Speaker: It's caa.
caa.
They be created by caa.
It's for the show.
Let's go.
Speaker 2: So today we're with Desiree Garcia, the co-founder of
REM Max and we're talking about the 10 revenue management terms that
every property manager should know.
My first recollections of Desiree was Carlos telling me
about how brilliant she was.
And I didn't really get to know her until recently through our classes with RevMax
. It's obvious why Carlos said those things.
Welcome, Desiree.
Speaker 3: Hey, Steve.
Thank you.
Glad to be here.
Speaker 2: Yeah, we're so glad to have you and thank you for everything you've
been doing over the past couple months.
With the classes, people are getting so much value out of it.
And I personally learn something every time I jump on those calls.
Speaker 3: Perfect.
No, like the team is great and I'm glad that we're able to connect on that level.
Speaker 2: So Desiree, you started revenue management in 2006.
So you've been doing this for a little bit.
Correct.
Can you tell us a little bit about your journey, how you started and
maybe how you ended up here at RevMaxMD as a co founder?
Speaker 3: Absolutely.
So yes, started as a revenue manager back in 2006.
Now I'm a revenue manager by trade, right?
I've been in the hotel space.
I started out with the major hotel brands, Hilton, Hyatt, Marriott, Starwood.
Having that foundation and that experience.
was really laying a great foundation of revenue management to the vacation
industry and since then have watched it explode and really gain momentum
most recently in the past few years.
So crossing paths with Carlos and the Streamline team, they were very motivated
to be the leaders in the industry.
And part of that included making a revenue management solution,
which I was able to aid with.
So partnered with Carlos and the team, and we built out RevMax.
And it's a complete revenue management solution that's all in
one available to the vacation rental industry, built by revenue managers.
And that's the difference in what makes the product unique is that
we are not data scientists trying to tell clients what they should do
because that's what the data says.
We need that part, but we also need to understand why we're doing it.
And that's where RevMax is unique because we have revenue managers who've
built the system can tell you exactly why you need all of these components
in order to have a successful strategy.
And we have a lot of proven results.
Speaker 2: You know, every time I'm in Rev Max and especially on classes with
you, I'm always surprised about how robust it is and all of the features that I
just had no idea were possible, or even the reports just recently on this last
one, I started screenshotting like every 15 seconds because I'd found a whole
new report that I was so excited about.
And you do a great job explaining that really appreciate that.
So today we're talking about 10 revenue management terms that every
property manager needs to know, . So for number one, you had revenue.
Can you help explain why revenue is a term that everybody needs to know?
Speaker 3: Absolutely.
As a revenue manager, we want to at least understand what we're measuring.
And revenue is the number one term that needs to be understood.
And revenue.
In the rev max world means nightly room rent, right?
Or just room rent, because that's ultimately what a revenue manager is
managing is the price or part of it.
And so the best KPI or metric indicator is going to be revenue
and revenue for the company.
In general with any company and then ultimately revenue per owner,
because that's what they care about and that to our customer is,
Speaker 2: and there's a lot of different ways to really think about
revenue , what's the revenue coming in for the property manager, or for
the homeowner, or what's the combined take rate between them, there's a
lot of ways to think about it right.
Speaker 3: Absolutely.
And so it's important that everyone's aligned with what that understanding
is, because that way we are all strategizing to reach that goal.
Speaker 2: So for number two, you have occupancy.
Speaker 3: So occupancy is important as just to understand
the basic key terms, right?
We have to understand Our revenue goal, but we also need to understand occupancy
because occupancy is going to be a metric that is measured in the industry.
And you need to understand how it translates and occupancy is
essentially taking how many nights.
On any given day are occupied versus your total availability.
So if you have 10 units, five are occupied, your occupancy is 50%.
So it's really just understanding how many nights in a year am I booked?
Or occupied because you could have owner nights, right?
You could have maintenance blocks, things along those lines.
