, which effectively automate work, create many new possibilities, as well as collect a lot of data which is invaluable from a business perspective.

Central property management system – PMS
A property management system (PMS) does precisely what the name suggests. In the case of hotels such a system is practically indispensable: it is a hub which contains information on whether a room is vacant or occupied, cleaned or requires cleaning, etc., which largely automates the work of many people, starting from reception staff. However, it is increasingly becoming indispensable in the work of people and companies in charge of managing apartments.

In the context of all online bookings it is particularly significant that a property management system transmits information on room availability and prices to other systems on an ongoing basis. At the same time, a system of the channel manager class transmits information on bookings made in each distribution channel to the PMS. This makes it possible to avoid situations where, for instance, the same room would be sold twice.

Apartment managers are increasingly using property management systems. Although it is possible not to use this system when selling overnight stays via OTAs, it is not recommended. If distribution is based both on OTA bookings and on direct bookings (from a booking engine), a PMS is absolutely necessary, as it would be very difficult to avoid the risk of overbooking otherwise. Who wouldn’t want to avoid such unpleasant consequences as the need to look for alternative accommodation for guests from additional bookings or negative guest ratings?

While hotels usually have multiple similar rooms at their disposal and can quickly accommodate such guests into them, the same might prove more difficult in the case of apartments. After all, it is impossible to offer an alternative property in the same place and with the same arrangement. Is it worth the risk? Definitely not, especially seeing that simple property management systems are not as expensive as it is commonly thought. They are available from as little as several hundred zlotys per year, which is why using them is a much more cheaper alternative than manual management of a calendar and collecting data in an Excel file, for instance, which is not only time-consuming, but also creates the risk of human error.

How do property management systems and channel managers support apartment rental?

A PMS alone certainly relieves apartment managers of many tedious obligations, but it will not enable automation of online apartment distribution. This is where channel managers, i.e. tools facilitating efficient management of sales in multiple channels, prove a useful asset. Generally speaking, a channel manager acts as a middleman in the transmission of information between the PMS and OTAs. It is the channel manager that allows real-time transmission of information on apartment prices and availability from the PMS to all OTAs linked to the channel manager as well as immediate transmission of information on the bookings made with individual OTAs via the channel manager to the PMS. Updating the calendar on an ongoing basis minimizes the risk of overbooking and makes the distribution process practically unmanned.

Naturally, a good channel manager has much more to offer than just an efficient flow of information between the PMS and OTAs as well as the booking engine. Notably, it can be used for the purpose of analytics, which has been used increasingly year by year. How exactly? Every day, a channel manager collects a massive amount of data which is worth using for the purpose of analyzing and forecasting sales – so as to make even better use of apartment potential. When choosing the right channel manager, it is a good idea to pay special attention precisely to this aspect. Reports adjusted to individual needs and possibilities of creating flexible distribution strategies for individual channels allow you to increase occupancy, and thus also the revenue generated by your properties.

Looking for solutions that will help you manage your facility’s availability? Contact us – we will be happy to provide you with a dedicated offer for the YieldPlanet Channel Manager.

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The best apartment rental websites

Jul 12, 2019 | Apartments, Channel Manager

The best apartment rental websites

Which channels to use to efficiently boost profits on renting apartments ?

A successful sales strategy involves the use of a variety of diverse and mutually complementary channels. Using of only one or two distribution channels in an extremely competitive industry, such as tourism and hospitality, first of all hinders the full exploitation of the facility’s potential, and in addition it makes the stakeholders heavily dependent on specific bookings and conditions they set. We may try to compare the above statements to our own financial policy: if we plan to invest a certain amount of money and want to disperse the investment risk, we would acquire several different blocks of shares of different companies rather than play va banque by acquiring shares of one company for all the money we have. By founding our sales solely on our own booking system and one or two leading OTA (Online Travel Agency) websites, on the one hand we can hope to reach a huge number of prospects in a relatively easy way, and on the other hand – any changes in the positioning of the facility’s offer or the amount of commission made by this website may have a significant impact on revenues.

First: the leading OTAs
While the direct sale of apartments generates the highest profits, it is generally responsible for a lower percentage of total revenues. Therefore, when developing an optimized distribution strategy, at least a few agent websites (OTA) should be taken into account, after a very careful selection. It is worth taking into account the leading websites in this category, i.e. Booking.com and Expedia – both in Poland and worldwide they generate a significant share of bookings. Giving them up would significantly limit distribution; however, an optimized distribution strategy should primarily be based on a definitely broader spectrum of channels available. Data provided by the YieldPlanet Channel Manager clearly indicates that the optimal number of channels for the apartments is between 4 and 6; however, assuming that these are the hotels that shape the market and are the trend testers, this number is likely to increase. It is very likely that in the years to come, better results will enable the apartments to increase the number of agents.

