WEBVTT NOTE This file was generated by Descript 00:00:00.940 --> 00:00:01.944 Speaker: It's caa. 00:00:04.605 --> 00:00:04.825 caa. 00:00:05.655 --> 00:00:09.945 They be created by caa. 00:00:11.415 --> 00:00:12.610 It's for the show. 00:00:12.610 --> 00:00:13.120 Let's go. 00:00:16.020 --> 00:00:18.419 Speaker 2: So today we're with Desiree Garcia, the co-founder of 00:00:18.419 --> 00:00:22.010 REM Max and we're talking about the 10 revenue management terms that 00:00:22.010 --> 00:00:23.540 every property manager should know. 00:00:23.919 --> 00:00:26.620 My first recollections of Desiree was Carlos telling me 00:00:26.620 --> 00:00:28.029 about how brilliant she was. 00:00:28.930 --> 00:00:34.410 And I didn't really get to know her until recently through our classes with RevMax 00:00:34.480 --> 00:00:36.910 . It's obvious why Carlos said those things. 00:00:37.170 --> 00:00:37.980 Welcome, Desiree. 00:00:38.330 --> 00:00:38.960 Speaker 3: Hey, Steve. 00:00:39.030 --> 00:00:39.540 Thank you. 00:00:39.580 --> 00:00:40.290 Glad to be here. 00:00:40.890 --> 00:00:43.140 Speaker 2: Yeah, we're so glad to have you and thank you for everything you've 00:00:43.140 --> 00:00:44.650 been doing over the past couple months. 00:00:45.099 --> 00:00:47.669 With the classes, people are getting so much value out of it. 00:00:47.730 --> 00:00:51.120 And I personally learn something every time I jump on those calls. 00:00:52.224 --> 00:00:52.525 Speaker 3: Perfect. 00:00:52.555 --> 00:00:57.074 No, like the team is great and I'm glad that we're able to connect on that level. 00:00:57.685 --> 00:01:01.165 Speaker 2: So Desiree, you started revenue management in 2006. 00:01:01.235 --> 00:01:02.355 So you've been doing this for a little bit. 00:01:03.175 --> 00:01:03.735 Correct. 00:01:04.384 --> 00:01:07.195 Can you tell us a little bit about your journey, how you started and 00:01:07.205 --> 00:01:10.335 maybe how you ended up here at RevMaxMD as a co founder? 00:01:10.765 --> 00:01:11.465 Speaker 3: Absolutely. 00:01:11.945 --> 00:01:15.804 So yes, started as a revenue manager back in 2006. 00:01:15.815 --> 00:01:17.745 Now I'm a revenue manager by trade, right? 00:01:17.745 --> 00:01:19.104 I've been in the hotel space. 00:01:19.104 --> 00:01:25.934 I started out with the major hotel brands, Hilton, Hyatt, Marriott, Starwood. 00:01:26.345 --> 00:01:28.835 Having that foundation and that experience. 00:01:29.275 --> 00:01:33.695 was really laying a great foundation of revenue management to the vacation 00:01:33.715 --> 00:01:39.324 industry and since then have watched it explode and really gain momentum 00:01:39.325 --> 00:01:40.965 most recently in the past few years. 00:01:41.305 --> 00:01:47.735 So crossing paths with Carlos and the Streamline team, they were very motivated 00:01:47.795 --> 00:01:50.125 to be the leaders in the industry. 00:01:50.635 --> 00:01:54.615 And part of that included making a revenue management solution, 00:01:54.854 --> 00:01:56.484 which I was able to aid with. 00:01:56.734 --> 00:02:02.425 So partnered with Carlos and the team, and we built out RevMax. 00:02:02.535 --> 00:02:05.495 And it's a complete revenue management solution that's all in 00:02:05.495 --> 00:02:10.165 one available to the vacation rental industry, built by revenue managers. 00:02:10.640 --> 00:02:14.090 And that's the difference in what makes the product unique is that 00:02:14.090 --> 00:02:18.910 we are not data scientists trying to tell clients what they should do 00:02:18.919 --> 00:02:20.230 because that's what the data says. 00:02:20.390 --> 00:02:24.340 We need that part, but we also need to understand why we're doing it. 00:02:25.159 --> 00:02:29.359 And that's where RevMax is unique because we have revenue managers who've 00:02:29.380 --> 00:02:33.620 built the system can tell you exactly why you need all of these components 00:02:33.620 --> 00:02:35.700 in order to have a successful strategy. 00:02:36.060 --> 00:02:37.600 And we have a lot of proven results. 00:02:38.585 --> 00:02:41.625 Speaker 2: You know, every time I'm in Rev Max and especially on classes with 00:02:41.685 --> 00:02:46.315 you, I'm always surprised about how robust it is and all of the features that I 00:02:46.315 --> 00:02:50.835 just had no idea were possible, or even the reports just recently on this last 00:02:50.835 --> 00:02:55.054 one, I started screenshotting like every 15 seconds because I'd found a whole 00:02:55.054 --> 00:02:56.999 new report that I was so excited about. 00:02:57.420 --> 00:02:59.890 And you do a great job explaining that really appreciate that. 00:03:00.480 --> 00:03:03.460 So today we're talking about 10 revenue management terms that every 00:03:03.470 --> 00:03:07.140 property manager needs to know, . So for number one, you had revenue. 00:03:07.570 --> 00:03:10.280 Can you help explain why revenue is a term that everybody needs to know? 00:03:10.770 --> 00:03:11.370 Speaker 3: Absolutely. 00:03:11.890 --> 00:03:16.190 As a revenue manager, we want to at least understand what we're measuring. 00:03:16.600 --> 00:03:21.150 And revenue is the number one term that needs to be understood. 00:03:21.180 --> 00:03:22.440 And revenue. 00:03:22.805 --> 00:03:26.835 In the rev max world means nightly room rent, right? 00:03:26.835 --> 00:03:29.845 Or just room rent, because that's ultimately what a revenue manager is 00:03:29.865 --> 00:03:32.235 managing is the price or part of it. 00:03:32.605 --> 00:03:37.915 And so the best KPI or metric indicator is going to be revenue 00:03:37.945 --> 00:03:40.125 and revenue for the company. 00:03:40.480 --> 00:03:44.180 In general with any company and then ultimately revenue per owner, 00:03:44.690 --> 00:03:47.360 because that's what they care about and that to our customer is, 00:03:49.270 --> 00:03:51.490 Speaker 2: and there's a lot of different ways to really think about 00:03:51.490 --> 00:03:56.700 revenue , what's the revenue coming in for the property manager, or for 00:03:56.760 --> 00:04:00.790 the homeowner, or what's the combined take rate between them, there's a 00:04:00.790 --> 00:04:02.070 lot of ways to think about it right. 00:04:02.525 --> 00:04:03.265 Speaker 3: Absolutely. 00:04:03.435 --> 00:04:08.235 And so it's important that everyone's aligned with what that understanding 00:04:08.235 --> 00:04:13.385 is, because that way we are all strategizing to reach that goal. 00:04:14.165 --> 00:04:16.955 Speaker 2: So for number two, you have occupancy. 00:04:17.825 --> 00:04:21.945 Speaker 3: So occupancy is important as just to understand 00:04:21.965 --> 00:04:24.655 the basic key terms, right? 00:04:24.655 --> 00:04:29.150 We have to understand Our revenue goal, but we also need to understand occupancy 00:04:29.150 --> 00:04:35.560 because occupancy is going to be a metric that is measured in the industry. 00:04:35.570 --> 00:04:39.620 And you need to understand how it translates and occupancy is 00:04:39.620 --> 00:04:43.600 essentially taking how many nights. 00:04:44.090 --> 00:04:49.110 On any given day are occupied versus your total availability. 00:04:49.650 --> 00:04:55.580 So if you have 10 units, five are occupied, your occupancy is 50%. 00:04:56.020 --> 00:05:01.290 So it's really just understanding how many nights in a year am I booked? 00:05:01.625 --> 00:05:04.465 Or occupied because you could have owner nights, right? 00:05:04.465 --> 00:05:07.395 You could have maintenance blocks, things along those lines. 