And it's important to understand occupancy because, and we're going to call them
young owners come into the industry and they'll compare rates amongst their
neighbors, but ultimately they also need to compare their occupancy because.
Having sold nights is maybe more important than having a high rate because if
you have a high rate and everybody can see it, that's usually an indicator
that you're still sitting empty.
So you want to focus on or at least understand occupancy.
Speaker 2: You know, I had a homeowner who did a study for me one time and
he, he was actually a researcher who would go out and study like a campaign
and figure out how to build a platform.
He's between campaigns.
He told me, Hey, Steve, I'd be happy to do this research on your company
as if you were a political candidate.
Speaker: I said,
Speaker 2: sure, why not?
And so he surveyed my competitors.
He went and surveyed our homeowners, , our teammates, all this.
And he came back and he said, Steve, Your homeowners will tell you that if
they can get more revenue per night and with less nights, that's better for them
because that's a smart thing to say.
But he said they're lying when I compare what their test results are and what
their skin, uh, sweat reactions are.
When they look at calendars that are empty with the same amount of nights,
he said, occupancy has a direct psychological connection to whether or
not homeowners are going to stay with you.
Speaker 3: Mm hmm.
Correct.
And nobody wants to walk away from the full calendar,
Speaker 2: right?
I mean, we're here to drive revenue, but at the same time, those homeowners,
when they look at those calendars, they are looking at that occupancy and
their loss bias is important for them.
So for number three, you had ADR.
What's ADR?
Speaker 3: So ADR stands for average daily rate.
An average daily rate is relative to when a reservation has booked.
What was that rate, or they reference it as ADR, and that's going to be a
term that translates across the vacation rental space as well as the hotel space.
So it's important that, you know, when Rev Max came out and we came into the
industry and we're building KPIs that it translates into the hotel space, because
there's a lot of companies and vacation rental managers that will acquire hotels.
Right.
And they'll have to speak to hotel owners or hotel investors or condo tells.
So we need to make sure that we set up clients for success.
In being able to speak that language and not have a translation barrier moving
forward as they grow so ADR simply means average daily rate of a reservation and
why that's important is because some folks will stand high on their ADR, and that's
great that they have that high rate.
However, again, as we talked about occupancy, if they sat with, you know,
five nights unsold because their customer can only afford one night at that rate,
then what, what was the opportunity lost there at the same time, if they stayed
for four nights and had a low ADR, could we have balanced that out with a higher
rate or what is the strategy just to make sure we're maximizing that rate?
So ADR in layman's terms is just simply how much.
Did my unit or home book for, for that night on average, right?
So as you're looking.
across multiple homes.
It's usually described as a per night rate because you want to compare a Saturday
night different than a Thursday night or Friday night and watch your ADR by day.
That also helps set strategy as you move forward.
Speaker 2: Desiree, a lot of times ADR can be expressed in different
sets, like what's my weekend ADR, what's my weekday ADR, what was my
ADR in May compared to June, right?
So there's a lot of comparables that we do there when we Add them all up
and then divide them by the number of nights and figure out what the ADR is
and compare them to other sets of ADR.
Is that correct?
Speaker 3: Yes.
And that's also important in why you want to be in a situation
where you don't have flat rates.
Because once you start changing your rate based on demand or occupancy, the higher
the occupancy, usually you can start to increase your rate because ultimately
what we're trying to do as a revenue manager is really economics 101, right?
You want to find the equilibrium between supply and demand every
day of the year for every home.
So when occupancy increases, That means there's a lot of demand coming in.
It allows you to have a higher rate when occupancy is low many times.
That means you are more willing to drop price to try to fill occupancy.
And ultimately generate more revenue the end of the week or for the
month or whatnot, therefore having a different ADR will help to identify
what price point sells for what day of week best, and then what season,
and then what bedroom size, et cetera.
So it can get very complex for sure.
However, overall, you want to have a good understanding of why ADR is
important and how to use that information moving forward to set strategies.