Second: the profiled OTAs
With leading OTAs, our offer can reach the farthest corners of the world – to customers who would have been hardly accessible to us without appropriate tools and massive promotion investments. Still, it is worthwhile to complete our distribution strategy with a few smaller OTA websites, which will enable us to reach customers potentially interested in our offer. If your apartment is located in a place frequently visited by Russians and/or potentially of interest to Russians, it is worthwhile incorporating into the distribution strategy the local OTA websites that enjoy great popularity in Eastern Europe – for example Ostrovok – or in Central Europe – Szallas.hu / Nocleg.pl. An interesting option is also the Chinese Ctrip website, thanks to which the Czechs and Hungarians have already been winning guests from the Far East.

By analyzing the potential of a specific property and its immediate environment, it is relatively easy to pinpoint potential agents who will guarantee us the ability to reach the target group of customers and at the same time will offer competitive terms of cooperation (e.g. lower commissions). Targeting the guests’ nationality is not the only available option to search for new OTAs to cooperate with. If you have a apartment located in a tourist resort that offers excellent conditions for winter sports, look for OTAs that aggregate such facilities. Are you the owner of a luxury property? Highlight it on websites dedicated to wealthy customers who are looking for premium locations – such as Prestigia, LifeStyleHotels or Mr & Mrs Smith. It is worth looking for OTAs that specialize in targeting customers representing a specific profile. While these are niche websites, they usually provide a high conversion rate and a low cancellation rate, which is also of great importance.

Third: Airbnb
Our apartment distribution strategy surely cannot fail to include Airbnb, a first choice for many when looking for accommodation for a private or business trip. Airbnb emerged from the sharing-based trend. In sharing economy, instead of buying a good or service, we simply rent it or share it with others. According to this rule, a landlord can rent a flat to another person while it is vacant. And what if we set up a platform where we could search for all the apartments and flats that are rendered available in this manner? This is how Airbnb entered the short-term rental market. According to YieldPlanet data, Airbnb generates more bookings than alternative OTAs or proprietary booking systems, which is why it is worthwhile taking advantage of the website’s potential.

Fourth: Booking Engine
In order to avoid unnecessary risks and consequently potential losses, in planning the distribution strategy it is advisable to include many mutually complementary channels in it. However, the starting point should be the Booking Engine, i.e. a proprietary booking system that would enable us to make bookings directly on the property’s website. As shown by data reflecting the share of bookings registered in the YieldPlanet Channel Manager for 2018, the potential for growth of direct bookings in Poland still remains high when compared to Western European countries.
Why is it worth striving to compete for a direct customer? First of all, due to the chance of avoiding the commissions that have to be paid to the OTA account in the indirect channel model. The growing position of the leading players entails the risk of further increase of the cost of winning guests, so it is worth securing the higher share of bookings made via our proprietary booking system. While the task is not a simple one, the efforts made in this regard should translate into tangible benefits in a relatively short period of time.

Fifth: cooperation with businesses
Apartments are becoming increasingly more popular with business customers, so if you manage a facility located in a large city, especially near business districts, it is advisable to include this group in your distribution strategy In order to reach business customers you should mark your presence in the HRS (Hotel Reservation Service). Another effective method of winning guests is to cooperate with wholesalers, i.e. agents acting as intermediaries in the apartment distribution process, such as Hotelbeds.

While developing a distribution strategy, you can not only effectively diversify the sources of revenue but also minimize the risks. An effective strategy, however, should be first and foremost a flexible strategy, adapted to constantly changing market conditions and customers’ habits. It is therefore necessary to monitor the market on an ongoing basis, automate the sales process using available technological solutions (including PMS, Channel Manager and RMS), and constantly analyze data and make business decisions on their basis.

Looking for solutions that will help you manage your facility’s availability? Contact us – we will be happy to provide you with a dedicated offer for the YieldPlanet Channel Manager.

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Build a distribution strategy for apartments

Jul 4, 2019 | Apartments, Channel Manager

Build a distribution strategy for apartments

Increasingly often, short-term rentals are the first choice over traditional accommodations, primarily among individual customers, but also among business customers. However, continuously growing interest and, as a result, competition, have made property owners and property management companies constantly optimize their online distribution strategies. How to do it effectively? How should the online distribution strategy for short-term rentals differ from the strategy applied by hotels?

Dynamic development of alternative accommodations
Quite obviously, short-term rentals has transformed the landscape of the tourism industry for good and forced hotels, guesthouses and other traditional accommodations to thoroughly redesign their current sales and distribution models. Originally, the redesign activities focused only on traditional facilities; at the initial development stage the apartments, given the relatively weak market competition and a more favourable pricing policy compared to hotels, did not have to be excessively customer-oriented. However, growing interest, combined with above-average rates of return on investment in short-term rentals, in a short period of time led to an abrupt increase in their number and the consequent necessity to move the existing customer acquisition strategies to a completely new level.

The market growth was fostered, on the one hand, by competitive prices and, on the other hand, by the global trend where the customers seeking uniqueness, genuineness and customized services would decide increasingly more often to stay in locations alternative to traditional accommodations – especially chain accommodations, which, in order to guarantee the same standard, were similarly equipped regardless of their location. All this translated into a great number of apartments becoming available for rent in a short period of time, especially in the most popular tourist destinations.