00:05:07.985 --> 00:05:13.195 And it's important to understand occupancy because, and we're going to call them 00:05:13.205 --> 00:05:19.975 young owners come into the industry and they'll compare rates amongst their 00:05:19.975 --> 00:05:25.039 neighbors, but ultimately they also need to compare their occupancy because. 00:05:25.440 --> 00:05:32.030 Having sold nights is maybe more important than having a high rate because if 00:05:32.030 --> 00:05:35.120 you have a high rate and everybody can see it, that's usually an indicator 00:05:35.120 --> 00:05:36.380 that you're still sitting empty. 00:05:37.390 --> 00:05:41.400 So you want to focus on or at least understand occupancy. 00:05:41.920 --> 00:05:45.430 Speaker 2: You know, I had a homeowner who did a study for me one time and 00:05:45.430 --> 00:05:49.220 he, he was actually a researcher who would go out and study like a campaign 00:05:49.220 --> 00:05:50.350 and figure out how to build a platform. 00:05:50.830 --> 00:05:51.700 He's between campaigns. 00:05:51.700 --> 00:05:54.950 He told me, Hey, Steve, I'd be happy to do this research on your company 00:05:54.950 --> 00:05:56.270 as if you were a political candidate. 00:05:56.890 --> 00:05:57.199 Speaker: I said, 00:05:57.200 --> 00:05:57.909 Speaker 2: sure, why not? 00:05:57.950 --> 00:06:00.490 And so he surveyed my competitors. 00:06:00.490 --> 00:06:03.350 He went and surveyed our homeowners, , our teammates, all this. 00:06:03.390 --> 00:06:08.735 And he came back and he said, Steve, Your homeowners will tell you that if 00:06:08.735 --> 00:06:14.055 they can get more revenue per night and with less nights, that's better for them 00:06:14.085 --> 00:06:15.595 because that's a smart thing to say. 00:06:16.055 --> 00:06:22.065 But he said they're lying when I compare what their test results are and what 00:06:22.065 --> 00:06:24.505 their skin, uh, sweat reactions are. 00:06:24.505 --> 00:06:27.235 When they look at calendars that are empty with the same amount of nights, 00:06:27.655 --> 00:06:32.125 he said, occupancy has a direct psychological connection to whether or 00:06:32.125 --> 00:06:33.495 not homeowners are going to stay with you. 00:06:34.035 --> 00:06:34.715 Speaker 3: Mm hmm. 00:06:34.925 --> 00:06:35.365 Correct. 00:06:35.725 --> 00:06:37.808 And nobody wants to walk away from the full calendar, 00:06:37.808 --> 00:06:38.061 Speaker 2: right? 00:06:38.061 --> 00:06:42.425 I mean, we're here to drive revenue, but at the same time, those homeowners, 00:06:42.435 --> 00:06:45.325 when they look at those calendars, they are looking at that occupancy and 00:06:45.325 --> 00:06:46.975 their loss bias is important for them. 00:06:47.975 --> 00:06:50.265 So for number three, you had ADR. 00:06:50.315 --> 00:06:50.975 What's ADR? 00:06:51.585 --> 00:06:54.015 Speaker 3: So ADR stands for average daily rate. 00:06:54.645 --> 00:07:00.385 An average daily rate is relative to when a reservation has booked. 00:07:01.000 --> 00:07:05.620 What was that rate, or they reference it as ADR, and that's going to be a 00:07:05.620 --> 00:07:10.050 term that translates across the vacation rental space as well as the hotel space. 00:07:10.370 --> 00:07:14.800 So it's important that, you know, when Rev Max came out and we came into the 00:07:14.810 --> 00:07:21.640 industry and we're building KPIs that it translates into the hotel space, because 00:07:21.970 --> 00:07:28.640 there's a lot of companies and vacation rental managers that will acquire hotels. 00:07:29.085 --> 00:07:29.325 Right. 00:07:29.325 --> 00:07:33.645 And they'll have to speak to hotel owners or hotel investors or condo tells. 00:07:33.985 --> 00:07:38.655 So we need to make sure that we set up clients for success. 00:07:39.000 --> 00:07:43.990 In being able to speak that language and not have a translation barrier moving 00:07:43.990 --> 00:07:52.190 forward as they grow so ADR simply means average daily rate of a reservation and 00:07:52.190 --> 00:07:58.970 why that's important is because some folks will stand high on their ADR, and that's 00:07:58.980 --> 00:08:00.710 great that they have that high rate. 00:08:01.010 --> 00:08:06.720 However, again, as we talked about occupancy, if they sat with, you know, 00:08:06.720 --> 00:08:11.360 five nights unsold because their customer can only afford one night at that rate, 00:08:11.650 --> 00:08:16.939 then what, what was the opportunity lost there at the same time, if they stayed 00:08:16.939 --> 00:08:21.730 for four nights and had a low ADR, could we have balanced that out with a higher 00:08:21.730 --> 00:08:25.600 rate or what is the strategy just to make sure we're maximizing that rate? 00:08:26.130 --> 00:08:30.340 So ADR in layman's terms is just simply how much. 00:08:30.585 --> 00:08:37.005 Did my unit or home book for, for that night on average, right? 00:08:37.005 --> 00:08:37.905 So as you're looking. 00:08:38.365 --> 00:08:39.535 across multiple homes. 00:08:40.455 --> 00:08:44.785 It's usually described as a per night rate because you want to compare a Saturday 00:08:44.785 --> 00:08:50.305 night different than a Thursday night or Friday night and watch your ADR by day. 00:08:50.505 --> 00:08:53.085 That also helps set strategy as you move forward. 00:08:53.875 --> 00:08:57.245 Speaker 2: Desiree, a lot of times ADR can be expressed in different 00:08:57.245 --> 00:09:00.965 sets, like what's my weekend ADR, what's my weekday ADR, what was my 00:09:00.965 --> 00:09:03.325 ADR in May compared to June, right? 00:09:03.345 --> 00:09:06.815 So there's a lot of comparables that we do there when we Add them all up 00:09:06.815 --> 00:09:09.765 and then divide them by the number of nights and figure out what the ADR is 00:09:09.795 --> 00:09:12.305 and compare them to other sets of ADR. 00:09:12.505 --> 00:09:13.465 Is that correct? 00:09:14.145 --> 00:09:14.645 Speaker 3: Yes. 00:09:14.905 --> 00:09:19.335 And that's also important in why you want to be in a situation 00:09:19.335 --> 00:09:21.075 where you don't have flat rates. 00:09:21.715 --> 00:09:27.505 Because once you start changing your rate based on demand or occupancy, the higher 00:09:27.505 --> 00:09:32.635 the occupancy, usually you can start to increase your rate because ultimately 00:09:32.925 --> 00:09:39.055 what we're trying to do as a revenue manager is really economics 101, right? 00:09:39.055 --> 00:09:42.735 You want to find the equilibrium between supply and demand every 00:09:42.735 --> 00:09:44.695 day of the year for every home. 00:09:44.855 --> 00:09:48.915 So when occupancy increases, That means there's a lot of demand coming in. 00:09:49.225 --> 00:09:54.875 It allows you to have a higher rate when occupancy is low many times. 00:09:54.875 --> 00:10:00.905 That means you are more willing to drop price to try to fill occupancy. 00:10:01.305 --> 00:10:04.335 And ultimately generate more revenue the end of the week or for the 00:10:04.335 --> 00:10:09.495 month or whatnot, therefore having a different ADR will help to identify 00:10:09.505 --> 00:10:15.155 what price point sells for what day of week best, and then what season, 00:10:15.735 --> 00:10:18.205 and then what bedroom size, et cetera. 00:10:18.555 --> 00:10:20.855 So it can get very complex for sure. 00:10:21.075 --> 00:10:26.195 However, overall, you want to have a good understanding of why ADR is 00:10:26.195 --> 00:10:29.945 important and how to use that information moving forward to set strategies. 00:10:30.935 --> 00:10:34.735 Speaker 2: So when it comes to ADR, the whole point of that is looking 00:10:34.755 --> 00:10:36.965 for your price equilibrium, right? 