Speaker 2: So when it comes to ADR, the whole point of that is looking
for your price equilibrium, right?
Like the price equilibrium is the most amount that you can get per
night while still driving demand.
It kind of measures the value of that rental night.
Is that a good way of thinking about it?
Or am I completely off?
Speaker 3: Nope, that's perfect.
Nail on the head.
Absolutely.
Speaker 2: So for number four, you put RevPAR.
Speaker 3: So RevPAR, now this one specifically is a vacation
rental term because in hotel world, it's called RevPAR, it stands
for Revenue Per Available Room.
In hotels, they're all one room, right?
In vacation rentals, it's called Revenue Per Available Room.
One room is equivalent to one unit, so we just, to clarify, it's RevPAR.
There are other KPIs that will say RevPAR, which is your four
bedroom, right, divided by four.
So you get your revenue per actual room in the house.
But for the most part, it's RevPa, which is revenue per available unit.
And all we're doing there is just saying, what is the total revenue that I'm
getting as a vacation rental company?
Divide that by the total amount of units I have in my portfolio.
And why that's important is because that is a great indicator of My occupancy in my
ADR mix, that equals your rev pot, right?
So if I had high occupancy and low ADR, and I made, we'll just say 5, 000.
And at the same time I had high ADR and low occupancy, but still made 5, 000.
Right?
My RevPaw is the same in both scenarios, so it's what makes
more sense for your company.
And like you said earlier, Steve, the better story is to have higher
occupancy with maybe a lower ADR because my calendars are full.
I'm cutting now more checks per owner, whereas if I have high ADR, low occupancy,
those four owners are getting big checks, but my other owners are sitting empty.
That may not always be the best strategy.
So your RevPaw is a good indicator to understand one thing.
How well am I doing per my neighbor who sits there and says, well, I'm
available for, you know, 500 a night.
And that's what you should be getting.
Whereas you're selling at three 50 a night.
So I'm doing better than you, right?
Well, maybe what was your total revenue?
Did you sell only one night at 500 and I sold four at three 50.
So it's between your occupancy and ADR.
You really, your best measurement of performance is your rev pot.
So how much revenue did I actually make?
Which goes back to number one, what is my revenue?
The second piece to that is to say, I'm going to pull it back
now to look at it as a company.
So as a company, you want to make sure that collectively, if you are
growing in more inventory, are you truly making more money for your owner?
If I had 10 units and I was making, I don't know, 900 per unit on average.
And now I grew to 15 units.
And now my new owners are doing great and I'm selling it for a little bit more.
In general, I'm making more money because maybe I have, you know, a bigger
bedroom size or whatnot, or the unit is the same size and a little bit newer,
but my revenue per unit is dropping.
That's usually an indicator that I don't have enough demand
to fulfill my new inventory.
So in that situation, if you're growing in supply, And your overall
revenue is going up, but your revenue per unit is going down.
That's a great indicator that you're not actually making any more money.
You're just moving the money between units.
And what you're really saying is Mr.
Owner, I added more inventory, but I don't have enough demand
to fill you as well to feed you.
I'm feeding all my new guys.
And that's an indicator to understand, Hey, I got to do better.
It's not just enough for owner services to go out and grow the product.
I have to also work with marketing to grow the demand to be able
to sustain my existing product.
Speaker 2: So if you're driving inventory growth and your rev pause going down,
you could probably expect that to be a leading indicator of future churn within
your inventory set because the value that the homeowners are being divided out.
Amongst more properties.
And you know, there's a good possibility that you'll probably start losing some
properties if you continue to see that.
Speaker 3: Exactly.
Yes.
Speaker 2: It's a great way of looking at that.
I never thought about it in that way.
That's.
That's a math problem I'm going to go do today.
Speaker 3: Yes, that's the key P I that's the metric right we've got to understand.
Yes, I could be getting high rate.
