Escapia Blog - Vacation Rental News and Trends

Predictions for 2009

By James Sells, Dir. Client Services

One of the blogs that I regularly visit had some interesting predictions for the industry that they are in (media) for the coming year. The game is definitely changing and I think it is wise to recognize and embrace the coming changes instead of trying to fight them.

Here are the five predictions (tweaked slightly for context):

The “easy way out” will be big. Too many people look for easy answers in tough times. The self proclaimed SEO miracle workers and second and third tier vendors will be chomping at the bit to sell you that magic bullet that will turn your business around. Remember the old adage “If it sounds too good to be true, it probably is.”

The pool will shrink. A good number of agencies will either go under or sell/merge to larger companies.  If you can survive, there will be less choice for future owners and guests and you may actually emerge stronger than ever.  That may sound a bit cutthroat but it will probably happen.

Lot’s of re-organization (to no avail).  Too many people equate “busyness” with “progress” or “productivity”.  So they waste time with meetings, silver bullet schemes and other things instead of actually being productive.

Panic will ruin a lot of good companies. Good leaders may let emotion cloud their judgment instead of objectively looking at the facts and then using them to improve or set a new direction. Or they will gamble on unwise or immature products, solutions, and initiatives to try and save a couple of bucks or find the “easy way out”.

Those without a long-term strategy will fail. The organizations that survive the slump will be organizations that have been strategically planning for the future and sticking to their core business.  Strategy matters, so start thinking long-term.

I’ll add one of my own:

More and more people will step over a dollar to pick up a dime. With layoffs, a recession, unstable markets, and all the rest, very few will stick to the proven concept that it takes money to make money. For instance, if I were to hand you an envelope with a check for $1,000 and a signed rental agreement, would you pay me $100 for it? Most people would say yes, yet most people don't do it! Most people will not take calculated risks on the long term value of how and where they spend their money, and will sacrifice quality and greater potential in the long term for quantity and immediate gratification in the short term.

So what does this all mean?

Focus. Have a strategy. Plan for the long term. Let the facts guide your decision making. Adapt. Be wise with your investments. Don't simply "hunker down". Don't sacrifice your long term goals for short term benefits.

Escapia Research: January toughest for "fly-to" markets

by Bill Furlong, CEO

A week ago we released January data from Escapia Research showing that vacation rental bookings trended down 19% versus a year ago.

Now, we'll take a look at how those trends varied by whether a destination was a "drive-to" or "fly-to" destination.

January data supports the anecdotal evidence that agencies with rental units in destinations that require getting on a plane are feeling the greatest pain from the recession.  As the chart below shows, agencies in "fly-to" destinations -- dominated in our sample by Hawaii and the Rockies -- have seen dollar bookings decline by 33% from a year ago.

 

As expected, agencies who rely more on renters located within a drive of their location fared "better" in January (if you can call it that), with bookings dropping by 18%.  Interestingly, the best performers in January were agencies who have a balance of people flying and driving -- for example agencies in Lake Tahoe or northern Florida -- who limited the slide to 9%.

The data also shows that agencies in the "drive-to" areas have seen the biggest relative decline in dollars per booking.  While the percent decline in price was bigger for "fly-to" areas, price declines were a bigger share of the overall drop for "drive-to" areas.  While it is impossible to be certain, it is at least interesting that the group of agencies who appear to have been most aggressive on price saw a lower overall booking dollar drop.

Update Your Owner Agreements

By John Suzuki, Escapia VP Sales

Here's the whole ball game:  If your commission is 20 percent, and you have to offer a 30% discount to win a renter, does that mean you walk away since you'd otherwise be under water for that rental? If the answer is yes, you need to update your owner agreements.

If you believe as we do that, like hotels and airlines, dynamic rates based on supply, demand, and timing offers a big competitive advantage, your owner contracts need to be set up so that discounts and marketing fees you pay to various OTAs (Online Travel Agent) should be shared with your owners, and not solely paid out of your commissions.

Using the above example, let's say you have a $1,000 rental and are paid a 20% commission. If you have to discount the unit by 30%, your commission should not be minus $100 (i.e. $1,000 times your 20% commission less 30%). Rather, it should be $140 ($1,000 less 30%, times your 20% commission). In other words, because the world of vacation rentals is following the path of hotels and airlines with yield management pricing, you need to accommodate the fact that your rates are going to become as inconsistent as sunny days in Seattle. Here's why:

Yield management and dynamic rates enable you to maximize occupancy and minimize revenue leakage. While traditional rate structures offer different rates for various reasons (i.e. high/low/shoulder seasons, weekends, holidays, etc.), Escapia lets you take your rates to a whole new level with rate rules that are easy and automatic:

• Last minute deals
• Premiums/Discounts based on occupancy
• Holiday premiums and discounts based on time to arrival
• Weekday and mid-week discounts
• Promotions with free or discounted nights.
• Premiums and discounts based on source of booking.
• Legacy guest pricing
• Rollover pricing into next year
• Premium pricing based on "non-typical" stays.
• Guest-type premiums and discounts

In this new world of smart rate management, the entire financial burden of marketing your vacation rentals should not and cannot rest on you alone. After all, in today's economy, everyone is shopping for deals and if you can't give them what they want, they'll find someone else who will. So here's the question to your owners for 2009: Isn't a little bit of somethin' better than a whole lot of nuthin'?