00:10:36.995 --> 00:10:41.704 Like the price equilibrium is the most amount that you can get per 00:10:41.705 --> 00:10:43.395 night while still driving demand. 00:10:43.395 --> 00:10:47.055 It kind of measures the value of that rental night. 00:10:47.095 --> 00:10:48.445 Is that a good way of thinking about it? 00:10:48.475 --> 00:10:49.615 Or am I completely off? 00:10:49.775 --> 00:10:50.585 Speaker 3: Nope, that's perfect. 00:10:51.125 --> 00:10:51.845 Nail on the head. 00:10:51.845 --> 00:10:52.555 Absolutely. 00:10:56.565 --> 00:10:57.995 Speaker 2: So for number four, you put RevPAR. 00:10:59.975 --> 00:11:03.475 Speaker 3: So RevPAR, now this one specifically is a vacation 00:11:03.475 --> 00:11:07.385 rental term because in hotel world, it's called RevPAR, it stands 00:11:07.385 --> 00:11:09.075 for Revenue Per Available Room. 00:11:09.545 --> 00:11:11.915 In hotels, they're all one room, right? 00:11:12.255 --> 00:11:13.839 In vacation rentals, it's called Revenue Per Available Room. 00:11:14.260 --> 00:11:19.320 One room is equivalent to one unit, so we just, to clarify, it's RevPAR. 00:11:19.790 --> 00:11:24.600 There are other KPIs that will say RevPAR, which is your four 00:11:24.610 --> 00:11:26.440 bedroom, right, divided by four. 00:11:26.940 --> 00:11:30.110 So you get your revenue per actual room in the house. 00:11:30.850 --> 00:11:34.150 But for the most part, it's RevPa, which is revenue per available unit. 00:11:34.540 --> 00:11:38.120 And all we're doing there is just saying, what is the total revenue that I'm 00:11:38.120 --> 00:11:40.950 getting as a vacation rental company? 00:11:41.310 --> 00:11:47.929 Divide that by the total amount of units I have in my portfolio. 00:11:48.680 --> 00:11:57.705 And why that's important is because that is a great indicator of My occupancy in my 00:11:57.715 --> 00:12:02.525 ADR mix, that equals your rev pot, right? 00:12:02.545 --> 00:12:09.934 So if I had high occupancy and low ADR, and I made, we'll just say 5, 000. 00:12:10.515 --> 00:12:16.249 And at the same time I had high ADR and low occupancy, but still made 5, 000. 00:12:17.250 --> 00:12:17.490 Right? 00:12:17.490 --> 00:12:23.040 My RevPaw is the same in both scenarios, so it's what makes 00:12:23.040 --> 00:12:24.160 more sense for your company. 00:12:24.510 --> 00:12:28.930 And like you said earlier, Steve, the better story is to have higher 00:12:28.930 --> 00:12:32.360 occupancy with maybe a lower ADR because my calendars are full. 00:12:32.880 --> 00:12:38.900 I'm cutting now more checks per owner, whereas if I have high ADR, low occupancy, 00:12:38.970 --> 00:12:43.150 those four owners are getting big checks, but my other owners are sitting empty. 00:12:43.915 --> 00:12:45.535 That may not always be the best strategy. 00:12:45.535 --> 00:12:49.895 So your RevPaw is a good indicator to understand one thing. 00:12:50.225 --> 00:12:54.185 How well am I doing per my neighbor who sits there and says, well, I'm 00:12:54.185 --> 00:12:57.045 available for, you know, 500 a night. 00:12:57.480 --> 00:12:59.650 And that's what you should be getting. 00:13:00.110 --> 00:13:02.580 Whereas you're selling at three 50 a night. 00:13:02.850 --> 00:13:04.810 So I'm doing better than you, right? 00:13:04.810 --> 00:13:07.700 Well, maybe what was your total revenue? 00:13:08.280 --> 00:13:11.950 Did you sell only one night at 500 and I sold four at three 50. 00:13:12.360 --> 00:13:14.680 So it's between your occupancy and ADR. 00:13:14.889 --> 00:13:18.180 You really, your best measurement of performance is your rev pot. 00:13:18.690 --> 00:13:20.230 So how much revenue did I actually make? 00:13:20.770 --> 00:13:23.750 Which goes back to number one, what is my revenue? 00:13:24.560 --> 00:13:27.660 The second piece to that is to say, I'm going to pull it back 00:13:27.660 --> 00:13:29.470 now to look at it as a company. 00:13:29.870 --> 00:13:34.690 So as a company, you want to make sure that collectively, if you are 00:13:34.690 --> 00:13:40.160 growing in more inventory, are you truly making more money for your owner? 00:13:40.730 --> 00:13:47.550 If I had 10 units and I was making, I don't know, 900 per unit on average. 00:13:48.000 --> 00:13:50.510 And now I grew to 15 units. 00:13:51.495 --> 00:13:56.245 And now my new owners are doing great and I'm selling it for a little bit more. 00:13:56.765 --> 00:14:02.625 In general, I'm making more money because maybe I have, you know, a bigger 00:14:02.625 --> 00:14:06.865 bedroom size or whatnot, or the unit is the same size and a little bit newer, 00:14:07.945 --> 00:14:10.585 but my revenue per unit is dropping. 00:14:11.675 --> 00:14:15.275 That's usually an indicator that I don't have enough demand 00:14:15.665 --> 00:14:17.825 to fulfill my new inventory. 00:14:19.135 --> 00:14:25.135 So in that situation, if you're growing in supply, And your overall 00:14:25.145 --> 00:14:29.455 revenue is going up, but your revenue per unit is going down. 00:14:29.595 --> 00:14:33.365 That's a great indicator that you're not actually making any more money. 00:14:33.365 --> 00:14:36.075 You're just moving the money between units. 00:14:36.845 --> 00:14:40.035 And what you're really saying is Mr. 00:14:40.035 --> 00:14:43.945 Owner, I added more inventory, but I don't have enough demand 00:14:43.945 --> 00:14:45.785 to fill you as well to feed you. 00:14:45.975 --> 00:14:47.395 I'm feeding all my new guys. 00:14:48.685 --> 00:14:52.325 And that's an indicator to understand, Hey, I got to do better. 00:14:52.375 --> 00:14:56.965 It's not just enough for owner services to go out and grow the product. 00:14:57.595 --> 00:15:02.275 I have to also work with marketing to grow the demand to be able 00:15:02.275 --> 00:15:03.805 to sustain my existing product. 00:15:05.025 --> 00:15:10.845 Speaker 2: So if you're driving inventory growth and your rev pause going down, 00:15:11.605 --> 00:15:16.845 you could probably expect that to be a leading indicator of future churn within 00:15:16.845 --> 00:15:20.975 your inventory set because the value that the homeowners are being divided out. 00:15:21.910 --> 00:15:23.220 Amongst more properties. 00:15:23.240 --> 00:15:27.210 And you know, there's a good possibility that you'll probably start losing some 00:15:27.210 --> 00:15:29.310 properties if you continue to see that. 00:15:29.760 --> 00:15:30.510 Speaker 3: Exactly. 00:15:31.020 --> 00:15:31.540 Yes. 00:15:32.420 --> 00:15:33.880 Speaker 2: It's a great way of looking at that. 00:15:34.030 --> 00:15:35.150 I never thought about it in that way. 00:15:35.150 --> 00:15:35.579 That's. 00:15:36.180 --> 00:15:37.440 That's a math problem I'm going to go do today. 00:15:40.240 --> 00:15:45.359 Speaker 3: Yes, that's the key P I that's the metric right we've got to understand. 00:15:45.990 --> 00:15:47.560 Yes, I could be getting high rate. 00:15:47.960 --> 00:15:52.139 Yes, I could be sitting with decent occupancy but my true metric to 00:15:52.140 --> 00:15:57.399 understand, and or yes and I could be making more money but organically If I'm 00:15:57.400 --> 00:16:00.000 not making more money on average per unit. 00:16:00.565 --> 00:16:01.135 To your point. 00:16:01.135 --> 00:16:01.375 Yes. 00:16:01.375 --> 00:16:02.335 You're going to start to see that. 00:16:03.895 --> 00:16:06.075 Speaker 2: So this is going to go off just a little bit. 00:16:06.275 --> 00:16:11.485 When the listeners thinking about Repa, should they be thinking about it as 00:16:11.485 --> 00:16:16.764 their total inventory set, or should we be thinking about it, like in segments 00:16:16.765 --> 00:16:21.595 within your inventory set, because maybe you brought on a lot more four bedrooms. 