Yes, I could be sitting with decent occupancy but my true metric to
understand, and or yes and I could be making more money but organically If I'm
not making more money on average per unit.
To your point.
Yes.
You're going to start to see that.
Speaker 2: So this is going to go off just a little bit.
When the listeners thinking about Repa, should they be thinking about it as
their total inventory set, or should we be thinking about it, like in segments
within your inventory set, because maybe you brought on a lot more four bedrooms.
And so it upped your average bedroom count.
So your Rev pop could look.
better, but not necessarily be better for maybe the smaller units.
Is there a reason to break those up or think about it in different ways?
Or am I overthinking it?
Speaker 3: No, that's perfect.
That would be what we call level two.
So it's great.
You always want to at least start high level.
Right.
To at least get a basic understanding and strategy to
say, okay, yes, I'm doing good.
That's your first checkpoint.
Then your second checkpoint is to make sure that all of your KPIs, your
revenue, your occupancy, and your ADR and your RevPA now are falling suit
through every bedroom size or subset of inventory within your portfolio.
Speaker 2: Really valuable.
So for number five, you said pace, and I think a lot of people
don't really understand pace.
In fact, I feel like maybe I had thought about it wrong for a while.
So I'm excited that you have this word in here.
Speaker 3: Yes.
So pace is really a benchmark.
And when we say pace, I probably should have said revenue pace because that's
what we're really measuring, but we want to understand in general, pacing
is going to tell you, where am I today?
How am I performing relative to same time last year?
So if we're on a race and I need to get to the finish line and I'm racing
myself, am I going faster this year?
Am I going slower this year?
How do I know if I'm doing better?
Right?
You bring in another revenue manager, you bring in somebody,
you're like, Hey, how am I doing?
They need to run your pace to understand how are you performing?
Then measure that pace against other components like the market.
But revenue is simply just saying, how well am I doing?
Am I doing better?
Or worse or the same as last year.
Because once you have that information, then you can help to understand or
guide your strategy moving forward.
Speaker 2: Desiree, have you ever played Sonic the Hedgehog?
Uh, I have, yes.
Do you remember when you'd go through the lap and you do the jumps, you get
the rings, and you come back around?
You can put the settings.
On so that you could watch a little ghost of your last go around and
you're racing against yourself.
And there'd be like a little kind of transparent translucent hedgehog that
you'd be either running in front of or behind of, and that was your pace.
And I always think about, uh, that video game when I think about pace
and how we think about our year going, you know, our lap around the sun
this time and how well we're doing
. We're talking about revenue pace and we won't get to it today.
But there's several different kinds of pace to think about, right?
So there's like occupancy pace or, or reservation pace, or there's
other ways to measure pace.
That you'll hear when you're out thinking about how you're
running your business, right?
Speaker 3: Yes.
Revenue was the number one term because that's our number one metric
because that's what pays the bills.
So once we know that our revenue pace is great and that's on par,
then we can back in to make sure, okay, how is our booking pace?
Because maybe I'm getting my revenue, but it's because I'm charging more
money for less nights, or I had to charge more money because I'm not
generating as many reservations.
So, revenue pace is number one, and then back into it with other
metrics like your occupancy pace.
Your bookings pace, your night's pace, because your revenue goal is number one.
And once that check Mark is there and you know, okay, I'm good on that metric.
Now, how can I maximize it?
And that's when you start to look in other areas.
Speaker 2: That's a really good way of thinking about it.
And I think I often think about a reservation pace and I should be thinking
more about revenue pace, uh, when it comes to the health of the company.
Correct.
Speaker 3: Yes, because I can get one reservation for one night at
the same value of two reservations.
For six nights, so my booking could be double, but my revenue could be less and
I could have one booking, you know, with six nights of revenue and one reservation.
So first I want to get the revenue and then I'll back into how I'm going to
maximize that between occupancy and rate.
Speaker 2: So number six is interesting because we've
already talked about occupancy.