Escapia in the Outer Banks...

By Kris Lande, Escapia Product Marketing Manager

This week John, Bryan and I had the pleasure of spending time in one of the biggest vacation destinations in the country – the Outer Banks of North Carolina.  Not only is the area absolutely beautiful, but it packed with vacation rental homes.   I snapped the picture below of the coastline just outside of Duck, North Carolina. 

Note the endless row of vacation home after vacation home lining the beach.  And these homes aren’t the average family home, these are huge ‘monsters’ (as I like to call them) boasting up to 18 bedrooms in some cases.  It is easy to see why North Carolina is the 2nd largest vacation rental destination, just behind Florida.

What brought us to the area was the Outer Banks Vacation Rental Seminar we held yesterday in Kitty Hawk.  The event was a great success bringing together over 50 attendees from 22 leading vacation rental management companies in the area who came to learn about not only surviving the current economy, but thriving in it.  Here is what some of the attendees said about the seminar:

“Topics were right on target for the times and directly relating to vacation rentals!” –Petrina, Resortquest Outer Banks

“The seminar was extremely informative and right on target with the latest and most up to date information that pertains to our industry.” -Michelle, Carolina Designs

“I enjoyed learning where trends in the industry are headed and suggestions for staying competitive.”  -Kara, Village Realty

 
John Suzuki, VP of Escapia, discussing the importance of ratings and reviews for the vacation rental industry. 

 
In addition to meeting new faces at the seminar, getting to visit with friends and clients in the area is something we always look forward to.  Pictured above is John, Kris and Bryan of Escapia with clients Sara and Lorena of Paramount Destinations.

Interested in attending a Vacation Rental Seminar in your area? Visit www.vrseminar.com for upcoming seminars or email us at seminar@escapia.com for more information.

Remarkable is a Choice.

By James Sells, Dir. Client Services

A very thought provoking article from the great Seth Godin. (Who’s blog you should read religiously if you are a business owner, marketer, manager, or decision maker that values innovation, emerging trends, and insightful commentary.)

The two points that jump out to me the most are;

      “You’re probably boring on purpose.”
     “Remarkable costs time and money and effort…”

What are the areas that you are boring in and how can you get un-boring?

Is your staff boring? (How do they answer the phone, greet guests, write e-mails?)

Is your company boring? (Do you specialize in anything? Is there something that you do or offer that no one else does?)

Are your units boring? (Are they like every other home in your area? What is unique about them? How can you draw that out in the pictures and descriptions on your website?)

Is your pricing boring? (Is it the exact same as every other agency in your area? Do you offer discounts for last minute bookings? Partial stays? Do you offer special promotions?)

Is your website boring? (What does it communicate? Professionalism? Fun? Luxury? Or does it look like your 16 year old nephew designed it?)

Are your services boring? (Do you offer services that no other agency does? At lower costs or better value?)

“If people aren't discussing your products, your services…there's a reason.”

Always Play Nice

By John Suzuki, Escapia VP Sales

I am truly blessed to have kids who are two of the nicest people I've ever known. Michael is 20 and Kristin is 17. I recently had a deep conversation with them about competition, and how to do well in an increasingly competitive and seemingly desperate world. Here's what I said: There is a right way and a wrong way to make yourself look better than your competitor. The right way is to work hard and be better. The wrong way is to make the other guy look worse.

We all have competitors whose tactics seem less than honorable. They disparage against you, spread unsubstantiated rumors, and try to sabotage you by spreading FUD (fear, uncertainty and doubt). We at Escapia have several such competitors, and while it may be tempting to respond in kind, the fact of the matter is, we just won't do it not only because it's the wrong thing to do, but we're too busy focusing on the right way to improve our company and make our products and services better for our clients.

Thumper's mom on Walt Disney's Bambi said something profound that I will never forget: "If you don't have something nice to say, don't say anything at all." My corollary to that is "People who disparage against others don't have anything better to say about themselves." I believe that always doing what's right and living with integrity is the easy path in life, simply because you never have to keep track of what you said or did in the past. Frankly, it's a whole lot more fun, and a whole lot less stressful.

Winning the right way let's you walk with your chin up and a smile on your face. It sets a positive tone in your company and makes your work a whole lot more interesting and rewarding. Why? Because you're focusing on BUILDING something great, and not focusing on tearing others down. It's a whole different mind set.

So next time someone disparages you, or disparages others to you, just remember that whatever they say is likely a reflection of themselves. Of course, the most important thing to remember is that which ever path you choose, your actions will work like a magnet in attracting like-minded people to you.

The choice is yours. Choose wisely.

Happy Valentine's Day! Romance Found on ClearStay.com...