00:16:21.595 --> 00:16:24.925 And so it upped your average bedroom count. 00:16:25.495 --> 00:16:27.385 So your Rev pop could look. 00:16:27.970 --> 00:16:31.970 better, but not necessarily be better for maybe the smaller units. 00:16:31.990 --> 00:16:35.590 Is there a reason to break those up or think about it in different ways? 00:16:35.620 --> 00:16:37.280 Or am I overthinking it? 00:16:37.750 --> 00:16:38.800 Speaker 3: No, that's perfect. 00:16:38.840 --> 00:16:41.150 That would be what we call level two. 00:16:42.850 --> 00:16:43.920 So it's great. 00:16:43.920 --> 00:16:46.264 You always want to at least start high level. 00:16:46.465 --> 00:16:46.795 Right. 00:16:46.795 --> 00:16:49.185 To at least get a basic understanding and strategy to 00:16:49.185 --> 00:16:50.515 say, okay, yes, I'm doing good. 00:16:50.515 --> 00:16:51.705 That's your first checkpoint. 00:16:52.235 --> 00:16:57.015 Then your second checkpoint is to make sure that all of your KPIs, your 00:16:57.015 --> 00:17:01.975 revenue, your occupancy, and your ADR and your RevPA now are falling suit 00:17:02.014 --> 00:17:07.425 through every bedroom size or subset of inventory within your portfolio. 00:17:08.105 --> 00:17:08.735 Speaker 2: Really valuable. 00:17:09.520 --> 00:17:12.980 So for number five, you said pace, and I think a lot of people 00:17:13.120 --> 00:17:14.810 don't really understand pace. 00:17:14.870 --> 00:17:18.670 In fact, I feel like maybe I had thought about it wrong for a while. 00:17:18.670 --> 00:17:20.420 So I'm excited that you have this word in here. 00:17:21.110 --> 00:17:21.580 Speaker 3: Yes. 00:17:21.880 --> 00:17:25.599 So pace is really a benchmark. 00:17:25.610 --> 00:17:28.670 And when we say pace, I probably should have said revenue pace because that's 00:17:28.670 --> 00:17:33.730 what we're really measuring, but we want to understand in general, pacing 00:17:33.730 --> 00:17:36.050 is going to tell you, where am I today? 00:17:36.620 --> 00:17:40.770 How am I performing relative to same time last year? 00:17:41.130 --> 00:17:46.510 So if we're on a race and I need to get to the finish line and I'm racing 00:17:46.510 --> 00:17:50.280 myself, am I going faster this year? 00:17:50.320 --> 00:17:51.909 Am I going slower this year? 00:17:52.770 --> 00:17:54.240 How do I know if I'm doing better? 00:17:54.520 --> 00:17:54.800 Right? 00:17:54.800 --> 00:17:57.270 You bring in another revenue manager, you bring in somebody, 00:17:57.270 --> 00:17:59.120 you're like, Hey, how am I doing? 00:17:59.130 --> 00:18:02.640 They need to run your pace to understand how are you performing? 00:18:03.290 --> 00:18:07.120 Then measure that pace against other components like the market. 00:18:07.420 --> 00:18:10.330 But revenue is simply just saying, how well am I doing? 00:18:10.330 --> 00:18:11.370 Am I doing better? 00:18:11.820 --> 00:18:14.520 Or worse or the same as last year. 00:18:14.940 --> 00:18:19.830 Because once you have that information, then you can help to understand or 00:18:19.830 --> 00:18:22.200 guide your strategy moving forward. 00:18:22.940 --> 00:18:25.220 Speaker 2: Desiree, have you ever played Sonic the Hedgehog? 00:18:26.320 --> 00:18:27.610 Uh, I have, yes. 00:18:28.155 --> 00:18:31.260 Do you remember when you'd go through the lap and you do the jumps, you get 00:18:31.260 --> 00:18:32.580 the rings, and you come back around? 00:18:33.160 --> 00:18:34.120 You can put the settings. 00:18:34.370 --> 00:18:39.010 On so that you could watch a little ghost of your last go around and 00:18:39.010 --> 00:18:40.150 you're racing against yourself. 00:18:40.170 --> 00:18:43.600 And there'd be like a little kind of transparent translucent hedgehog that 00:18:43.610 --> 00:18:47.140 you'd be either running in front of or behind of, and that was your pace. 00:18:47.150 --> 00:18:51.090 And I always think about, uh, that video game when I think about pace 00:18:51.630 --> 00:18:55.060 and how we think about our year going, you know, our lap around the sun 00:18:55.060 --> 00:18:56.320 this time and how well we're doing 00:18:57.650 --> 00:19:00.940 . We're talking about revenue pace and we won't get to it today. 00:19:01.465 --> 00:19:04.395 But there's several different kinds of pace to think about, right? 00:19:04.405 --> 00:19:08.995 So there's like occupancy pace or, or reservation pace, or there's 00:19:09.015 --> 00:19:10.374 other ways to measure pace. 00:19:11.020 --> 00:19:14.250 That you'll hear when you're out thinking about how you're 00:19:14.260 --> 00:19:15.390 running your business, right? 00:19:16.340 --> 00:19:16.850 Speaker 3: Yes. 00:19:17.330 --> 00:19:22.250 Revenue was the number one term because that's our number one metric 00:19:22.430 --> 00:19:23.830 because that's what pays the bills. 00:19:24.550 --> 00:19:29.420 So once we know that our revenue pace is great and that's on par, 00:19:29.859 --> 00:19:33.340 then we can back in to make sure, okay, how is our booking pace? 00:19:33.720 --> 00:19:38.990 Because maybe I'm getting my revenue, but it's because I'm charging more 00:19:38.990 --> 00:19:45.370 money for less nights, or I had to charge more money because I'm not 00:19:45.390 --> 00:19:47.510 generating as many reservations. 00:19:48.750 --> 00:19:53.360 So, revenue pace is number one, and then back into it with other 00:19:53.379 --> 00:19:55.439 metrics like your occupancy pace. 00:19:55.735 --> 00:20:01.355 Your bookings pace, your night's pace, because your revenue goal is number one. 00:20:01.355 --> 00:20:04.965 And once that check Mark is there and you know, okay, I'm good on that metric. 00:20:05.295 --> 00:20:06.815 Now, how can I maximize it? 00:20:06.945 --> 00:20:09.275 And that's when you start to look in other areas. 00:20:10.285 --> 00:20:11.564 Speaker 2: That's a really good way of thinking about it. 00:20:11.585 --> 00:20:15.435 And I think I often think about a reservation pace and I should be thinking 00:20:15.435 --> 00:20:18.805 more about revenue pace, uh, when it comes to the health of the company. 00:20:19.280 --> 00:20:19.840 Correct. 00:20:19.900 --> 00:20:25.260 Speaker 3: Yes, because I can get one reservation for one night at 00:20:25.260 --> 00:20:28.509 the same value of two reservations. 00:20:28.935 --> 00:20:35.665 For six nights, so my booking could be double, but my revenue could be less and 00:20:35.665 --> 00:20:39.255 I could have one booking, you know, with six nights of revenue and one reservation. 00:20:39.795 --> 00:20:43.985 So first I want to get the revenue and then I'll back into how I'm going to 00:20:43.985 --> 00:20:46.955 maximize that between occupancy and rate. 00:20:47.805 --> 00:20:49.955 Speaker 2: So number six is interesting because we've 00:20:49.955 --> 00:20:51.265 already talked about occupancy. 00:20:51.730 --> 00:20:54.550 But you felt it was important enough to differentiate between 00:20:54.560 --> 00:20:57.020 occupancy and paid occupancy, 00:20:57.430 --> 00:20:57.870 Speaker 3: correct? 00:20:58.300 --> 00:21:02.530 And the difference between the two is occupancy is going to reflect 00:21:02.599 --> 00:21:08.049 on total booked nights and booked nights or occupied nights, right? 00:21:08.149 --> 00:21:12.975 You could mean if That was a owner night that stayed. 