But you felt it was important enough to differentiate between
occupancy and paid occupancy,
Speaker 3: correct?
And the difference between the two is occupancy is going to reflect
on total booked nights and booked nights or occupied nights, right?
You could mean if That was a owner night that stayed.
It could mean a maintenance block.
It could mean a paying reservation, right?
All of those three components add up to occupancy, but now paid occupancy.
And this is where the vacation rental space is unique is because I can't control
necessarily how many owners come in.
So when we're measuring performance.
Let's say I have 10 homes.
My whole company sold out this Friday.
That's great.
But was all of that paid occupancy, right?
Or if I had five owners in and five paid nights.
Okay, great.
So now next year, when that next Saturday comes, right, I need to consider what
was my paid occupancy the prior year, because if I just look at total occupancy,
five of those were occupied by owners, which did not generate any revenue.
So I really only had an opportunity to book those five.
And if I'm comparing that and saying, well, dang, last year
I sold out, I definitely need to increase my rate this year.
That may not be the best metric to use because half of my inventory was not paid.
So it's not a true reflection of demand.
Paid occupancy is a true reflection of demand.
And if you had five nights solar, you were at 50 percent occupancy, and
now you want to grow to 60%, right?
How are we going to do that?
Is that through price?
Is that through availability or whatever the case may be?
Speaker 2: Yeah.
Just as a point of curiosity, Desiree, is there a report we can look at
in RevMax that shows the difference between occupancy and paid occupancy?
Or is it something we just need to pull out and do ourselves?
Speaker 3: So for RevMax, yes, there are different reports
that you can pull for paid.
By default, RevMax will always show you all of your paid statistics.
And then you have the choice to include your non paying data to
get a total picture of opportunity.
Um, also on the tape chart, we also show you by day what your, uh, paid nights
was prior year and occupancy percentage.
Speaker 2: Such a powerful tool.
For number seven, Desiree, you said availability.
What do we need to know about availability that isn't obvious to us?
Speaker 3: Availability is important because just as much As we look at
occupancy as the metric, that's great.
If we were at, you know, 40 percent occupancy, 60 percent occupancy.
But now that's the strategy.
And that's what our goal was, right?
To achieve that occupancy level, the availability is
everything that is sitting empty.
So availability is really opportunity.
How do I sell the rest of that product?
Because all of that available inventory is unsold.
It's an empty calendar and my owners aren't making any money, which
means I'm not making any money.
So we'll get clients who say, yes, I'm going to pick up 10 percent occupancy
for this weekend, 60 percent empty.
We got to focus on that 60%.
That's not going to get booked, right?
Because that's the available inventory that's left.
And it's important to understand, we know you're not going to sell out
every night, but are we exhausting every opportunity that we have for
our owners to make sure that they're maximizing their opportunity, right?
And if you have availability, how are we putting that into the
marketplace for customers to buy?
Speaker 2: Yeah, our revenue manager for Rocky Point, who's on RevMax, he
always talks about his name is Arthur.
You've met him a couple of times.
He, he doesn't like to look at occupancy.
He likes to look at availability because he believes that focusing
on the availability left is how you end up driving, you know, occupancy
and revenue and things like that.
And I always thought that was an interesting way to almost flip the script
on how a lot of us property managers think about our occupancy and availability.
Speaker 3: Absolutely.
Right.
I'm going to put this in very layman terms.
It's kind of like when a reservationist makes a booking,
it's like, well, that was their job.
That's what they're paid to do.
That's why you're here.
Cause you get those.
And the occupancy is what the revenue manager's job is, right?
There's going to be some organic demand that regardless you're going to fill up.
The real strategy comes into how to decrease the availability, which
ultimately increases your occupancy.
In theory with an optimized rate or ADR, you would then generate more revenue.
Speaker 2: So our job is not to build occupancy.
It's to murder availability.
Speaker: Yes.
Speaker 2: I like what you said.
Availability equals opportunity.
I think that's a great quote.
