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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