00:21:13.685 --> 00:21:15.625 It could mean a maintenance block. 00:21:15.665 --> 00:21:18.775 It could mean a paying reservation, right? 00:21:18.785 --> 00:21:24.885 All of those three components add up to occupancy, but now paid occupancy. 00:21:25.264 --> 00:21:30.585 And this is where the vacation rental space is unique is because I can't control 00:21:30.935 --> 00:21:33.155 necessarily how many owners come in. 00:21:33.914 --> 00:21:35.464 So when we're measuring performance. 00:21:35.985 --> 00:21:37.055 Let's say I have 10 homes. 00:21:37.455 --> 00:21:39.535 My whole company sold out this Friday. 00:21:39.955 --> 00:21:40.775 That's great. 00:21:40.775 --> 00:21:44.215 But was all of that paid occupancy, right? 00:21:44.215 --> 00:21:47.655 Or if I had five owners in and five paid nights. 00:21:48.145 --> 00:21:49.185 Okay, great. 00:21:49.630 --> 00:21:55.550 So now next year, when that next Saturday comes, right, I need to consider what 00:21:55.550 --> 00:22:01.510 was my paid occupancy the prior year, because if I just look at total occupancy, 00:22:02.180 --> 00:22:07.029 five of those were occupied by owners, which did not generate any revenue. 00:22:07.585 --> 00:22:11.155 So I really only had an opportunity to book those five. 00:22:11.335 --> 00:22:14.675 And if I'm comparing that and saying, well, dang, last year 00:22:14.675 --> 00:22:17.814 I sold out, I definitely need to increase my rate this year. 00:22:18.755 --> 00:22:24.965 That may not be the best metric to use because half of my inventory was not paid. 00:22:25.745 --> 00:22:27.784 So it's not a true reflection of demand. 00:22:28.600 --> 00:22:31.330 Paid occupancy is a true reflection of demand. 00:22:31.680 --> 00:22:35.610 And if you had five nights solar, you were at 50 percent occupancy, and 00:22:35.610 --> 00:22:38.130 now you want to grow to 60%, right? 00:22:38.130 --> 00:22:39.150 How are we going to do that? 00:22:39.190 --> 00:22:40.380 Is that through price? 00:22:40.735 --> 00:22:43.885 Is that through availability or whatever the case may be? 00:22:44.565 --> 00:22:44.895 Speaker 2: Yeah. 00:22:45.165 --> 00:22:48.725 Just as a point of curiosity, Desiree, is there a report we can look at 00:22:48.945 --> 00:22:52.705 in RevMax that shows the difference between occupancy and paid occupancy? 00:22:52.705 --> 00:22:54.605 Or is it something we just need to pull out and do ourselves? 00:22:55.245 --> 00:23:00.715 Speaker 3: So for RevMax, yes, there are different reports 00:23:00.735 --> 00:23:02.525 that you can pull for paid. 00:23:02.845 --> 00:23:06.405 By default, RevMax will always show you all of your paid statistics. 00:23:06.995 --> 00:23:12.415 And then you have the choice to include your non paying data to 00:23:12.415 --> 00:23:14.175 get a total picture of opportunity. 00:23:14.695 --> 00:23:21.065 Um, also on the tape chart, we also show you by day what your, uh, paid nights 00:23:21.065 --> 00:23:24.055 was prior year and occupancy percentage. 00:23:24.905 --> 00:23:25.784 Speaker 2: Such a powerful tool. 00:23:26.274 --> 00:23:29.835 For number seven, Desiree, you said availability. 00:23:30.585 --> 00:23:33.665 What do we need to know about availability that isn't obvious to us? 00:23:33.995 --> 00:23:38.620 Speaker 3: Availability is important because just as much As we look at 00:23:38.620 --> 00:23:42.090 occupancy as the metric, that's great. 00:23:42.090 --> 00:23:45.570 If we were at, you know, 40 percent occupancy, 60 percent occupancy. 00:23:45.780 --> 00:23:49.540 But now that's the strategy. 00:23:49.599 --> 00:23:51.620 And that's what our goal was, right? 00:23:51.620 --> 00:23:55.979 To achieve that occupancy level, the availability is 00:23:55.999 --> 00:23:58.110 everything that is sitting empty. 00:23:58.110 --> 00:24:01.470 So availability is really opportunity. 00:24:02.255 --> 00:24:05.605 How do I sell the rest of that product? 00:24:05.615 --> 00:24:09.065 Because all of that available inventory is unsold. 00:24:09.065 --> 00:24:12.255 It's an empty calendar and my owners aren't making any money, which 00:24:12.255 --> 00:24:13.555 means I'm not making any money. 00:24:13.955 --> 00:24:20.934 So we'll get clients who say, yes, I'm going to pick up 10 percent occupancy 00:24:21.185 --> 00:24:26.585 for this weekend, 60 percent empty. 00:24:27.115 --> 00:24:28.855 We got to focus on that 60%. 00:24:28.875 --> 00:24:30.165 That's not going to get booked, right? 00:24:30.195 --> 00:24:32.435 Because that's the available inventory that's left. 00:24:32.715 --> 00:24:37.435 And it's important to understand, we know you're not going to sell out 00:24:37.435 --> 00:24:42.525 every night, but are we exhausting every opportunity that we have for 00:24:42.525 --> 00:24:47.424 our owners to make sure that they're maximizing their opportunity, right? 00:24:47.424 --> 00:24:51.605 And if you have availability, how are we putting that into the 00:24:51.605 --> 00:24:54.015 marketplace for customers to buy? 00:24:54.855 --> 00:24:58.895 Speaker 2: Yeah, our revenue manager for Rocky Point, who's on RevMax, he 00:24:58.895 --> 00:25:00.425 always talks about his name is Arthur. 00:25:00.725 --> 00:25:01.735 You've met him a couple of times. 00:25:02.155 --> 00:25:05.405 He, he doesn't like to look at occupancy. 00:25:05.415 --> 00:25:09.415 He likes to look at availability because he believes that focusing 00:25:09.415 --> 00:25:13.975 on the availability left is how you end up driving, you know, occupancy 00:25:13.975 --> 00:25:15.495 and revenue and things like that. 00:25:15.515 --> 00:25:19.665 And I always thought that was an interesting way to almost flip the script 00:25:19.765 --> 00:25:24.685 on how a lot of us property managers think about our occupancy and availability. 00:25:25.180 --> 00:25:25.810 Speaker 3: Absolutely. 00:25:25.810 --> 00:25:26.040 Right. 00:25:26.070 --> 00:25:27.750 I'm going to put this in very layman terms. 00:25:27.980 --> 00:25:30.970 It's kind of like when a reservationist makes a booking, 00:25:31.500 --> 00:25:32.930 it's like, well, that was their job. 00:25:32.940 --> 00:25:33.980 That's what they're paid to do. 00:25:33.980 --> 00:25:35.180 That's why you're here. 00:25:35.260 --> 00:25:36.420 Cause you get those. 00:25:36.790 --> 00:25:39.520 And the occupancy is what the revenue manager's job is, right? 00:25:39.520 --> 00:25:42.479 There's going to be some organic demand that regardless you're going to fill up. 00:25:42.660 --> 00:25:48.409 The real strategy comes into how to decrease the availability, which 00:25:48.409 --> 00:25:51.240 ultimately increases your occupancy. 00:25:51.825 --> 00:25:56.835 In theory with an optimized rate or ADR, you would then generate more revenue. 00:25:57.405 --> 00:25:59.515 Speaker 2: So our job is not to build occupancy. 00:25:59.515 --> 00:26:01.235 It's to murder availability. 00:26:01.555 --> 00:26:02.215 Speaker: Yes. 00:26:05.025 --> 00:26:05.935 Speaker 2: I like what you said. 00:26:05.935 --> 00:26:08.185 Availability equals opportunity. 00:26:08.285 --> 00:26:09.554 I think that's a great quote. 00:26:10.405 --> 00:26:13.135 So for number eight, you put booking window. 00:26:13.465 --> 00:26:17.295 And I think this is going to be a great glossary term to go over and 00:26:17.315 --> 00:26:20.335 understand, because I feel like this is. 00:26:20.875 --> 00:26:25.215 A word or a phrase that's often misused or misunderstood in the industry as a whole. 00:26:27.215 --> 00:26:29.085 Speaker 3: So I'm going to get geeky for a second. 