So for number eight, you put booking window.
And I think this is going to be a great glossary term to go over and
understand, because I feel like this is.
A word or a phrase that's often misused or misunderstood in the industry as a whole.
Speaker 3: So I'm going to get geeky for a second.
Booking window is how far out from arrival date to reservation creation date.
The difference between those two is your booking window, right?
So if I make a reservation today and I arrive in seven days.
Then my booking window seven, right?
If I make my reservation today and arrive tomorrow, my booking windows one.
So you want your booking window.
You need to understand your booking window.
So, you know, exactly when the majority of your reservations are created for
a very specific period of time during peak season, what is the booking window?
And when they say that they're referencing the majority of reservations, we know
you're going to have reservations book a year in advance, two weeks in advance.
But when is the majority of reservations, when do they come
in for that period of time, right?
And you're going to have a different booking window for every month of the
year or even seasonality because, and I can break it down, certain markets like
in the Carolinas, they're usually going to have a year advanced booking window.
Majority of those bookings are going to come in 12 months out and that's it.
You may have some that come in last minute, but it's not the majority.
So.
As a revenue manager, understanding that booking window and understanding exactly
when your peak demand is going to hit, that's when you want to make sure that
you have the best rates, you have the best product positioned correctly, right?
You have everything set your strategy set.
And the more opportunity you have to build And market your availability
when that booking window comes, that's, that's going to give you confidence
to know that you can hang on to your price and demand that price, right?
Because it's all about that supply and demand.
So if I've already built up enough occupancy, if you will, for that
prime booking time, whenever they transact, I know I can, that helps
me to ensure I have optimum rate.
Speaker 2: So the booking window is a specific time before the reservation.
In which the value of those rental nights are at their peak.
It's when you're going to get the most value out of them, right?
And then beyond that, there's a chance that all things being said that the
value of those nights start going down because there's less and less
demand for those dates that were that are specific to that booking window.
Is that right?
Speaker 3: That's correct.
Yes.
Speaker 2: As a property manager, you know, we're sitting in front
of our system thinking, where is my prime booking window?
How do I figure that out?
, what report do I run or what graph do I look at or what historical data am I
seeking for, say, I was looking at for the 4th of July weekend, what would I
be looking for to figure out what my prime booking window is for that weekend?
Speaker 3: So in RevMax, we actually have a booking window report that will
provide all of that information for you.
We break it down by month and then you also have the ability to break
it down by week so you would be able to get that answer, right?
When is my prime booking window for 4th of July?
Is it 60 days out?
Is it three weeks out?
Is it week of?
Now I will also tell you that your booking window will vary by bedroom size.
So it's important to understand that, right?
So that's why this is an important KPI or term because you need to understand
that in the, especially in the vacation rental space, your 4, bedrooms are
going to have a much different booking window than your ones, twos, and threes.
So you almost have to have two different strategies.
When you are setting goals and when you are looking to set pricing and
set nightly minimums and promos and things along those lines.
And it's important to understand how each of those segments of product book,
that way you can make sure you have the appropriate strategy in place.
What I mean by that is the chances of the majority of your 10 bedrooms
booking within 30 days of arrival.
During peak time are going to be very slim and only because logically
it's a little bit more difficult to get probably three or four families
together within a month and say, we're all going to go to the destination.
And we're all going to go during the same time and everyone's
already put in their work, right?
Coordinating that group is a lot more challenging to do last minute than it
is for just that couple who's going to go away and just needs a one bedroom.
So usually your larger homes have a further outbooking window.
And usually your one your smaller homes or units or condos especially have
a very short booking window, so you will have a different strategy right
within 30 days of arrival for your one bedrooms versus your 10 bedrooms your 10
bedrooms at that point may be distressed.
For your one bedrooms, it might be prime buying time for them.
Speaker 2: This is something I picked up on my very first season in 2001.
It became obvious something was happening.
I didn't have the sophistication or tools.