By Kris Lande, Escapia Product Marketing Manager

For a little fun on this Valentine's Day, I started poking around on our consumer site, ClearStay.com, trying to find  'romantic' vacation homes.  I was blown away with all I found!  Some made me laugh (see the best romantic home names) and some made me want to book them immediately.  I put together a list of my personal favorites in a few choice categories:

1. Best Romantic Views
2. Best Romantic Home Names; and
3. Best Hot Tubs (hot tubs are romantic, right?!).

I found the top five homes, chosen by me for each category and in no particular order... Enjoy! 

Best Romantic Views:
Villa Iguanas Sur - This home in Cozumel is gorgeous - complete with steps that lead into the sea, literally!
Reef Madness Villa - Amazing view in St. John.
A&J's Haystack Retreat - Cannon Beach in Oregon is just beautiful, and the view from the home is perfection!
Sea Stone Villa - Swim in the private pool while enjoying views of the Caribbean Sea!
Puamana - Waking up and seeing a view of the Pacific Ocean from bed, wow!

Best Romantic Home Names:
A Love Shack
Snuggled Inn
Bear Hugs
Hidden Romance
Cuddled Up

Best Hot Tubs:
Mountain Comfort - This home has a heart-shaped hot tub!
Nebenzahl - How about relaxing in this hot tub with views of the California coastline?
Diamond Head Sunset Villa - Watching the Hawaiian sunset from this tropical hot tub would be amazing.
Banyon Treen Beach Estate - I love this home's 'grotto' style jacuzzi!
Snowshoe Chalet - Lovely hot tub in the woods - perfect place to warm up after skiing.

Escapia Research: No relief yet from vacation rental booking slide

by Bill Furlong, CEO

January is the biggest booking month of the year in the vacation rental business.  But this year it wasn't nearly as busy for vacation rental managers as it was a year ago.

Escapia Research has just completed analyzing January vacation rental bookings data and the results indicate that the slide in bookings that started in mid-2008 and accelerated during the financial crisis in the 4th quarter has continued as we begin 2009.

As the chart below indicates, January 2009 vacation rental bookings were 19% lower than they were a year ago.

 

While the smaller booking dollar decline in December provided some hope that the steepest declines might be over, January's results indicate that the recession is still strongly impacting consumer's travel planning.

The 19% decline is roughly corraborated by analyzing data from Google.  The chart below based on data from Google Trends shows that relative to a year ago, roughly 20% fewer searches were done on Google for the term "vacation rentals" than were done a year ago.  The data below is an index on the search volume with January 2007 set at 1.00. 

As you can see, the peak January booking season indexes at 1.0 in 2007 and slightly more than that in 2008, while the index is just 0.8 for the same time in 2009.  With 20% fewer people searching for vacation rentals, it is no surprise that almost 20% fewer people are booking rentals.

It is also interesting to see how much of the decline in booking dollars has come from fewer bookings and how much is attributable to lower revenue per booking.  I am careful to say "revenue per booking" rather than rates because the decline from the value of a booking might come from a shorter length of stay as well as a discounted rate (we'll be looking at that in coming days.)  The average revenue per booking declined by 6% from January 2008 to January 2009, while the number of bookings declined by 13%.  So while some discounting is clearly going on, less than you might expect.

While the 19% overall decline in booking dollars shows how challenging the environment is for the industry, some agencies have found a pathway to growth despite all of the challenges.  In fact, 26% of the agencies in our survey have had their January booking dollars grow year-over-year.

Next week we'll take a look at the regional results -- where are agencies weathering the storm the best and where is it hurting the most.

Keywords Aren't the Only Way to Unlock Rental Bookings

By Parag Vaish, Vice President Consumer Marketing

With competition in the vacation rental industry always increasing, there’s been a lot of focus on which “key” words most effectively attract renters.  But now, some insiders say we should go back in the opposite direction – instead of simply listing several brief, attractive terms to snag attention, we should expand the terms into longer (sentence-format) descriptions of the actual experiences they evoke.  This automatically generates strong imagery which will distinguish your rental from those that require imaginative effort on behalf of the traveler.

To grasp the gravity of the difference that focusing on experience makes, imagine for a moment that you are the renter looking for a vacation home to share with a few of your friends.  The first ad you come across simply lists its amenities, which are indeed impressive:

Ocean view
Beautiful natural stone patio with outdoor furniture
Gas BBQ grill
Close to fine wine shops

But the second ad you come across draws you into the experience and gives you images of how you will enjoy utilizing the amenities; it says:

Step out onto your beautiful natural stone patio on a warm, breezy evening and fire up the gas grill.  Indulge in a glass of fine wine from one of the many friendly local shop owners and enjoy a delicious outdoor meal with your friends as the sun sets over the glimmering ocean in front of you.

Both ads boast the same amenities, but the latter makes them sound like true luxuries rather than clear-cut commodities – and in this waning economy and increasingly competitive market, renters want the most luxurious experiences they can get for their dollar.  The bottom line, as property owner Jon Ludwig puts it, is that putting a little more time and thought into your rental advertisements is the key to making a real impression on your renters and unlocking those extra bookings.

Latest Press Release: Escapia Completes 2008 With Record Results

By Kris Lande, Product Marketing Manager

We're excited to share our record results from 2008!  Click here or here to read the entire release.