00:26:29.155 --> 00:26:36.365 Booking window is how far out from arrival date to reservation creation date. 00:26:36.605 --> 00:26:39.775 The difference between those two is your booking window, right? 00:26:39.785 --> 00:26:44.455 So if I make a reservation today and I arrive in seven days. 00:26:45.360 --> 00:26:47.540 Then my booking window seven, right? 00:26:47.540 --> 00:26:51.200 If I make my reservation today and arrive tomorrow, my booking windows one. 00:26:51.480 --> 00:26:53.310 So you want your booking window. 00:26:53.310 --> 00:26:54.900 You need to understand your booking window. 00:26:55.580 --> 00:27:01.290 So, you know, exactly when the majority of your reservations are created for 00:27:01.300 --> 00:27:06.170 a very specific period of time during peak season, what is the booking window? 00:27:06.630 --> 00:27:11.440 And when they say that they're referencing the majority of reservations, we know 00:27:11.440 --> 00:27:15.740 you're going to have reservations book a year in advance, two weeks in advance. 00:27:16.145 --> 00:27:19.765 But when is the majority of reservations, when do they come 00:27:19.765 --> 00:27:23.245 in for that period of time, right? 00:27:23.245 --> 00:27:27.325 And you're going to have a different booking window for every month of the 00:27:27.325 --> 00:27:33.335 year or even seasonality because, and I can break it down, certain markets like 00:27:33.335 --> 00:27:37.185 in the Carolinas, they're usually going to have a year advanced booking window. 00:27:37.755 --> 00:27:42.445 Majority of those bookings are going to come in 12 months out and that's it. 00:27:42.555 --> 00:27:46.124 You may have some that come in last minute, but it's not the majority. 00:27:46.845 --> 00:27:47.285 So. 00:27:47.640 --> 00:27:51.470 As a revenue manager, understanding that booking window and understanding exactly 00:27:51.470 --> 00:27:55.210 when your peak demand is going to hit, that's when you want to make sure that 00:27:55.220 --> 00:28:01.220 you have the best rates, you have the best product positioned correctly, right? 00:28:01.220 --> 00:28:03.889 You have everything set your strategy set. 00:28:04.129 --> 00:28:11.745 And the more opportunity you have to build And market your availability 00:28:12.405 --> 00:28:16.025 when that booking window comes, that's, that's going to give you confidence 00:28:16.025 --> 00:28:19.804 to know that you can hang on to your price and demand that price, right? 00:28:19.805 --> 00:28:21.355 Because it's all about that supply and demand. 00:28:21.895 --> 00:28:27.084 So if I've already built up enough occupancy, if you will, for that 00:28:27.084 --> 00:28:32.085 prime booking time, whenever they transact, I know I can, that helps 00:28:32.085 --> 00:28:33.485 me to ensure I have optimum rate. 00:28:34.395 --> 00:28:40.635 Speaker 2: So the booking window is a specific time before the reservation. 00:28:41.410 --> 00:28:45.820 In which the value of those rental nights are at their peak. 00:28:45.840 --> 00:28:49.680 It's when you're going to get the most value out of them, right? 00:28:49.850 --> 00:28:53.650 And then beyond that, there's a chance that all things being said that the 00:28:53.680 --> 00:28:58.010 value of those nights start going down because there's less and less 00:28:58.010 --> 00:29:02.219 demand for those dates that were that are specific to that booking window. 00:29:02.289 --> 00:29:02.729 Is that right? 00:29:03.049 --> 00:29:03.609 Speaker 3: That's correct. 00:29:03.659 --> 00:29:03.989 Yes. 00:29:05.105 --> 00:29:08.805 Speaker 2: As a property manager, you know, we're sitting in front 00:29:08.805 --> 00:29:12.515 of our system thinking, where is my prime booking window? 00:29:13.215 --> 00:29:14.075 How do I figure that out? 00:29:14.145 --> 00:29:18.724 , what report do I run or what graph do I look at or what historical data am I 00:29:18.724 --> 00:29:22.445 seeking for, say, I was looking at for the 4th of July weekend, what would I 00:29:22.445 --> 00:29:26.875 be looking for to figure out what my prime booking window is for that weekend? 00:29:27.330 --> 00:29:31.500 Speaker 3: So in RevMax, we actually have a booking window report that will 00:29:31.510 --> 00:29:33.180 provide all of that information for you. 00:29:33.270 --> 00:29:36.180 We break it down by month and then you also have the ability to break 00:29:36.180 --> 00:29:40.600 it down by week so you would be able to get that answer, right? 00:29:40.600 --> 00:29:43.230 When is my prime booking window for 4th of July? 00:29:44.129 --> 00:29:45.440 Is it 60 days out? 00:29:45.490 --> 00:29:47.070 Is it three weeks out? 00:29:47.300 --> 00:29:48.240 Is it week of? 00:29:48.835 --> 00:29:54.725 Now I will also tell you that your booking window will vary by bedroom size. 00:29:55.845 --> 00:29:57.655 So it's important to understand that, right? 00:29:57.655 --> 00:30:02.425 So that's why this is an important KPI or term because you need to understand 00:30:02.425 --> 00:30:08.325 that in the, especially in the vacation rental space, your 4, bedrooms are 00:30:08.325 --> 00:30:12.725 going to have a much different booking window than your ones, twos, and threes. 00:30:13.635 --> 00:30:16.355 So you almost have to have two different strategies. 00:30:16.760 --> 00:30:24.210 When you are setting goals and when you are looking to set pricing and 00:30:24.210 --> 00:30:26.820 set nightly minimums and promos and things along those lines. 00:30:27.150 --> 00:30:33.580 And it's important to understand how each of those segments of product book, 00:30:33.830 --> 00:30:36.560 that way you can make sure you have the appropriate strategy in place. 00:30:37.050 --> 00:30:41.730 What I mean by that is the chances of the majority of your 10 bedrooms 00:30:41.730 --> 00:30:44.000 booking within 30 days of arrival. 00:30:44.735 --> 00:30:49.525 During peak time are going to be very slim and only because logically 00:30:49.525 --> 00:30:53.765 it's a little bit more difficult to get probably three or four families 00:30:53.805 --> 00:30:58.435 together within a month and say, we're all going to go to the destination. 00:30:58.875 --> 00:31:00.785 And we're all going to go during the same time and everyone's 00:31:00.785 --> 00:31:02.015 already put in their work, right? 00:31:02.015 --> 00:31:07.395 Coordinating that group is a lot more challenging to do last minute than it 00:31:07.395 --> 00:31:12.984 is for just that couple who's going to go away and just needs a one bedroom. 00:31:12.984 --> 00:31:15.819 So usually your larger homes have a further outbooking window. 00:31:16.480 --> 00:31:21.230 And usually your one your smaller homes or units or condos especially have 00:31:21.230 --> 00:31:26.320 a very short booking window, so you will have a different strategy right 00:31:26.320 --> 00:31:31.950 within 30 days of arrival for your one bedrooms versus your 10 bedrooms your 10 00:31:31.960 --> 00:31:33.860 bedrooms at that point may be distressed. 00:31:34.495 --> 00:31:38.255 For your one bedrooms, it might be prime buying time for them. 00:31:39.085 --> 00:31:43.075 Speaker 2: This is something I picked up on my very first season in 2001. 00:31:43.685 --> 00:31:45.085 It became obvious something was happening. 00:31:45.085 --> 00:31:46.445 I didn't have the sophistication or tools. 