I was working on an Excel spreadsheet at the time, but something else
that occurs to me, it's not only unit size or bedroom count, but also
location, because I noticed that my beachfront properties, as opposed
to like, say beach view properties.
had different booking windows and if I change the rates to be discounted
deep enough to match the value of that beachfront for what you would pay for a
second row, those booking windows between beachfront and beach view would get
closer because the price differentiation made them more competitive.
Does that make sense?
Speaker 3: Yes, absolutely.
Speaker 2: Really interesting stuff.
I feel like you could really play around and, uh, and do a lot of adjustments.
It's kind of an art in there, isn't it?
Once you get your data there.
Speaker 3: Yes.
And funny enough, because that's what revenue management is.
It's a mix of art and science.
Speaker 2: Yeah.
Number nine length of stay.
Speaker 3: So this one's a lot of fun because I can't,
you can blow people's minds.
Length of stay is basically equal to nightly minimum and nightly minimum
is not pricing nightly minimum.
Right.
But the nightly minimum requirement for your calendar.
So pretty basic around the board.
Um, your nightly minimum during off season is probably, you know, three nights.
nightly minimum during peak season is usually seven.
And that has drastically changed across the board.
Folks have realized, hey, I can get, you know, one and two night
stays now because that's the flexibility that most people have.
And I can also still capture five and six night stays.
In some cases for the price of seven.
So length of stay is really just determining what is the nightly
minimum for your calendar.
And it's important metric to understand.
And why it makes the top 10 is because if we look at the buying
pattern just for ourselves, right.
When we go on vacation, first of all, how many of us can even get seven nights off?
And then how many of us have to book Saturday to Saturday, right?
Or Sunday to Sunday, nine times out of 10, whenever we're traveling, we're
trying to do an extended weekend.
We're trying to cram something in and it has nothing to do with price.
More so than it has to do with flexibility, but by having length of
stay air quote restrictions on right, you're you're prohibiting your own
opportunity, so it's important to understand what the length of stay is.
It's important to understand.
Hey, be flexible.
If you can, you know, another pun on Red Max, we give length of stay pricing.
So what that does is that allows you to stay, you know, one
night for the price of three.
If you're looking and you want a three night minimum, do you really want a
three night minimum or do you just want the revenue for three nights?
And within the system, we can give you that revenue if
they stay one or two nights.
Same thing with if they're, you really want them to stay a week or
you just want the revenue for a week.
I can give you the same revenue if you allow them to stay
five or six nights, right?
The system can automatically make those adjustments.
And that's where we come back to KPI number one, which is revenue.
And, you know, when the owner says, Hey, well, I was supposed to get a seven.
I say, you only sold it for five nights.
It's like, yes, that's correct.
But I still got you the same amount of money.
So part of that is an education piece as well.
And that's why the number one goal, right?
Is revenue.
We do that with occupancy.
We do that with rate as we're building, building, building.
Now it comes down to length of stay and what does the market demand.
Right.
At the end of the day, it's all about the customer.
The customer is the one who determines the price.
The customer is the one who determines the length of stay because they're
the ones who are buying it, right?
That's the demand.
I have this supply.
We got to meet in the middle.
Speaker 2: I love this length of stay logic that you guys are using because
I can't tell you how many times we've had homeowners who said, Hey, I've got
a two night or three night minimum.
And so when you search on the website or on an OTA, it comes up as unavailable.
And so they would have paid the higher price, you know, or at least
possibly paid the higher price.
But we would have never known because it didn't show up as available at all.
It shows nothing available for a one night, right?
So this, this is a great way to, uh, drive bookings and show, uh, availability on the
calendar and also drive revenue because of this length of stay logic you guys have
put together and then understanding your length of stay, uh, in each market and
each type of, you know, property market.
It's, it's a powerful way to segment and understand how to serve your
homeowners in each segment better.
Speaker 3: Absolutely.
