Reaction to KeyData Article About Trends Heading into 2024
KeyData’s October 2023 overview of industry trends reveals a few potentially worrisome trends as we head into 2024.
- Occupancy, ADR, and RevPAR are all down compared to 2021 and 2022 (but higher than 2019);
- booking windows and average length of stay are down, and;
- shoulder season performance is slightly up.
To be fair, 2021 should hardly count as a benchmark. The pandemic bump that benefited many short-term rental companies couldn’t last. But it helped expose more travelers to the wonderful possibilities of vacation rentals vs. hotels, and we’re still seeing some of those gains. Effectively, it expanded the VR marketplace.
However, as the article points out, we’re also seeing increased competition. Housing prices have put many properties out of reach for the average buyer, creating an opportunity for individual and corporate investors to increase their portfolios. While the marketplace expanded (demand side), so did inventory (supply side). Thus, lower rates and occupancy.
Any number of factors could drive strong shoulder season performance. More people working from home means more flexible schedules. High prices on consumer goods mean more bargain hunting, making the shoulder and low seasons more attractive to thrifty travelers.
So what does all this mean, and what should you take from it?
Small improvements matter
It’s been shown that microwaving citrus before juicing yields more juice. That’s a great metaphor for optimization. If you get 1/3 cup of juice from a room-temperature orange and 1/2 cup from a warmed-up one, that’s not a huge difference. But for a whole pitcher, it could save you an orange or two. Repeated hundreds of times, an incremental improvement can make a big difference.
That’s why dynamic pricing tools like Rented can be so powerful. Bumping your ADR from $215 to $222 across all properties (for example) might not quicken your pulse, but it’s tough out there, folks. There’s a reason why male bike racers shave their legs or skiers wear tight suits. Little advantages can make the difference between winning and losing.
Direct bookings are critical
From self-publishing to retail, individuals and companies are using modern tools to help take business away from the “big boxes,” and it’s starting to work. Building a robust mailing list, for example, is the easiest way to build and maintain control over your own customer base. At the end of the day, OTAs are just conversion-optimized search engines that get around 20% of your revenue just for creating organic traffic to your listings.
But they’re just channels, and so is your website. Not only can you drive more business to your own website and booking engine, but you must. Margins are thin enough in this industry as it is. If you only get $160 from a $200 booking, then you can price the same night at $180 through your own channel and be money ahead. Driving that traffic isn’t magic—it’s equal parts science and art, and we can help you sharpen that part of your game.