This is perfectly illustrated by the statistics published by the biggest players on the distribution channel market (mainly OTAs – i.e. Online Travel Agencies). Alternative accommodations already account for approx. 20% of Booking.com‘s revenues. Airbnb, the short-term rental market leader and one of the icons of the sharing economy alongside Uber, generates almost all of its revenue from short-term rentals. While the website owes its current position to the immense interest of individual customers, it has been increasingly more active in the USD 1 trillion worth business travel sector. As a result, over the last two years the number of corporate bookings has tripled and reached 15% of the total number of bookings. By 2020, the share of bookings made by companies is expected to reach 30%!

How to effectively develop the suite distribution strategy?
Operating in such a dynamically evolving market is definitely challenging; therefore numerous holiday suite owners decide to entrust their management to professionals. Today there are dozens of companies providing such services; however, they do not always succeed in fully exploiting the potential of managed properties. The reason for that is that building an effective online distribution strategy is extremely challenging a task. On the one hand, it involves extensive expertise and know-how and, on the other hand, the use of professional tools supporting the sales process automation.
While it is worthwhile drawing on good practices from the hospitality industry, it is misleading to expect that a 1:1 copy of the distribution strategies used by leading hotel facilities will yield the desired outcomes. Why being so? This is because the apartments are characterised by exceptional uniqueness. While the hotels as a rule offer at least several identical rooms (similar in size and style), it is practically impossible to find two identical apartments. This is both an asset and a major obstacle, requiring the property manager to manage the property skilfully. This is due to the fact that the number of possible options for manoeuvring is significantly limited, which means that the distribution strategy should be tailor-made each time. Given the fact that each suite constitutes a unique resource and juggle with its availability is impossible, careful and well-thought-out price management is essential as well. Excessive under- and/or overpricing may indeed have a significant impact on the RoI.

So, how to effectively manage the suite distribution? First and foremost, it is crucial to carefully analyze their potential, showcase them skilfully and select the most appropriate distribution channels. According to the number of bookings recorded by Channel Manager YieldPlanet, maximizing suite revenue goes hand in hand with maximizing the number of available sales channels. The majority of the short-term rentals we cooperate with use 4 to 6 sales channels, yet increasingly more facilities operate through 7 to 10 channels. The more channels we use, the more difficult it is to manage them. For each channel a separate strategy needs to be developed, and it should be thoroughly analyzed with respect to its profitability, the amount of commission charged by the given channel for cooperation, and other factors as well. On this basis, it is advisable to develop a proprietary online distribution strategy.

Optimally designed IT ecosystem
The management of a significant number of distribution channels involves the application of tools that will substantially enable to automate the process of managing suite prices and availability. Today it is virtually impossible to introduce all the necessary modifications and manage the calendar manually. This is especially true if we plan to establish cooperation with at least some of the leading distribution channels, such as Booking.com, Airbnb, Expedia or local booking portals. The process of multi-channel management automation can be supported by solutions that has already been used by hotels for years and widely used in the short-term rental market for some time now.

What kind of solutions are they? First of all, the PMS system (property management system), which should include the entire inventory, i.e. all managed properties. It is PMS that will monitor the current number of available properties and enter new bookings directly into the calendar. The system will also feed information on apartment’s availability into the next link in the data flow chain, i.e. Channel Manager. This system, in turn, allows to effectively manage the multi-channel sales process. Provided that the short-term rentals are being offered on several booking websites at the same time, modification of the offer and customization of prices to the current market conditions will be possible in real time from the level of one tool, without the need to log in to each channel separately.

Connecting the Channel Manager with the PMS is essential while managing the suite availability. Since each suite offers unique qualities and often it is not possible to replace it with another similar suite, it is of utmost importance that the system sends real-time information about the suite’s availability to OTA in order to prevent double bookings at the same time (i.e. overbooking).

Imagine a situation where we have available apartments whose interiors are inspired by the culture of different countries. So there is a Japanese, Chinese, American, Italian, Swedish and French suite. If a guest cares particularly to stay in a Chinese suite and they book one, but there will be an overbooking situation, i.e. another guest books the same suite at the same time, it will most likely be an issue for the suite manager; this issue will be difficult to solve or even impossible to solve in such a way as not to offend the guest who will not be able to stay in the Chinese suite. The sales strategy for this type of facilities is different than in the case of many identical rooms, as it enforces the need for detailed and careful price management and provides fewer opportunities for manoeuvring within the suite inventory.
In this particular case, it is extremely vital that the system immediately changes the status of the facility’s availability. Of course, the channel manager brings many more advantages. This translates into higher suite occupancy rates, greater control over the margins paid to the agents and huge time savings for the managers.
What is probably the most interesting for the suite managers at the moment is the cost of developing this type of infrastructure. And even though it may seem that these solutions are reserved exclusively for the biggest market players, in fact things look completely different. In most instances, investment in expensive IT infrastructure is not necessary. The presented systems are usually cloud-based solutions, settled on the basis of a fixed, monthly subscription fee or based on a commission system, which makes them available to virtually everyone.
Are you looking for a solution that will help you manage your short-term rentals? Contact us to receive an offer for the YieldPlanet Channel Manager.