And a lot of times, especially as there's so much more supply in the
marketplace, what are other owners doing?
If you've typically had a four night minimum and all of a sudden majority
of your market is offering two and people are searching for two, right?
Like you said, you're not even showing up.
So it's important to check the marketplace, not only from a pricing
perspective, but also from an availability perspective, right?
Am I really showing up?
Am I maximizing my exposure?
If I get a hundred people who will stay two nights, I'm not even entertaining
them because I have a three night minimum on, but if I could cater and capture at
least 50 percent of that demand, I just got 50 more nights, 50 more reservations
that increases my booking pace.
That increases my occupancy.
I'm going to increase my revenue organically.
And so it's the total revenue management strategy that helps Drive
KPI number one, which is revenue.
Speaker 2: Yeah.
You know, those, uh, occupied nights, I don't have to tell you this.
They're perishable and, uh, getting revenue for them matters because once
they're gone, they're gone forever.
. There's no shelf life for them.
They're gone.
so for number 10, you had forecast and goal and budget.
And those are three together, but I'm certain you have a reason for
it and how it all works together.
So tell me how that works.
Speaker 3: Yes.
So the reason why we have forecast goal and budget is because we all need a goal.
We all need to know what are we trying to achieve, whether that is
a hard coded budget, depending upon.
the language in, in your culture, whether that is a revenue goal in general,
or whether that's just your forecast, because that's how you're pacing, right?
Either one of those will work.
As team, we need to get to KPI number one, which is revenue.
What is that goal?
I need to make sure the revenue manager knows that goal.
I need to make sure the GM of the company or owner understands that goal.
And I need to make sure my homeowner understands that goal.
Because if all three of them know that they're trying to get to X, that's
where everyone is aware, and everyone's on the same page, and we don't have a
revenue manager who's trying to stick on rate because they're on an occupancy
number, right, where the owner's like, I don't care how you get to 000, Get it.
The revenue managers, then look, I have 365 days to make you 80 grand.
Let me do it the best way I know how.
And if the GM knows that, they know, okay, this is how much money we can
expect for my budgeting purposes.
I know how much commission I'm going to make off of that.
I can forecast my fees and cleaning and all of that.
Speaker 2: When I think of, uh, the team effort, I feel like, , you've got
the quarterback, you know, the revenue manager, you've got the, the coach,
maybe that's the property manager, there's all these different positions
on the field, even your reservationists, they don't have to actually do.
Revenue management, but they need to be able to recognize it, explain it,
have a conversation with a homeowner about it when they get the call, an
angry call of why is it this price?
And so everybody's got a different position to play on the team,
but man, is it a team sport?
Absolutely.
I'm going to throw in one as a bonus because you said it earlier and I like it.
. So our bonus definition is opportunity loss, , can you just
give us a quick explanation of that?
Of opportunity loss.
Speaker 3: Absolutely, and that's a very vague term 'cause there are
many ways we can lose opportunity.
The biggest opportunity loss in many cases is going to be in availability, where you
have, let's say a five night strategy, which means a five night minimum, but
your calendar only has four nights available, three nights available, two
nights available, one night available.
If you have discrepancies with your nightly minimums, you're
already closing yourself off.
Nobody can find you.
Even with homeowners, when they're coming in and trying to stay during
peak times, we have to understand, Hey, that's great that you want to come
in during the 4th of July, , you're going to displace X amount of dollars.
And that's the bread and butter of when, , most companies make
their money during peak season.
So it's important to understand that.
And to your point, Steve, it's important that the reservationists know that too.
So when that owner is calling, they can have that educated conversation with them
to let them know what they're displacing.
Speaker 2: Desiree, thank you so much for coming on so much to learn from you.
Always these top 10 terms are just fantastic.
And It's so valuable to our partners and thank you for
everything you do for Costco.
So appreciative.
Speaker 3: Absolutely.
Thank you, Steve.
Thank you for having me.
And I look forward to having more revenue management talks with you.
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