00:31:46.445 --> 00:31:50.165 I was working on an Excel spreadsheet at the time, but something else 00:31:50.585 --> 00:31:56.455 that occurs to me, it's not only unit size or bedroom count, but also 00:31:56.455 --> 00:32:01.245 location, because I noticed that my beachfront properties, as opposed 00:32:01.245 --> 00:32:03.275 to like, say beach view properties. 00:32:03.800 --> 00:32:10.070 had different booking windows and if I change the rates to be discounted 00:32:10.080 --> 00:32:16.180 deep enough to match the value of that beachfront for what you would pay for a 00:32:16.180 --> 00:32:21.630 second row, those booking windows between beachfront and beach view would get 00:32:21.630 --> 00:32:26.290 closer because the price differentiation made them more competitive. 00:32:26.410 --> 00:32:26.850 Does that make sense? 00:32:27.480 --> 00:32:28.590 Speaker 3: Yes, absolutely. 00:32:28.925 --> 00:32:29.845 Speaker 2: Really interesting stuff. 00:32:29.845 --> 00:32:33.385 I feel like you could really play around and, uh, and do a lot of adjustments. 00:32:33.385 --> 00:32:35.235 It's kind of an art in there, isn't it? 00:32:35.275 --> 00:32:36.485 Once you get your data there. 00:32:36.945 --> 00:32:37.735 Speaker 3: Yes. 00:32:37.855 --> 00:32:41.105 And funny enough, because that's what revenue management is. 00:32:41.115 --> 00:32:43.075 It's a mix of art and science. 00:32:44.505 --> 00:32:44.885 Speaker 2: Yeah. 00:32:45.915 --> 00:32:48.885 Number nine length of stay. 00:32:49.665 --> 00:32:54.095 Speaker 3: So this one's a lot of fun because I can't, 00:32:54.095 --> 00:32:55.335 you can blow people's minds. 00:32:55.795 --> 00:33:01.585 Length of stay is basically equal to nightly minimum and nightly minimum 00:33:01.605 --> 00:33:03.665 is not pricing nightly minimum. 00:33:03.665 --> 00:33:03.875 Right. 00:33:03.875 --> 00:33:07.295 But the nightly minimum requirement for your calendar. 00:33:07.665 --> 00:33:10.825 So pretty basic around the board. 00:33:10.865 --> 00:33:15.985 Um, your nightly minimum during off season is probably, you know, three nights. 00:33:16.310 --> 00:33:19.470 nightly minimum during peak season is usually seven. 00:33:20.180 --> 00:33:23.160 And that has drastically changed across the board. 00:33:23.700 --> 00:33:27.710 Folks have realized, hey, I can get, you know, one and two night 00:33:27.720 --> 00:33:32.910 stays now because that's the flexibility that most people have. 00:33:33.340 --> 00:33:37.300 And I can also still capture five and six night stays. 00:33:37.625 --> 00:33:39.505 In some cases for the price of seven. 00:33:40.235 --> 00:33:45.395 So length of stay is really just determining what is the nightly 00:33:45.395 --> 00:33:47.875 minimum for your calendar. 00:33:48.155 --> 00:33:50.725 And it's important metric to understand. 00:33:51.065 --> 00:33:57.365 And why it makes the top 10 is because if we look at the buying 00:33:57.365 --> 00:33:59.365 pattern just for ourselves, right. 00:33:59.365 --> 00:34:03.295 When we go on vacation, first of all, how many of us can even get seven nights off? 00:34:04.075 --> 00:34:07.795 And then how many of us have to book Saturday to Saturday, right? 00:34:07.795 --> 00:34:11.455 Or Sunday to Sunday, nine times out of 10, whenever we're traveling, we're 00:34:11.455 --> 00:34:13.075 trying to do an extended weekend. 00:34:13.495 --> 00:34:18.425 We're trying to cram something in and it has nothing to do with price. 00:34:18.860 --> 00:34:24.050 More so than it has to do with flexibility, but by having length of 00:34:24.050 --> 00:34:28.180 stay air quote restrictions on right, you're you're prohibiting your own 00:34:28.180 --> 00:34:32.500 opportunity, so it's important to understand what the length of stay is. 00:34:32.500 --> 00:34:33.700 It's important to understand. 00:34:33.700 --> 00:34:35.100 Hey, be flexible. 00:34:35.100 --> 00:34:39.350 If you can, you know, another pun on Red Max, we give length of stay pricing. 00:34:39.850 --> 00:34:44.510 So what that does is that allows you to stay, you know, one 00:34:44.510 --> 00:34:46.230 night for the price of three. 00:34:46.670 --> 00:34:51.330 If you're looking and you want a three night minimum, do you really want a 00:34:51.330 --> 00:34:54.240 three night minimum or do you just want the revenue for three nights? 00:34:55.370 --> 00:34:58.040 And within the system, we can give you that revenue if 00:34:58.040 --> 00:34:59.170 they stay one or two nights. 00:34:59.750 --> 00:35:02.430 Same thing with if they're, you really want them to stay a week or 00:35:02.430 --> 00:35:03.940 you just want the revenue for a week. 00:35:04.700 --> 00:35:08.160 I can give you the same revenue if you allow them to stay 00:35:08.160 --> 00:35:09.760 five or six nights, right? 00:35:09.760 --> 00:35:11.740 The system can automatically make those adjustments. 00:35:12.705 --> 00:35:16.025 And that's where we come back to KPI number one, which is revenue. 00:35:16.445 --> 00:35:19.075 And, you know, when the owner says, Hey, well, I was supposed to get a seven. 00:35:19.075 --> 00:35:20.635 I say, you only sold it for five nights. 00:35:20.635 --> 00:35:22.145 It's like, yes, that's correct. 00:35:22.645 --> 00:35:24.465 But I still got you the same amount of money. 00:35:24.615 --> 00:35:27.845 So part of that is an education piece as well. 00:35:27.845 --> 00:35:30.305 And that's why the number one goal, right? 00:35:30.305 --> 00:35:30.985 Is revenue. 00:35:31.165 --> 00:35:32.435 We do that with occupancy. 00:35:32.435 --> 00:35:35.165 We do that with rate as we're building, building, building. 00:35:35.165 --> 00:35:40.465 Now it comes down to length of stay and what does the market demand. 00:35:40.745 --> 00:35:41.045 Right. 00:35:41.115 --> 00:35:42.795 At the end of the day, it's all about the customer. 00:35:42.795 --> 00:35:44.485 The customer is the one who determines the price. 00:35:44.485 --> 00:35:46.925 The customer is the one who determines the length of stay because they're 00:35:46.925 --> 00:35:47.965 the ones who are buying it, right? 00:35:47.975 --> 00:35:49.055 That's the demand. 00:35:49.425 --> 00:35:50.615 I have this supply. 00:35:50.625 --> 00:35:51.835 We got to meet in the middle. 00:35:52.425 --> 00:35:56.475 Speaker 2: I love this length of stay logic that you guys are using because 00:35:56.970 --> 00:36:00.690 I can't tell you how many times we've had homeowners who said, Hey, I've got 00:36:00.970 --> 00:36:02.400 a two night or three night minimum. 00:36:02.980 --> 00:36:07.860 And so when you search on the website or on an OTA, it comes up as unavailable. 00:36:08.270 --> 00:36:11.820 And so they would have paid the higher price, you know, or at least 00:36:11.830 --> 00:36:14.060 possibly paid the higher price. 00:36:14.575 --> 00:36:17.765 But we would have never known because it didn't show up as available at all. 00:36:18.135 --> 00:36:20.005 It shows nothing available for a one night, right? 00:36:20.025 --> 00:36:26.625 So this, this is a great way to, uh, drive bookings and show, uh, availability on the 00:36:26.675 --> 00:36:30.855 calendar and also drive revenue because of this length of stay logic you guys have 00:36:30.855 --> 00:36:34.585 put together and then understanding your length of stay, uh, in each market and 00:36:34.585 --> 00:36:36.675 each type of, you know, property market. 00:36:36.675 --> 00:36:40.455 It's, it's a powerful way to segment and understand how to serve your 00:36:40.465 --> 00:36:42.225 homeowners in each segment better. 00:36:42.855 --> 00:36:43.585 Speaker 3: Absolutely. 00:36:43.955 --> 00:36:47.225 And a lot of times, especially as there's so much more supply in the 00:36:47.225 --> 00:36:49.625 marketplace, what are other owners doing? 00:36:49.625 --> 00:36:55.565 If you've typically had a four night minimum and all of a sudden majority 00:36:55.565 --> 00:37:00.685 of your market is offering two and people are searching for two, right? 00:37:00.705 --> 00:37:02.435 Like you said, you're not even showing up. 00:37:02.755 --> 00:37:06.395 So it's important to check the marketplace, not only from a pricing 00:37:06.395 --> 00:37:09.495 perspective, but also from an availability perspective, right? 00:37:09.495 --> 00:37:10.805 Am I really showing up? 00:37:10.805 --> 00:37:12.835 Am I maximizing my exposure? 00:37:13.660 --> 00:37:19.540 If I get a hundred people who will stay two nights, I'm not even entertaining 00:37:19.540 --> 00:37:24.810 them because I have a three night minimum on, but if I could cater and capture at 00:37:24.810 --> 00:37:29.110 least 50 percent of that demand, I just got 50 more nights, 50 more reservations 00:37:29.310 --> 00:37:30.720 that increases my booking pace. 00:37:30.730 --> 00:37:33.320 That increases my occupancy. 00:37:34.010 --> 00:37:36.170 I'm going to increase my revenue organically. 00:37:36.740 --> 00:37:43.120 And so it's the total revenue management strategy that helps Drive 00:37:43.400 --> 00:37:45.090 KPI number one, which is revenue. 00:37:45.590 --> 00:37:45.930 Speaker 2: Yeah. 00:37:46.490 --> 00:37:49.050 You know, those, uh, occupied nights, I don't have to tell you this. 00:37:49.060 --> 00:37:54.250 They're perishable and, uh, getting revenue for them matters because once 00:37:54.250 --> 00:37:55.960 they're gone, they're gone forever. 00:37:56.010 --> 00:37:57.030 . There's no shelf life for them. 00:37:57.130 --> 00:37:57.560 They're gone. 00:37:58.060 --> 00:38:01.910 so for number 10, you had forecast and goal and budget. 00:38:02.505 --> 00:38:05.965 And those are three together, but I'm certain you have a reason for 00:38:05.965 --> 00:38:07.135 it and how it all works together. 00:38:07.135 --> 00:38:09.395 So tell me how that works. 00:38:09.845 --> 00:38:10.385 Speaker 3: Yes. 00:38:10.565 --> 00:38:17.215 So the reason why we have forecast goal and budget is because we all need a goal. 00:38:17.235 --> 00:38:21.855 We all need to know what are we trying to achieve, whether that is 00:38:21.855 --> 00:38:24.445 a hard coded budget, depending upon. 00:38:24.930 --> 00:38:30.240 the language in, in your culture, whether that is a revenue goal in general, 00:38:30.280 --> 00:38:33.810 or whether that's just your forecast, because that's how you're pacing, right? 00:38:33.830 --> 00:38:35.560 Either one of those will work. 00:38:36.020 --> 00:38:41.090 As team, we need to get to KPI number one, which is revenue. 00:38:41.780 --> 00:38:43.020 What is that goal? 00:38:43.770 --> 00:38:46.330 I need to make sure the revenue manager knows that goal. 00:38:46.390 --> 00:38:52.340 I need to make sure the GM of the company or owner understands that goal. 00:38:52.680 --> 00:38:55.770 And I need to make sure my homeowner understands that goal. 00:38:56.625 --> 00:39:02.295 Because if all three of them know that they're trying to get to X, that's 00:39:02.295 --> 00:39:07.575 where everyone is aware, and everyone's on the same page, and we don't have a 00:39:07.575 --> 00:39:13.165 revenue manager who's trying to stick on rate because they're on an occupancy 00:39:13.165 --> 00:39:20.660 number, right, where the owner's like, I don't care how you get to 000, Get it. 00:39:21.350 --> 00:39:26.320 The revenue managers, then look, I have 365 days to make you 80 grand. 00:39:26.390 --> 00:39:29.110 Let me do it the best way I know how. 00:39:30.160 --> 00:39:34.050 And if the GM knows that, they know, okay, this is how much money we can 00:39:34.050 --> 00:39:36.850 expect for my budgeting purposes. 00:39:37.190 --> 00:39:39.430 I know how much commission I'm going to make off of that. 00:39:39.450 --> 00:39:42.640 I can forecast my fees and cleaning and all of that. 00:39:44.040 --> 00:39:47.070 Speaker 2: When I think of, uh, the team effort, I feel like, , you've got 00:39:47.070 --> 00:39:50.750 the quarterback, you know, the revenue manager, you've got the, the coach, 00:39:50.790 --> 00:39:53.910 maybe that's the property manager, there's all these different positions 00:39:53.910 --> 00:39:58.230 on the field, even your reservationists, they don't have to actually do. 00:39:58.515 --> 00:40:01.495 Revenue management, but they need to be able to recognize it, explain it, 00:40:01.965 --> 00:40:05.395 have a conversation with a homeowner about it when they get the call, an 00:40:05.395 --> 00:40:07.115 angry call of why is it this price? 00:40:07.775 --> 00:40:10.905 And so everybody's got a different position to play on the team, 00:40:11.445 --> 00:40:12.735 but man, is it a team sport? 00:40:13.265 --> 00:40:14.045 Absolutely. 00:40:14.545 --> 00:40:19.715 I'm going to throw in one as a bonus because you said it earlier and I like it. 00:40:19.775 --> 00:40:24.264 . So our bonus definition is opportunity loss, , can you just 00:40:24.495 --> 00:40:26.514 give us a quick explanation of that? 00:40:26.515 --> 00:40:27.775 Of opportunity loss. 00:40:28.825 --> 00:40:31.675 Speaker 3: Absolutely, and that's a very vague term 'cause there are 00:40:31.675 --> 00:40:33.685 many ways we can lose opportunity. 00:40:34.135 --> 00:40:38.725 The biggest opportunity loss in many cases is going to be in availability, where you 00:40:38.730 --> 00:40:43.985 have, let's say a five night strategy, which means a five night minimum, but 00:40:43.990 --> 00:40:48.835 your calendar only has four nights available, three nights available, two 00:40:48.835 --> 00:40:50.245 nights available, one night available. 00:40:51.080 --> 00:40:54.700 If you have discrepancies with your nightly minimums, you're 00:40:54.930 --> 00:40:56.610 already closing yourself off. 00:40:56.730 --> 00:40:57.830 Nobody can find you. 00:40:58.280 --> 00:41:02.870 Even with homeowners, when they're coming in and trying to stay during 00:41:02.870 --> 00:41:07.170 peak times, we have to understand, Hey, that's great that you want to come 00:41:07.170 --> 00:41:11.360 in during the 4th of July, , you're going to displace X amount of dollars. 00:41:12.020 --> 00:41:15.540 And that's the bread and butter of when, , most companies make 00:41:15.570 --> 00:41:17.130 their money during peak season. 00:41:17.130 --> 00:41:19.420 So it's important to understand that. 00:41:19.810 --> 00:41:22.940 And to your point, Steve, it's important that the reservationists know that too. 00:41:23.109 --> 00:41:26.949 So when that owner is calling, they can have that educated conversation with them 00:41:27.109 --> 00:41:28.740 to let them know what they're displacing. 00:41:29.839 --> 00:41:33.000 Speaker 2: Desiree, thank you so much for coming on so much to learn from you. 00:41:33.010 --> 00:41:36.610 Always these top 10 terms are just fantastic. 00:41:36.640 --> 00:41:40.500 And It's so valuable to our partners and thank you for 00:41:40.500 --> 00:41:41.790 everything you do for Costco. 00:41:42.100 --> 00:41:42.740 So appreciative. 00:41:43.250 --> 00:41:43.890 Speaker 3: Absolutely. 00:41:43.900 --> 00:41:44.520 Thank you, Steve. 00:41:44.560 --> 00:41:45.450 Thank you for having me. 00:41:45.450 --> 00:41:49.420 And I look forward to having more revenue management talks with you. 00:42:09.870 --> 00:42:10.570 . 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